A Pennsylvania company on Monday said it has closed a $1.75 million seed funding round as its community-based small business financing model expands nationwide.
The funding round for Pittsburgh-based Honeycomb Credit was anchored by the American Family Insurance Institute for Corporate and Social Impact, a venture capital firm under the umbrella of Madison-based American Family Insurance group, plus Innovation Works, K50 Ventures, The Urban Redevelopment Authority of Pittsburgh, Reinforced Ventures and Flight.vc.
Honeycomb, which launched in 2017, has connected small business owners with more than $3.5 million in loans crowdfunded by people who want to support local businesses, via over 100 investment crowdfunding campaigns in major cities and rural communities across 18 states. The average loan is about $40,000.
“While local businesses were working on the fly to adapt their business models to the pandemic, the modest funding they needed simply wasn’t available through traditional lending sources as banks and online lenders pulled back,” George Cook, Honeycomb CEO, said in a prepared statement. “We give these businesses a way to connect with community members who care deeply about the survival of their local businesses and want to ensure it through their investments.”
More than 57% of the businesses in Honeycomb’s campaigns are owned by women or minorities and 55% have been in low-to-moderate income communities.
“Honeycomb appeals to many of these businesses because the size of the loan they seek is often too small for traditional capital,” Cook said.
