Insurance meets mutual aid for essential bills.

Staying alive, let alone thriving and enjoying life, is hard for the average person in Baltimore, as well as broader America. According to multiple sources such as The New York Times and Dave Ramsey Financials:

• 28% of Americans could survive three months on their emergency savings. 

• The average car payment is $717. 

• Credit card debt is at a 20-year high 

• 42% of Americans have less than $1,000 in savings. 

• 64% of Americans are living paycheck to paycheck. 

• 29% of Americans receive some form of government assistance (welfare, housing vouchers, food stamps, etc) which is a 7% increase from 2013. 

• 66% of Black and Latinx households live in liquid asset poverty (having less than 3-month’s worth of living expenses in savings), with the largest percentage being women between the ages of 25-54. 

• 900,000 women of color get evicted each year, but there are no formal studies on this which means the number is possibly astronomically higher.

There is a ripple effect that occurs in the aforementioned list of statistics. When money is tight, a bill can be missed, which causes not only further financial strife to the individual but also emotional, mental, and even physical health issues. 

Fintech currently focuses on wealth management, investments, and asset growth for the wealthy and those aspiring to be rich, while leaving behind those who are low to low-middle class, which needs innovation. Fintech has grown to include mobile banking solutions, payment plan installment apps, cryptocurrency, and fancy credit cards, but nothing that aids people in paying their essential bills.

Lumpsome’s flagship market is Baltimore, MD, which is the founder’s hometown. The statewide median income is $41,516, but according to Baltimore Neighborhoods Alliance, there are communities within the city where the average annual income is $12,000 and households manage to survive on that money. In Baltimore, there are 87,000 people that earn less than the statewide median income. Across the entire United States, there are 40 million people that earn less than the nationwide median income of $41,000 according to the US Census Bureau, which means a huge market opportunity for Lumpsome.

As a fintech solution for low and middle income (LMI) people, customers pay a $5 monthly membership fee in addition to a sliding scale monthly investment. After at least 6 months of consistent membership, customers are eligible to withdraw funds to cover an essential bill, even if the amount of their bill is more than what they’ve invested. Examples of bills include expenses including rent, utility bills, and transportation.

Lumpsome will reshape consumer-level economics for the greater good. There are 3 core differentiators/value propositions that qualifies Lumpsoe to be the perfect solution:

1. Proprietary sliding scale. As the founder, I spent most of 2022 teaching myself coding, and in 2023 I am in a 9-month software engineering program through a local nonprofit called Betamore, so I am leveraging these skills to build my own sliding scale backend system and payment processing webpage that collaborates with my GoDaddy host site. 

2. No fine print and red tape like other insurance and financial models. The intention is to not burden customers with premiums, surcharges, and tax penalties. 

3. Customers can take more than they give. Even if a customer invests $100 total for the year, they can withdraw, for example, $200 to cover a utility bill, with expectations of repayment or a higher investment scale.

Within the first 1-2 startup years, the target market is Baltimore, MD, and possibly surrounding counties in Maryland, Washington, DC, and Virginia. Demographics and psychographics of the target customer include:

• Age range: 25-45 years old.

• Gender: Men and women.

• Household size: Singles, or people with children, typically single parents, rarely married.

• Income level: Maximum $45,000 which is slightly above the $41,516 statewide median individual income. They may also receive financial relief resources such as Section 8 and food stamps. They often hold jobs in retail, food service, or entry-level roles related to their degree, in addition to mid-level careers/industries such as teachers, social work, nonprofit roles, and office roles. They may also be unemployed, underemployed, and in-between jobs.

• Education level: GED, high school diploma, associates degree, bachelor's degree, trade school. A major factor may also be large student loan debt.

• Very little to no savings.

• View “wealth building” trends (or scams) on social media with optimism, such as real estate, AirBnB ownership, life insurance policies, and stock investments, but they have little money to get started; it’s all an unattainable get-rich-quick plan for them.

• Their happiest time of year is tax season when they expect a refund check; the hardest time is probably holiday season.

• They are afraid of being one missed paycheck away from homelessness.

