Friday, July 19, 2024

Daylight, the LGBTQ+ neobank, calls it quits

Daylight, an LGBTQ+ banking platform, is shutting down. Its operations will cease on June 30, according to embattled co-founder and CEO Rob Curtis. 

The announcement comes months after NY Magazine published an explosive feature on the neobank. The article honed in on Daylight, whose seed and Series A fundraises TechCrunch had covered here and here, respectively. NY Mag’s piece detailed a lawsuit brought on by three former employees as well as alleged fabrications and inappropriate behavior on the part of Curtis. 

In a blog published today, Curtis said he felt like “now is the right time to exit this market” and told customers that their “money is safe and will be fully accessible for transfer through 30 June.” 

He added: “Daylight had a great run paving the way for US LGBTQ+ customers — we opened thousands of trans-inclusive debit accounts, supported thousands of prospective LGBTQ+ parents’ plans for their families. Ultimately, though, we couldn’t provide these services in a way that covered our costs — this is likely a job for big banks and I hope they pick up the torch and carry forward our legacy.”

Founded in 2020, Daylight raised a total of $20 million in funding. Anthemis Group led its $15 million Series A in 2022. Other backers include Kapor Capital, Precursor Capital, Clocktower, Financial Venture Studio and Citi.

Soon after covering the shocking allegations, the company reached out to TechCrunch with a statement from Curtis, who struck back at former employees. Essentially, Curtis said the company “regretted” that “some former employees felt disappointed” that the company “would not go beyond the scope” of its mission and invest its “resources in addressing systemic, societal issues affecting LGBTQ+ people.” He added: “We’re equally sad that we could not meet their personal expectations of start-up culture and continue to wish them the best in the future.”

The former employees alleged age and wage discrimination, whistleblower retaliation and fraud. For example, Terrance Knox — who is Black — claimed to have made $85,000 less than his white peers. The lawsuit also alleges that Curtis “made up” a projection that Daylight would process $500 million in transactions by the end of 2023.

The CEO told TechCrunch that the former employees’ claims were “fabricated,” adding: “We disagree wholeheartedly with their negative characterization of our business, and Daylight is fully prepared to address these concerns in court.” 

At the time of its seed raise, the company said its products were designed to promote financial equality and inclusion for the estimated 30-million-plus Americans who identify as LGBTQ+. The startup also planned to build out a LGBTQ+ business marketplace and a platform that offered discounts and rewards when members shop at merchants whose actions support the queer community.

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Daylight, the LGBTQ+ neobank, calls it quits by Mary Ann Azevedo originally published on TechCrunch

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