Venture capital rebuilds, rebuilds, and turns a profit as founders reunite for a new chapter

Possible Finance CEO Tony Huang describes the startup’s history as “a story of three chapters.” They can be summarized as a rocket launch, a survival test, and a return story.

These days, it also feels like a reunion.

The Seattle-based fintech startup, which offers small-dollar loans as an alternative to payday loans, reached $125 million in revenue last year and posted the first annual profit in its history, recovering from a difficult situation amid the pandemic that put its future in doubt.

After cutting more than a third of its workforce by 2022, the company is now back in expansion mode, with about 150 people worldwide, including 50 in Seattle. It is looking to double its office space near Pike Place Market to accommodate up to 100 people in the area.

At the same time, Possible is strengthening its leadership team with new hires. One of the latest additions is actually nothing new to the company: founder Prasad Mahendra, who left two years ago to join another startup, returned last month to help lead Possible’s AI initiatives.

We asked three of the company’s founders — Axon veterans Huang, Mahendra, and CTO Tyler Conant — to recap the company’s early days in the photo booth at the recent GeekWire Awards (above), where Huang was a finalist for CEO of the Year.

Some new additions to the leadership team:

• Meghan Frazer as chief people officer, a lawyer turned HR leader who previously served as the head of HR at the beginning of the Katerra structure.
• Craig Anderson, who joined Possible as its general counsel from Revolut after previously working at Klarna and Sezzle.
• Jon David as chief product officer, previously leading game franchises including Plants vs. Zombies and Bejeweled Blitz at EA and was CEO of Taunt, a Pioneer Square Labs company.
• Bobby McCarty, former VP of operations who left in 2021 and recently returned, as chief of staff.

Possible offers a technology-driven alternative to payday loans, offering loans of up to $500 through a mobile app with no credit check. Instead of relying on FICO scores, the company uses machine learning to analyze bank transaction history to assess risk.

Traditional payday lenders require borrowers to pay back the full amount and total funds on their next payday, and the payments are never reported to the credit bureaus, trapping many customers in a cycle of borrowing without a path to better credit.

The alternative allows borrowers to pay in smaller installments and report payments, giving customers a way to build their credit scores over time.

Founded in 2017, the company flew out of the gate quickly, growing to $44 million in revenue by the end of 2020. Then the epidemic hit the business hard. Revenue has stagnated at $46 million for two consecutive years, and the company laid off 35% of its workforce.

Huang said the apartment’s sprawl forced Possible to rebuild from the ground up. They have grown too fast and made the same mistakes as the original founders, he said, over-focusing on technology while underestimating the importance of credit risk management and regulatory compliance.

“We’re too focused on the technology, frankly, not enough on the fin,” Huang said. After that, he said, “we brought in experts who helped us make the kill piece even better.”

The broader market has also shifted in favor of Possible. During the years of low interest rates, venture capital poured into fintech startups, and Possible found itself competing for customers against well-funded rivals. When that era ended, many of their competitors folded or retreated.

Potentially, since it has already cut costs and fixed the basics, it is set to grow again.

“We actually got into the party earlier than everyone else,” Huang said.

Revenue is expected to rise to $58 million in 2023 and $79 million in 2024. In December, the company was operating at $125 million in annual revenue, and it has since crossed $130 million.

Possible has raised approximately $55 million in equity funding. Its first backers were Axon CEO Rick Smith and Andy Liu of Seattle-based Unlock Venture Partners. Recent investors include Union Square Ventures, Canvas Ventures, and Euclidean Capital, the family office of the late hedge fund pioneer Jim Simons.

Huang said the company is now investing in AI, to improve internal efficiency and improve its lending products, although he said he was not ready to share details about this. That’s why Mahendra came back, he said.

The company has returned to normal operations. It is possible to go completely remote during the pandemic, employing people in many countries. Huang said the company’s investors have told them it’s the most distributed culture they’ve seen.

But Huang said the company found that remote work required layers of process to keep people connected, which slowed the team down and made collaboration less efficient. As a result, Possible’s leaders took the investor’s comments less as a compliment and more as a sign that remote work has limits no one knows how to overcome.

“We know that this is not good enough, and we know that there is no one better than this,” Huang said, explaining the process of thinking about the long-term work.

The company now works in person three days a week in Seattle and flies remote employees twice a year to the company’s Possipalooza event. Two senior executives, Conant and longtime CFO Harsha Srinivas, also returned to Seattle to be part of the campaign.

Possible is currently No. 93 on the GeekWire 200, our ranking of the Pacific Northwest’s top privately held startups. It was recently named to the Forbes Fintech 50, an annual ranking of the top private fintech companies in the US, the only Seattle-area company to make the list.