Phaedra Ellis-Lamkins built Promise into a $520 million powerhouse by helping municipalities collect unpaid bills with text messages and zero-interest plans
Promise CEO Phaedra Ellis-Lamkins
Image: Cody Pickens for Forbes
April Bingham, director of Richmond, Virginia’s Department of Public Utilities, was worried. During the pandemic, as consumers struggled to pay their utility bills, the city’s unpaid accounts had soared to $41 million by November 2022, up nearly threefold from roughly $15 million in February 2020. The steep increase raised questions about how the US city would fix its aging infrastructure, including maintaining a century-old water main. Collecting on those unpaid bills was vital: They added up to 13 percent of the city-owned utility’s annual billing.
In February 2023, Richmond turned to Promise, a software startup based in Fairfield, California, that manages payment plans for state and local governments and that had already helped the city distribute federal aid. The result: While bills 90 days past due have continued to rise, 11,000 people have signed up for a payment plan, and 93 percent are making payments on time, thanks to Promise’s consumer-friendly app, zero-interest plans and ability to pay by credit card, Venmo or just about any other method.
“When we had in-house payment plans, [customers] would make one payment to stop the disconnection and then break the payment plan and start the cycle over again,” Bingham says. “Promise allowed people to feel human again, to take control of their finances and to be secure in making a decision about what they can and cannot afford.”
For Promise co-founder and CEO Phaedra Ellis-Lamkins, treating with respect people who are struggling financially is what it’s all about. A 48-year-old Black woman who grew up on welfare and worked as a labour organiser in her 20s, Ellis-Lamkins also did stints as a nonprofit executive and pop star Prince’s business advisor before she turned her focus to helping folks pay their bills. But Promiseis not a charity or a nonprofit. Instead, Ellis-Lamkins is out to prove that a fast-growing, venture-backed company can be successful without being exploitative. “We’re all trying to use capitalism to do things we believe in,” Ellis-Lamkins says.
Promise’s focus on state and municipal governments and utilities, for which it provides dashboards with real-time updates about payments and relief programs, differentiates it from the larger group of fintech startups that help consumers pay their bills. Most of those firms simply offer hard-pressed customers high-interest-rate loans, which is the last thing they need. Promise makes money from the other side of the equation. It’s the governments and utilities that pay, not the customers: Municipalities typically pay a minimum of $1 million per year; states up to $10 million. But it’s a good deal for them too. After signing up with Promise, recoveries from delinquent accounts can soar to 85 percent or more. “For the municipalities, this was found money, money they never thought they’d get,” says investor Mitch Kapor. “It created this huge momentum of not just cities but entire states signing up.”