Founded in 2017, UK-based Pave is building the proper path to good credit. Through a tech-first approach, the startup helps customers improve their credit score and history with bill monitoring and credit building.
As the cost-of-living crisis and effects of the looming recession are adversely impacting consumers, financial inclusion products like Pave are needed more than ever. People are increasingly looking for financial help to navigate these turbulent waters, and fintech innovation is leading the way forward. As a testament to its value as a fintech-for-good, Pave already has almost 500k registered users and is making an impact in stopping the financial inequality that is spreading across the UK and Europe.
Sho Sugihara is the founder & CEO of Pave. Born in Japan, Sho has had experience working with NGOs around the world and is driven by the desire to build a world free of financial inequality, making the space more inclusive and accessible.
We caught up with Sho to learn more about Pave’s founding story, navigating a pivot and different challenges, as well as delving into financial inclusion and how fintechs can be impact-driven.
How did your personal and professional experiences prior to founding Pave shape you to be the founder that you are today?
I grew up in Japan, where my first job was delivering magazines to homeless vendors in Osaka city for The Big Issue. That was the moment I started thinking about social finance. At 18, I went to Brazil to work for an entrepreneur who had set up an NGO providing financial and educational support to disadvantaged communities in São Paulo. I saw the impact that one person could have on the lives of many and was deeply inspired by that. From that point, I wanted to build my own business with a focus on solving inequality.
I worked at McKinsey for three years after university to save up cash to start my own venture. Eventually, I co-founded Pave out of Entrepreneur First in 2017 with Chris Butcher.
The desire to solve systemic inefficiencies and eliminate unjust financial exclusion continues to be my biggest motivation to this day.
You met your co-founder, Chris, at Entrepreneur First. Why do you think it’s important to have a co-founder when starting a company?
As exciting as it sounds, founding your own company can be incredibly intense and daunting. It’s nice to have someone to share the journey with, who can give you moral support throughout – like Chris did for me.
More practically, Chris had expertise in areas that I do not, which helped round out the skill sets within the company. It’s particularly important to build self-awareness around both your strengths and weaknesses and co-found with someone who can offset these.
What were you looking for in a co-founder? What advice do you have for someone looking for a co-founder?
You need to have a co-founder that you get on with at a personal level and respect, who has skills they bring to the table. If you often have contrasting opinions on things, that can be challenging but productive too.
It really does mirror a romantic relationship in many ways! You will go through inevitable ups and downs and have mounting frustrations over the small things they do which can sometimes explode. But if the foundations are built on personal care and respect, all of this can be worked out with patience and lots of communication. If you don’t have those foundations, it’s much harder to want to get through these challenges.
On the flip side, if you get along too well and agree on everything all the time, you probably aren’t addressing the toughest issues or lack diversity in thought which could lead to bad business outcomes.
You really need someone you are willing to face all the difficulties with head on, which is why I think you have to like and respect the person so you can get through it all.
Could you tell us more about the journey and thought process behind the pivot and rebrand from Portify to Pave?
We started Portify in 2017 to help gig economy workers better manage their finances with Open Banking and improve their financial well-being.
During the pandemic in 2020, we did over one hundred in-depth customer interviews to understand what it meant for them. We learned that for the first time, a lot of our customers had managed to free up cash flow because of lockdown and furlough payments. There was a surge in demand for credit building services as people started considering long-term financial aspirations like a mortgage. We rapidly shifted our attention towards providing credit-building products, and that took off. It required tough decisions like axing some of the lucrative contracts we had at the time to re-focus our resources, but it worked out.
As cliché as it sounds, I would say the key to successful pivots is speaking to your customers and understanding their evolving needs while committing to bold decisions quickly even if painful.
Earlier this year, we went through a rebrand from Portify to Pave to finalise our commitment to this new direction and prove there’s a better way to build credit than getting into more debt. By offering tools, education and support, we offer the proper path to good credit.
Could you share what are some of the hardest challenges you faced with scaling Pave?
There were numerous challenges around scaling the business, but the most challenging that comes to mind were around changes of direction, and bringing the team along with those decisions when you have minimal proof points that things are going to work out. That requires empathy, conviction, open communication, and a lot of legwork from the team.
The other challenge I’ve found is building a productive team. In particular, leadership team building can be challenging. Given our social mission we don’t struggle hiring good people, but making sure they are a good fit, delegating tasks effectively, and building a productive dynamic within that team requires a lot of trust building and discipline.
