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Jesse Chor grew up going with his grandfather and uncles to Montreal’s Chinatown to participate in their tanda collective. That’s an informal peer-to-peer savings and lending network within a community of family, neighbors and friends.

The concept, largely rooted in Mexican culture, has been around for centuries. Chor asked his grandfather why he used a tanda, and his response was that as an immigrant, he lacked access to traditional banking services, loans and credit. The tanda supported his grandfather and others in everything from unexpected expenses to starting their own businesses, Chor told TechCrunch.

The memories stuck with him as he went into the working world, and while at Yahoo (full disclosure: TechCrunch’s parent company), he was tasked with building a version of a tanda in 2018. However, what stood out to Chor was that he could have used something like that back when he was working at minimum-wage jobs.

“Not only that, I feel like everyone I worked with at those places could have, too,” Chor said. “It’s really the idea of helping the community sustain each other, empower each other and lift each other up while making money more accessible.”

Tailoring the approach to small businesses

Yahoo’s tanda product fizzled out after about six months, according to Chor, and he left Yahoo in 2019 to start his own company. Two companies later, he continued to think about the idea. When he learned of the widely known statistic that a majority of Americans would find it challenging to handle an unexpected $400 expense, he knew what his third company needed to be.

He started Tanda, the platform he is building that provides financial resilience and community ties through collective savings. Tanda uses the Rotating Savings and Credit Association model and goes a step further to offer the service to small businesses as a way to retain employees, reduce turnover and minimize burnout.

“We’re partnering with small business owners and they’re offering it as a benefit to employees,” Chor said. “There’s already a micro culture, if you will, so we’re able to link with each other better.”

How it works

In a traditional tanda, one person takes the lead in collecting the money and maintaining a ledger system for lending out that money. Chor’s approach is to leverage technology to take over that job.

Business customers advertise Tanda with employees, who scan a QR code and get access to the product for free. Rather than variable dollar amounts, they are fixed increments, and users can start at $100 and borrow up to $2,500.

Tanda then charges fees based on payout position within a circle of people. For example, those who are first or second to take a payout will be assessed a fee of around 10% or 8%. Those in the middle will be free or could get a reward, Chor said. He is also getting interest from employers who want to sponsor the product so the fees are covered.

“One of the secrets about tandas is, historically speaking, they have very low default rates, something like less than 2%,” Chor said. “The reason for that is really the community and camaraderie of adults and social accountability.”

Next steps

Tanda is still in its early stages, working with a small group of restaurants and managing a few hundred thousand dollars, as it builds up its waitlist.

Meanwhile, the company closed on $4.5 million in seed capital from Initialized Capital and Arc, Sequoia Capital’s pre-seed and seed-stage catalyst. Chor intends to deploy the funding into scaling the business and hiring additional employees.

“We want to help employers offer something more than just money, but how to build a community and trust within the team so they perform better,” Chor said. “For us, that’s really the next step — unlocking that ability within our product.”