Every year, more than 3 million U.S. college students drop out due to small but time-critical financial crises. A technology platform being developed by a Brooklyn, N.Y.-based company called Edquity seeks to help college students gain access to financial emergency resources as well as get ongoing cash flow management guidance to keep them on track. 

An initiative launched by Principal Financial Group is awarding startups like Edquity with capital to develop promising new products aimed at boosting financial security for young adults, particularly those with low or moderate income who face daunting challenges getting started financially. 

Last week, a panel of financial experts assembled by Principal awarded Edquity a $150,000 grant during a live pitch competition in which it distributed $350,000 from the Principal Foundation to four startups from around the country.  

Edquity and another of the startups, MyPath, each received $150,000 top prizes, while the remainder each got $25,000. The initiative, which Principal launched in partnership with the Center for Financial Services Innovation, is part of Principal’s corporate goal of reaching 50,000 youths in 10 locations over the next five years to increase their financial security.  

Inside the auditorium at Principal’s headquarters, high-energy music blasted out of speakers before the start of the event, which was coordinated by a team of Principal employees sporting purple T-shirts emblazoned with the slogan “Be innovative, be creative, get results.” 

“I think one of the biggest keys to innovation is learning and discovery,” said Mandi McReynolds, director of the Principal Foundation and community relations director. “When we think about the idea to innovate, create and get results, this was a first-time shot at seeing what could be possible. Maybe the next round will be completely different, or it may be similar. But we’ve got to keep trying new things.” 

The winners were chosen by a seven-person panel of financial experts assembled by Principal, among them Mary Sellers, U.S. president of United Way Worldwide; Lynnette Khalfani-Cox, CEO of the Money Coach; and Jennifer Tescher, CEO of the Center for Financial Services Innovation. Also on the panel were Gary Scholten, Principal’s chief information officer; Mark Ernst, managing partner of Bellevue Capital, a private investment management firm; Primal Shah, president and founder of crowdfunding website Kiva; and Richard Bussey, publisher of Inc. Media. 

Additionally, to provide live feedback to the entrepreneurs, Principal invited 130 high school student leaders with Iowa Jobs for America’s Graduates (iJAG) to hear the pitches. The students were the majority voice in the audience vote that selected Edquity to an additional award a $10,000 Audience Favorite Award. 

“The landscape of philanthropy is changing,” McReynolds said. “It used to always be that you had nonprofits or [nongovernmental organizations] doing the work in the public sector for public good. Now what we’re finding is that there are more B-corps, social entrepreneurs and social enterprises that are being developed. So we wanted to partner and say, ‘As we go after this big aggressive goal … who can we partner with that’s doing great work that may or may not be a nonprofit, and how do we get these great ideas out in the world?’ ”

Principal sought out the Chicago-based Center for Financial Services Innovation because of its track record in working with innovators to help build solutions around promoting financial health, CFSI’s Jennifer Tescher said. 

“So together we came up with the idea of engaging with youth ages 15 to 24 and seeking out innovators for building solutions to challenges that young people have in earning more and saving more,” she said. “The program is a great example of Principal really putting its money where its mouth is and using its philanthropic and civic capital to help their next generation of customers succeed financially.” 

Coincidentally, iJAG had a large group of student leaders visiting Des Moines for a conference, so it was an easy decision to bring 130 students in to provide a youth perspective on each project. 

“It’s so cool because these are the kids who would use these products,” said Laurie Phelan, president and CEO of iJAG. “They voted for the ones that connected with them, and they were so excited because [the winners] were the ones they voted for. It was all related to how accessible are these resources, how flexible are these resources and how well was the program put together that makes it feel like it would be true to its mission.” 

Patience Grant, a Roosevelt High School senior and president of iJAG at her school, said that Edquity’s approach of providing a broad array of financial resources for young adults resonated the most with her. “Whatever resources you needed, he provided, and that really caught my attention. … He talked about things that are bigger than college.” 

CFSI helped Principal design the process by which a pool of potential entrepreneurs was identified and the winners selected. “We’ll be working closely with each of the winners to make sure they have the resources they need to be successful,” Tescher said. “It’s hard being an early-stage company.”  

Tescher said she believes each of the companies has the potential to grow to reach clients nationally. 

“All of them are working in multiple places around the country already, with only one exception, and that’s just an earlier project,” she said. “I absolutely believe all of these have the potential to scale, either directly, or in the case of MyPath by making their tools and training available to others. 

“It’s worth pointing out that two of the winners are for-profits, and two are nonprofits,” Tescher added. “I think it’s important to recognize that innovation can come from anywhere and it can take lots of different forms. The one thing they all have in common is engaging deeply with the students they’re trying to serve to meet their needs.”

The winning companies: 
Edquity — Offers a suite of technology platforms for low-income students, a one-stop shop to support students through every financial decision on the road to college graduation. Project partners include LaGuardia Community College, Nevada State College and the University of Las Vegas-Nevada. 

MyPath — Based in San Francisco, MyPath is a national nonprofit that powers youth potential and seeds economic mobility. The organization plans to provide young people in Seattle and San Jose with a path to financial success through a combination of youth-friendly financial products and an interactive, online platform called MyPath Money that includes in-person and online financial education resources. 

MoneyThink — A 501(c)(3) organization, MoneyThink’s goal is to empower low- to moderate-income youth to achieve college success through coaching and technology. The organization plans to build a web-based tool to help high school seniors understand their postsecondary options, by assessing their likelihood of acceptance at colleges across the United States. It would initially work with high school seniors in Chicago, Los Angeles and the San Francisco Bay Area. 

A.M. Money — A.M. Money, based in Chicago, seeks to develop a student loan repayment program that automatically takes a percentage of the borrower’s income as payment. The amount a borrower repays would shift over time based on changes in income and other financial considerations.