When I was 17 years old, I dreamed of growing up to be an inventor and social entrepreneur. Throughout high school, I was in a life changing program called Network for Teaching Entrepreneurship, and I even received the prestigious Gates Millennium Scholarship (founded by Bill Gates). However, I did not have the test scores to get accepted into a STEM degree program, so instead I pursued the arts. 

I lived in New York for 5 years as a sound designer, blessed to work on Broadway, travel the country to do regional theater, as well as do dialogue editing and sound effects creation for commercials, audiobooks, podcasts, and tv shows. Being a freelance backstage artist is entrepreneurialism within itself. After turning down a full-time sound design job for Pixar and Marvel, I moved back to Baltimore in summer 2022 to chase my childhood dream of being an inventor and entrepreneur. Arriving home, I saw nothing much had changed– rampant crime, more abandoned buildings, teens sitting on the corners, and only 2-3 “good” neighborhoods receiving economic support. Some cities are experimenting with guaranteed income programs and expanding government assistance offerings; temporary bandaids. Even Elon Musk said he would give billions of dollars to solve world hunger if someone had a viable plan. Well, I have a plan for my local community, and my venture will be a long-term, profitable economic model that can help repair cities like Baltimore across the country.

As a former artist, I’ve served on the board of directors for numerous nonprofits such as Design Action, Awesome Foundation, and Station North Tool Library where I’ve fundraised, read and awarded microgrants to the public, and developed new programming for the organizations. Most importantly, I’ve read and adjudicated over 400 grants for Maryland State Arts Council, so I possess a perspective of finance and impact from the charitable industries which will help me in the for-profit world. I am currently participating in a 9-month software engineering training through Betamore that I’m paying $4,000 for, and taking 6 online finance and insurance classes through Udemy. This illustrates that I’m all-in for my venture, and that my nonprofit arts skills are transferable as I cultivate new skills. 

While building and testing my MVP, I’m planning to host 5 in-person and 3 virtual focus groups throughout May and June. The in-person focus groups will be open to the public and are almost solidified, I’m just waiting for the venues to process my rental payments. The venues include: Impact Hub, Baltimore Unity Hall, Enoch Pratt Free Library, 2640 Space, and 410 Community Lofts. During these focus groups, guests will give feedback on my MVP (the application/membership process), as well as discuss my market research questions about their income, expenses, sources of financial help, and what solutions are pertinent that may not have been discovered by a larger company.

Lumpsome is in the prototype phase because there is an MVP (application/membership webpage) that is being tested by 10 non-paying users throughout May and June. Additionally, throughout June there will be at least 5 in-person and 3 online focus groups, which means at least 8 “soft launches” and opportunities to iterate and improve multiple times, leading up to an “official launch” by July 1, 2023. 

The solution is not serving any paying customers yet.

The number one challenge my venture faces is being able to find and hire a co-founder. As I’m applying for national accelerators, speaking to my Small Business Administrator mentor, and attending information sessions of venture capital firms, a core expectation is that I need to have a co-founder. I do not want to disqualify myself from opportunities because I am a solo-preneur.

Furthermore, I would love to have a mentor who can advise on industry certifications. For example, as a social impact venture registered as an LLC, I would like for Lumpsome to become a B Corp in the near future, but I need to ensure the company is compliant with the criteria. There are other structural and business model questions I have for an advisor, such as how to develop an exit strategy that does not require me selling my venture to a mega-corporation. 

Finally, joining this program will empower me because when I speak to mentors and peers in my hometown, I receive immense doubt from them. As a Black woman, it’s expected that I dive into a venture in the fashion, beauty, entertainment, or food industries, as those are the archetypes for women of color entrepreneurs. The common feedback I’ve received from peers is that my venture is unrealistic and that I don’t possess the credentials to lead this type of startup. However, it’s never too late to work hard to become an expert in a field, and great ideas for social impact ventures can come from anyone, including me.

Lumpsome’s direct competitors include, namely and those similar: Flex Pay (rent installment plan app, www.getflex.com), Deferit (utility bill installment plan app, www.deferit.com), and Advance America (the largest payday loan company in America, www.advanceamerica.net). 

