CapWay, a Y Combinator-backed fintech that sought to bring financial services to those in so-called banking deserts, has been shut down, according to its founder Sheena Allen. 

Allen wrote about it on LinkedIn and confirmed to TechCrunch.

“I am proud of the work we were able to accomplish, but honestly disappointed that we couldn’t complete the mission,” she wrote. “I feel strongly that there is still much work to be done in the financial inclusion space, so it won’t be the last you hear of me in regard to fighting for economic equality.” 

Allen told TechCrunch the company started to wind down last year and waited this long to announce after a possible acquisition fell through. 

Banking deserts are people in communities, often rural, that have no nearby physical bank branch to obtain a checking account. The term is also extended to people who have difficulty going to a bank, such as lower-income, older, or disabled individuals. 

Allen (pictured above) launched CapWay in 2016 after realizing the impact that not having a bank account has on some communities, such as depending on high-interest payday loans or high-fee cash-checking services, as CNN reported. 

CapWay’s company planned to address this population by teaching financial literacy and offering online banking solutions. PitchBook shows the company raised just under $800,000 in funding from investors, including Backstage Capital, Fearless Fund, and Khosla Ventures. It was part of YC’s Summer 2020 cohort, as TechCrunch reported at the time.

Allen told us there were a few reasons why she shut the company down. She cited the fact that the fintech industry took a huge reputational hit after the hacking of Evolve Bank & Trust and the collapse of Synapse, the latter of which saw hundreds of millions of dollars of consumer funds frozen. 

After that, many banks that looked to partner with fintechs required the fintech to have a certain amount of money in the bank. 

“It takes money to play in a highly regulated industry because you can’t control the changes,” Allen said. “You just have to have enough money and time to survive the adjustments.” 

CapWay had to find a new banking partner during this time but needed to raise more money to meet potential partners’ money-on-hand requirements, which it struggled to do. Some investors turned her away by citing that the company lagged too far behind its competitor.

But she also pointed out the challenge that has pained many Black founders this past year. 

“Fundraising itself was down for everyone, but it was and is extremely down for Black founders,” she said. Crunchbase found that Black founders raised only 0.3% of the $79 billion that went to U.S.-based startups in the first half of the year. 

Allen often felt like she was in competition with other Black-founded fintechs for that smaller piece of pie. She wrote in her post that some investors turned her down by telling her that they had already invested in another Black-founded debit card fintech.

“Some investors like to group all Black fintech companies into one box, [even] when we don’t all do or operate the same or have the same target audience,” she told us. “It’s unfortunate, but that was a factor in us being told no a few times.” 

Allen thanked her team and some of her investors in her LinkedIn post, pointing out that there were investors who “still called and not only checked on the business and me as a founder but me as a human.” She also thanked her fellow founders who “listened to me rant and called to simply check on my mental state through this process.” 

But one failed startup — which is almost a badge of honor in the startup world — has not deterred her from her love of building companies. She still wants to work in the financial inclusion space and is pondering her next startup idea. She’s currently looking at some potential entrepreneur-in-resident opportunities at venture firms. 

“It’s a rough time to wind down your company,” she said. “But I’ve learned there’s beauty in the journey even on cloudy days when things seem dark.”