How Fintech Soon Lets You Protect Your Cash Flow And Better Spend Investment Gains

Post-pandemic, many fintechs are seeking to help customers better spend, save, and invest in an era of heightened inflation.

Among them is Soon, a Salt Lake City-based fintech that just raised $500,000 and is participating in the Winter 2022 Y Combinator Cohort.

In light of the firm’s acceptance into Y Combinator, Benzinga spoke with the company's co-founder and CEO Chris Lovato.

Context: Founded in 2017, Soon offers users a smart debit account with automated investing and divesting. The idea for the platform came after the founders' successful careers in tech and other startups.

“We were all working professionals making good money,” Lovato said. “With money building up in our bank accounts, we thought we should be investing more.”

The inception of Soon came after the difficulty Lovato and his peers had investing and divesting objectively; time was scarce, and the process was often emotionally-driven.

“We thought on how we could spend more time living as opposed to thinking about finances,” the co-founder added. The group discussed ideas of how to realize and better employ capital gains.

After toying further with different ideas and coding, the Soon team came up with a proof of concept and ran backtests on their own finances.

“A lot of people will ride the wave up in markets, but forget about the wave down,” Lovato explained. Soon takes user deposits and invests them. As assets appreciate, Soon sells the moment users spend, reducing investment exposure so that “people lose less money in market loss events.”

The capital gains then help users reduce out-of-pocket expenses.

“If we can put a larger percentage of your cash flow to work – using money to make money – you can build wealth for yourself,” and not banks.

Core Offer: After opening an account, users deposit their paychecks into Soon.

The app, through a financial needs analysis, discovers the amount users are able to invest.

“Because assets are liquid and always available in Soon through the card, you’re able to invest a whole lot more than you normally would,” Lovato said.

Cash is invested in a diversified portfolio that is automatically managed. As users spend funds via their Soon debit card, the app will sell down positions that have appreciated most.

“Basically, imagine that with every deposit, 30% gets converted into this diversified portfolio of assets. As soon as specific positions reach a certain threshold, we will automatically select that position to be liquidated for transactions.”

This way, transactions at stores like Target Corporation TGT cost less as a result of a user’s appreciated gains in Microsoft Corporation MSFT or Tesla Inc TSLA stock.

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Implications: “The end result is a massive reduction of exposure” to expenses and market downside.

Additionally, in a conversation on tax implications, Lovato explained that Soon automatically keeps track of the taxes users are subjecting themselves in selling down appreciated gains.

Soon is exploring tax-loss harvesting as a dynamic “that can be injected directly into Soon’s algorithms,” also “if there’s an event that makes sense to offset taxes as opposed to taking a gain.”

Going Forward: In 2021, Soon raised a pre-seed round of about $1 million from local angel investors in Utah.

More recently, the company was accepted into Y Combinator, and raised an additional half-million from that organization.

“It’s harder to get in Y Combinator than it is Harvard or Stanford” as a student, Lovato noted with a chuckle. “That’s giving us good credibility that a product like ours needs.”

To further boost development, as well as navigate regulations and compliance processes, Soon is looking to raise a seed round.

“It’s going to cost quite a bit of money to get through that, and we expect final approval from the SEC and our banking partner to launch the product live to the general public in March.”

After launch, Soon will continue to build its product using funds it secures through its dual revenue model that taps into monthly subscription and service management fees.