Michael Broughton, 21
Company: Hatch Credit Solutions Inc.
Business: Credit-building tools for young people
Funding to date: $430,000
What led you to start this business?
When I was coming into college at USC, I was $10,000 short on my tuition. I was the first in my family to go to a school like that. I went to a bunch of lenders and they all said the same thing — your family’s finances aren’t great, and you have no credit. Thankfully, I was able to get a grant from the university, but I kept thinking about that situation. I spoke to a lot of my peers and found out that this was an issue for a lot of them.
It took me about two and a half years to figure it out. The problem is that the bureaucratic system of credit is just so complex. A lot of that (bureaucracy and complexity) was why young people weren’t building credit. I met my co-founder through USC. We started planning things out and eventually started winning pitch competitions. In December, we closed our first round of investment and the second in February.
How did you fund it, and how are you funding it going forward?
None of it was from family and friends. We raised $60,000 in pitch competitions and then got a big round from a celebrity. We’re having a PR launch in September, so I can’t really say any more about that.
Are there advantages/disadvantages to starting a business in your 20s?
There are obviously a bunch of advantages. People are willing to help college students a lot more. I wouldn’t have the same reception for this if I was 30 as I got when I was 20. Being a black founder was also a big help. On the disadvantages, I honestly don’t really know what I’m doing a lot of the time. Trying to understand how to build and run a business from the ground up is hard.
Does social responsibility play a role in your business?
We formed this whole company on social responsibility. Our goal was just to help as many students as possible build their credit. That developed into “let’s build this in a scalable way so that we can help more students.” That’s why the celebrity backed us, as well.
Do you feel that your business is tailored to the Los Angeles market?
One of the first pitch competitions we did was focused on L.A. startups. I think we’ve had a lot of success because we are in L.A. One of the first people that I helped build credit was an Angeleno named Samuel. He was trying to move to Michigan to be with his daughter but kept getting denied on rental applications due to his credit. We were able help him bring his credit up from around 400 to over 700 by adding in things he was already paying for, like rent.
Keep reading the 2020 edition of the 20 in Their 20s special report.