Blocked From His Banking Licenses, a Former Athlete Built a $700,000-a-Month Detour
Unable to raise money or get approval, he collected 50 small checks and took another path to the same goal.
mondaymorning.substack.com · Screening for ManiacsHe had drawn up the banking product he wanted to build. Then he ran into a block he could not get past.
The founder, a former professional athlete turned startup founder, could not get the licenses he needed. The permissions, known as Banking as a Service licenses, let a young company offer checking accounts and other bank-like services through a regulated partner without becoming a bank itself. Without them, his plan was stuck.
A block like this could end a young company. An investor who screens founders watches how they handle this kind of block, since building a company means solving problems for a decade or more. In the investor's view, optimism means treating problems as obstacles rather than roadblocks, and seeing every challenge as "an opportunity to solve something that someone else couldn’t/didn’t/won’t," as the investor put it.
He was unable to raise money, so he gathered 50 SAFEs, small early investments that convert into shares later.
Then he changed the route without changing the destination. He turned to card-linked offers, discounts and cash back that go to shoppers automatically when they pay with a card they have enrolled. It was not the bank he had sketched out. It was, in the investor's phrase, "another path to the same outcome," a way to keep the business moving and bringing in revenue while the banking idea waited.
To look for that ability, the investor asks founders what they would do if a new law suddenly made their product illegal. He says the specific answer matters less than the enthusiasm and creativity a founder shows in finding another way around.
The detour now brings in 700,000 dollars in monthly revenue. With that momentum he is now at work on the banking product he first envisioned.
Questions people ask
What is a SAFE and why would a founder collect 50 of them?
A SAFE is a Simple Agreement for Future Equity, a short contract where an investor gives money now and gets shares later, usually at a discount. Collecting dozens suggests many small believers rather than one lead investor, which can keep a company alive when a big round will not come together. The tradeoff is more paperwork and more people to update.
How do card-linked offers make money?
A shopper enrolls a credit or debit card, then earns cash back or discounts when buying from participating merchants. The offer company tracks the purchase through the card network and takes a cut from the merchant for driving the sale. For a would-be bank, it is also a way to learn spending habits and build merchant ties.
Why would a banking startup need someone else's license?
Becoming a chartered bank takes years, large capital reserves, and heavy oversight. Many startups instead rent access from a licensed bank, which handles compliance and holds the deposits while the startup builds the app and customer experience. If the partner says no, the startup must find another partner or another business to run first.