You will have likely already heard of fintech startup Squirrel – it’s made enough of a splash recently, with headlines peppering the Sunday Times, Proactive Investors UK, FT, Bloomberg, BBC, CNBC, Wired, Evening Standard, CityAM, The Sun, Virgin.com and others.
Squirrel is a personal financial management and savings solution that helps people regain control of their finances.
An FCA-authorised firm, Squirrel issues users with a basic bank account and provides a mobile app which prompts users to create a basic budget. This allocates the user’s income into their commitments, saving and spending money before they even get access to it, ensuring the money needed to pay essentials, like rent and bills, is set aside.
The idea is to ensure users have access to money only when they need it, making it harder to impulse-spend and easier to save. The company, which won Pitch@Palace 2.0 two years ago, has already secured a partnership to issue basic Barclays accounts for their community, so that users are essentially receiving a separate ‘filter’ account as part of their Squirrel engagement.
Once set up, Squirrel uses a combination of automation and proprietary behavioural nudges to ensure that people can create and, more importantly, stick to their budget.
Squirrel is interesting in that it’s not only a highly investable idea with tremendous growth opportunity – it also has a really positive social impact. The people who use it are generally people on lower incomes, and Squirrel is helping them save money for the first time.
– Jos Evans, lead investor in Squirrel
We caught up with the inexhaustible Mutaz Qubbaj, who many of our members met personally at our Sherry Coutu event earlier this month. Here’s the story of how Squirrel got started – and where it hopes to be in a few years’ time.
Mutaz presenting at Pitch@Palace. Credit: Michael Newington Gray via Wired
What’s your professional background?
Mutaz: I'm a Palestinian/Jordanian born in Kuwait with a degree in Electrical Engineering and Computer from MIT – one of four brothers to make it in on a scholarship. After a stint at the MIT Media Lab and ZEFER, an internet strategy consulting startup in Boston, I embarked on a 13-year career in finance on Wall Street and in the City at each of Morgan Stanley, Credit Suisse and PIMCO.
Over the course of my corporate finance career, I’ve taken on roles as a trader, strategist, salesperson and published researcher. I also picked up a Master’s in Finance at LBS along the way!
What gave you the idea for Squirrel? The idea for Squirrel came from seeing the significant growth of predatory lending practices in the UK, both by payday lenders as well as banks charging exorbitant interest rates and overdraft fees to a vulnerable community – a community that is typically underserved and underbanked and taken advantage of during their time of need.
Against the backdrop of a regulatory environment that was clamping down on unfair lending practices, Squirrel was born to address the problem underlying the increasing need for easy (but expensive!) credit: people are bad with money.
Thousands of interviews with individuals that involved asking the question ‘what keeps you up at night about your finances?’ helped us structure Squirrel around the mission of empowering people to truly take control of their finances. The core themes that kept coming up were that people couldn’t save money because they couldn’t get started, and they couldn’t resist the temptation to dip into their savings on a whim (typically for a binge purchase) after they’d gotten started.
The vast majority told us they struggled to make it from one payday to the next and that it was normal to ‘live out of [their] overdraft’ shortly after getting paid. We also found that people just had difficulty, in general, in terms of being able to budget or set a plan that they could stick to in terms of their finances.
Mutaz meeting the Queen
Do you and your Co-founder, Emanuel, get on well with one another? How do your strengths and weaknesses gel?
Yes, we do. Some would say ‘like a house on fire’ (a new term I’ve picked up in the UK, and it’s a positive one!). Our strengths do complement each other, between my background building businesses within the banking space and Emanuel’s background as a previous business founder. You could say we’re a good match that brings together the right mix of business development, product strategy, technical ability and operational experience that has been key to getting Squirrel to where we are today.
Being an entrepreneur is no easy life and requires you to tackle new challenges on a daily basis. What helps you day-to-day and motivates you to keep going?
My main motivation is seeing how Squirrel is truly working for members of our growing community (6,600 and rising!). It’s amazing having someone come back and tell us that Squirrel has changed their life for the better, especially given that financial situation can govern and influence everything from your personal to your professional life.
Seeing reviews walk through how Squirrel has empowered someone to take control of their money, how it has ‘broken the bad cycle’ with that money, how it has helped them keep from disappointing their five-year-old daughter on her birthday, how it has made their marriage better, how it has kept them from taking out a payday loan (we encourage everybody to set up a resilience buffer for unexpected costs as of day one), how it has made it feasible to go into year-end without being up to their eyeballs in debt, and how we’ve helped some people save towards their deposit on a first home is what keeps me going.
Our effect on people’s lives is very real, personal and easy to see. It’s why I’m impassioned by Squirrel’s mission to empower people with their money, and why I truly believe in our vision to change the face of finance for the better.
What is your vision for Squirrel’s future?
My vision is to turn Squirrel into the financial hub for individuals around each of their essentials and their financial aspirations. We’ve made headway in the UK, but there’s already been interest from the US, Asia, Australia, Africa and the Middle East for what we’ve built, so I look forward to taking this global!
Who’s to say what the future holds, but I personally wish all the best to Mutaz and his team.
Squirrel successfully completed its first SyndicateRoom round in February 2017.
This interview is featured in issue one of The Syndicate, the magazine for the investor community.