America runs on gig workers. According to Fortunly, more than one-third of US workers (36%) participate in the gig economy, either through their primary or secondary jobs. This number comprises around 59 million Americans. It’s not just multiple job holders; for 29% of US workers, their primary job is actually an alternative work arrangement.
Many gig workers are free-lance workers like designers, artists and writers. But a large number are drivers for delivery apps like Uber, Lyft, DoorDash and Instacart, some of whom use those services to supplement income from another job, but many derive their sole income from them. Without a regular paycheck, these workers find it difficult to get loans from traditional banks.
COVERR is out to change that. Founded by Kobina Ansah in 2019, COVERR, provides financial support specifically directed to gig workers and especially delivery app drivers. “With more and more of the workforce becoming independent contractors, it’s increasingly important to have financial solutions that are tailored to their needs. We know that traditional business lenders create significant barriers to obtaining business finance for some eligible independent contractors. Our mission is to reduce or eliminate these challenges,” says Ansah.
The company does not offer loans. Instead COVERR provides a business cash advance based on future earnings. There is no interest and there are no origination fees. They charge a minimal one-time service fee and provide customised payment forecast schedules for each customer.
“People (gig workers) are willing to pay a premium to have flexibility or flexibility is one of the biggest criteria. But they have liquidity issues and there’s alternative data that we might be able to evaluate. I started with a thousand dollars of my own money and gave it to 10 drivers who happened to work around the building where I worked. I waited to see if somebody would come back. Thankfully they did. And so that’s the Genesis of COVERR, says Ansah.
Financing is typically somewhere between $200 and $400, which no bank could afford to process as a loan. According to Ansah, those amounts can make all the difference for drivers facing an emergency or need to pay bills during a slow period. In addition, COVERR plans to provide data in a dashboard for their customers that will help them better understand their gig work as a business, seeing how they can be more efficient in their driving or comparing their data to comparable drivers as a corporate finance like application.
The company recently announced the capability to serve a nationwide clientele as a result of a $1 million dollar debt facility provided by a consortium of high-net worth individuals who believe in COVERRS’ mission. “Over the next year, we’ll be able to support over a million dollars in funding to these deserving gig workers and help propel their efforts,” says Ansah.
Ansah was born in Canada, raised in a family from Ghana, West Africa. “I’m an immigrant living in the states. I was like the Ghana person in America, I’ve been the Canadian, person from Ghana. I’m an American person. It’s the reason why I probably have an affinity for underserved or overlooked communities,” says Ansah.
Ansah graduated from Cornell and got his MBA from Wharton. He worked for Wells Fargo as a relationship manager serving high net worth individuals after graduating from Cornell. “My mandate at Wells was to look at deals greater than $20 million or above. And so any deal that was below that I wasn’t even allowed to look at. And unfortunately many times, the people who were coming to the table with projects that were under that cap often looked more like me and came from more diverse backgrounds. And so when ultimately deciding to leave Wells, I wanted to go into entrepreneurship and focus on serving this underserved market,” says Ansah.
He left Wells Fargo to co-found ModernLen, an online lender using machine learning to underwrite and lend to creditworthy borrowers who didn’t have a full FICO history in 2015. It was one of the first rewards credit cards for international students who didn’t have a US credit history and we’re effectively not able to get traditional finance from banks. “We had that run at many schools around the country, including Penn, Harvard, Yale and others, did quite well. But during that journey, I learned one of my biggest lessons, which was you need to diligence with your partners,” says Ansah. He was working with a bank that had a national charter. He was thankful to have a bank who would work with them and didn’t look at their balance sheet. When the bank went under, so did the business.
“I learned that very important lesson, but still had the passion for serving underserved communities. And when winding that project down, one of my investors, who happens to be one of the largest auto finance providers for Uber drivers in Mexico city said, ‘Hmm, could that product potentially work in the states and New York specifically?’,” says Ansah. He spent a year testing several ideas he had in the financial services sector, searching for a sufficiently strong pain point that he could address. He then founded COVERR in 2019.
As for the future? Ansah states, “We’re very excited to now finally have the ability to serve operators around the country. We’re looking forward to learning about the different needs that they have and being there to support them. Currently we’re focused in the mobility space or really the ride share and the food delivery space. Then as we continue to expand and better understand the types of clients that we can serve, we look to expand to other categories within the general US gig economy.”