Case study: I used FlexPay as an experiment because my apartment community promoted it. My rent was due on the 1st of the month, but a full week went by and there was no payment made to my apartment (luckily I had money and was able to pay in a timely manner). When I reached out to customer service to ask if there are any issues on my end to resolve, I received a blanket “we are working hard to resolve the issue” email. Researching FlexPay in the app store on the Better Business Bureau website, there are hundreds of people who have experienced the same problem as me, but unfortunately those people were late on their rent because they were financially dependent on FlexPay for relief.

Lumpsome’s differentiators include:

1. Personable customer service, available via direct email, online chat, and phone number.

2. The functions are operational via a website, and I would like to develop a fully integrated mobile app.

3. Penetration pricing strategy on a sliding scale, which means starting as low as possible, in order to prioritize long-term market research and customer relationship building, with the space to change pricing strategies over time if necessary.

4. This is not an installment payment plan app, payday loan, or banking alternative; this is a new vertical blending the business model of insurance with the impact of mutual aid.

Lumpsome’s flagship target market is Baltimore, MD, the founder’s hometown. Over the span of 5 years, the vision is to expand into at least 10 other major US cities that have large populations with a stark divide in economic class, such as New York, Chicago, Phoenix, and Detroit. 

A major impact goal is the “go-to market strategy” for incubating each new city, which involves getting endorsements from the local economic improvement agencies and nonprofits that already serve the targeted customers. Not only will this assist with low customer acquisition costs, but also tracking data on how the company is having a positive impact on customers. For example, in Baltimore, Lumpsome intends to advertise through agencies such as:

• Mayor’s Office of Employment Development

• Mayor’s Office of Performance & Innovation

• Maryland CASH Campaign

• Maryland Governor’s Office of Community Initiatives 

• Impact Hub

• InnovationWorks

• Baltimore Homecoming

• Annie E. Casey Foundation

As an alternative, Lumpsome will utilize traditional paid advertising once we secure funding, such as: paid promotion on Facebook and Instagram, and paid video commercials or product placements on popular financial Youtube pages such as Dave Ramsey Financial and Buzzfeed Finance.

Additionally, I am inspired by the United Nations’ list of sustainable development goals, which Lumpsome intends to implement long-term:

• By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance.

• Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions; pro-poor public social spending.

In practicality, the entire existence of Lumpsome is social impact, it is not a business selling a product/service that just-so-happens to have a heartfelt socially responsible goal as the afterthought. The business model is focused on giving back first, while figuring out how to make a profit at the same time. Within the first 2-3 startup years, there are 3 metrics I want to employ:

• Monthly active users: my objective is to have 130 users/paid customers by December 2023, and 350 users/paid customers by December 2024.

• Customers “aging out” of the business services, because as they get older their income and/or savings should increase. 

• Customers' ability to “pay it forward” to another customer if they don’t use their investment contributions.

Every year, Lumpsome will survey its members via automated online surveys in addition to an annual online focus group series to evaluate how effective the company is as a solution.

Lumpsome’s solution will have short and long term impact on the problem. 

• Problem: Low and middle income (LMI) people have a hard time “making ends meet” and are one paycheck away from homelessness and financial ruin, no matter how many credit cards, payment plans, installment apps, and loans they have.

• Outputs: LMI, for Lumpsome, is defined as men and women who generate less than their state’s median income. Because the flagship market is Baltimore, MD, the financial threshold is $41,000.

• Inputs: By participating in Lumpsome with a small financial investment, customers are eligible to withdraw from a surplus of funds to pay for essential bills such as rent and electricity bills.

• Short-Term Outcomes: LMI people are able to catch up on bills and develop a healthy relationship to accumulating savings while paying off debt and having breathing room to take care of essentials.

• Long-Term Outcomes: To reduce consumer debt and evictions, and to increase the savings and overall well-being of LMI men and women.

Lumpsome is developing its own online payment platform, membership portal, and sliding scale backend tool. All of these elements will work in tandem with the GoDaddy hosting website. Ultimately, the goal is to apply for a copyright on the sliding scale backend tool to leverage it as a proprietary asset for the venture. Additionally, the mission and model of Lumpsome blends “insurance” and “mutual aid” which have both existed for centuries, but have not been combined in an innovative way in the evolving fintech industry. 