Finally, as a founder often it’s difficult to fully delegate work to the team. Everything feels important, and it’s hard to let go of things, especially if it’s your first business. But to create a productive and motivated team it’s key to do so, and this is a challenge I’m always trying to get better at.
As Pave has grown, how has your role as the founder/CEO evolved and how have you navigated that?
At the very early stages (sub 10 employees), you have to do absolutely everything and be like a swiss army knife. I did everything from running payroll, negotiating contracts, issuing employee stock options, doing our accounts, to running Facebook ads. Frankly, I overdid it!
One of the best things we did as a company was to hire an executive assistant after our second funding round when we were a team of closer to 20. This changed my life as they took all the routine work off my plate and helped me focus on the bigger picture, and preserve energy to make key decisions. I wish we’d done this much earlier, I don’t think it’s at all unreasonable for founders to hire someone like this even at the sub-10 people stage and would recommend it.
Now, my role is much more focused on strategy, communication and motivating the team. I spend a lot more time with our board and leadership team, making sure we’re aligned and working towards a common vision. I still occasionally step in to execute the groundwork if we’re short-staffed, but I try not to.
Strangely, this has meant that I have more free time as the company has grown, and this frequently comes with a sense of guilt! But I think that’s natural. Overall, the best thing for the company as it frees up my time to anticipate the key moves we need to make and reflect on the bigger picture.
What is the current status of financial inclusion in the UK today?
I think there are two main issues that stand in the way of broader financial inclusion in the UK today.
The first is at an overall economic and social level. Since the 1970s, we’ve seen wages grow at a slower rate compared to GDP. This means that wealth has concentrated in the hands of fewer people, growing income and therefore financial inequality. We’re not doing enough to address this macro issue as a society right now, which concerns me.
Secondly, many of the core practices we carry out in the consumer credit sector remain inefficient, resulting in a large segment of consumers losing access to fair financial products, causing further inequality.
One example that comes to mind in the consumer credit sector is how we do credit checks. The data we use today for credit assessments is incomplete. Most companies carry out credit checks looking at your credit file to decide whether to give you credit. The problem is that 1 in 5 people say there are errors on their credit files, and around 10 million people in the UK have said they’ve found errors. This means that we’re not making the best decisions because we’re using incomplete data, and that can cause unfair exclusion. Technology like Open Banking could help improve the situation, but we need to do a lot more to make it mainstream adopted.
There are more inefficiencies that I can think of, but these, coupled with widening inequality at the societal level are what I believe leads to 1 in 5 Brits saying they feel locked out of the financial system – that’s close to 11 million people. So, when it comes to financial inclusion in the UK, I think there’s a lot more to be done.
What are some “fintech for good” startups that you are excited about?
I’m a big fan of Nubank. They started out in Brazil and provided access to core banking services and credit to millions of people. Having lived there and worked with people who were excluded from the financial system, I know they solve a real problem with respect to inequality, so I’m excited about the impact they are having.
I also think Goldfinch is up to interesting things. I’m aware there is a crypto gloom phase going on, but I think their business model remains smart, and their vision for decentralised off-chain lending has the potential to massively reduce the cost of borrowing for millions of underserved people in developing countries.
What do the next few years look like for fintechs working on improving financial inclusion?
It’s more important than ever that we focus on financial inclusion as fintechs.
The cost of borrowing is starting to rise in tandem with the cost of living. More and more consumers are going to need fair financial products to get through the next few years, and then rebuild their finances in the years after.
We must come together as a sector and bring products to market that will support them, even if that comes at a risk to businesses. I’d love to see more founders entering this sector, and I’m always open to conversations to explore ideas – feel free to DM me on Linkedin!
Tell us more about what’s next for Pave?
As mentioned, more and more people in the UK are resorting to credit products to cope with the current income shock and cost of living crisis. We will continue to improve our app to support our B2C customers in upkeeping their credit health.
At the same time, we are also launching B2B credit analytics services with our platform, Fuse. Over the past year, multiple fintechs approached us looking to get support on credit analytics and lending. Our benchmarking and research indicated our analytics capabilities were top-notch compared to what was out there.
Fuse will bring businesses an all-in-one platform for assessing customer cash flow, affordability and credit worthiness to help them get better lending products to market more efficiently. We think this is a key step to take at a critical time to widen the impact we can have and achieve our mission of bringing millions more people into a fair financial system.