The founder, Twi McCallum, is a Black woman with a speech disability, which sometimes makes the journey of entrepreneurship intimidating due to the expectations of pitching, answering questions, and consulting with customers. As a former artist, diversity, inclusion, equity, and justice are pillars of the arts and entertainment communities. Twi was raised in Baltimore, which is one of the few majority Black cities in the United States, and now has a growing immigrant population of people from Africa as well as Spanish-speaking countries. This makes Lumpsome significant because not only will the venture provide aid to low and middle-income people, but also to people of color, including those who may not be first generation American. 

Lupmsome is testing a “sliding scale” subscription model currently, and developing a proprietary sliding scale calculation code on the backend. This includes a base membership fee for all customers, in addition to a recurring investment. 

For example, Twi McCallum pays $5 per month membership fee, plus a $10 per month investment. Between January and June over 6 months, Twi’s total payment to the company is $90 ($5x6 + $10x6). After 6 months, Twi is eligible to apply to withdraw, for example, $1,000 to cover her rent or $70 to cover her water bill.

The customer journey map is explained below:

1. Apply for membership. This includes an online application, identity verification, income verification, etc.

2. Invest for 6 months. This includes a $5 monthly membership fee, and sliding scale monthly investment.

3. Apply for withdrawal after at least 6 months. This involves providing proof of a bill.

4. Provide proof of funds used. Lumpsome will test if it’s more efficient to transfer funds to the customer directly, or transfer funds to the bill company directly. 

5. Continue investments.

A few notes of pushback, barriers to entry, and threats I’ve addressed with mentors and potential investors include:

1. What prevents a customer from ending their membership after taking advantage of their first withdrawal? Answer: Lumpsome is developing a policy where customers can pause or skip investment months after 6 months of consistent investments. There is no reprimand for ending a membership after a withdrawal, but this policy can be revisited in the future.

2. How does Lumpsume make a profit if customers can withdraw more than they invest? Answer: This business model resembles what insurance companies, gambling companies, and even nonprofits already provide. These organizations often payout more than what a customer puts in, however they also invest revenue into high-interest bearing accounts such as corporate and government bonds to supplement losses from customer payouts. Additionally, Lumpsome will balance revenue and payouts by ensuring that not every customer is making withdrawals at the exact same time, and by placing a ceiling of 1-2 withdrawals per customer per year.

My most critical definition of long-term financial success for my venture is the fact that I do not have an “exit strategy.” It is not my dream to sell my business to a mega corporation– I would love to lead this business for decades to come. To do this, I hope to expand into other finance market segments such as debt collections, debt consolidation, traditional insurance (car, health, renters, etc), and community lending for business and education, all while integrating technology and social responsibility into those ventures. My vision for the first 1-2 startup years is to only focus in Baltimore and ideally the surrounding regions, and hopefully branch and then 2+ years afterwards I will stretch beyond to new markets which means more revenue.

In the future as Lumpsome gets bigger and better, we can explore additional revenue strategies such as advertising; a free newsletter to customers where big companies can purchase ad placements. This is a common method used by insurance companies and gambling companies that implement the “customers pay in as little as possible and withdraw as much as possible” revenue models.

All business expenses have been paid out-of-pocket, totaling $5,618 as of May 1, 2023. The founder is able to continue investing up to $500 per month.

Lumpsome has been accepted into a few local programs:

• Baltimore Means Business, by Morgan State University and Goldman Sachs (no investment component)

• Empower, by Impact Hub Baltimore and GoDaddy ($500 micogrant, expected June 2023)

• Startup 101, by Betamore (no investment component, paid $500 to participate)

Examples of programs Lumpsome is waiting to hear back from with an acceptance/rejection:

• Y Combinator

• Techstars New York’s Economic Mobility Accelerator 

• Halcyon Opportunity Intensive 

• Morgan Stanley Inclusive Ventures

• Builders & Backers Accelerator

• Lighthouse Labs Accelerator

• Conscious Venture Lab Accelerator