The CEO of consumer lender Aura Financial has abruptly resigned from his post but remains on the board, trying to put together a financing package to keep the troubled company afloat.
James Gutierrez has chosen to step back from his day-to-day management duties to avoid potential conflicts of interest as he seeks to put together a financing package for the privately held company to participate in, according to Dean Florez, a member of the Aura board of directors.
Aura, which Gutierrez co-founded in 2012, offers installment loans to low-income immigrants.
The San Francisco-based company, which has borrowed more than $ 800 million over the past six years, has named Anne Myong as its interim CEO. Myong is a former Walmart executive who joined Aura earlier this year as its chief financial officer. Also promoted is Joe Martin, a former Indiegogo executive who joined Aura in January and has now been promoted to chief operating officer.
During an interview on Monday, Florez pointed out that the Aura pandemic has made access to finance difficult. He also noted that the economic crisis is having a major impact on the company’s customers, many of whom are migrant workers. “We are constantly seeing new challenges,” said Florez.
When asked about a possible sale of the company, Florez said he hoped Gutierrez-led funding efforts will be successful and the company can continue to operate as it has before.
Aura, formerly known as insict, In a 2017 financing round by the Mexican conglomerate Grupo Coppel. cited, raised $ 50 million. David Coppel, board member of Grupo Coppel, is currently on the board of Aura, as is Rick Heitzmann, managing director of the risk capital company FirstMark, which has also invested in Aura.
Aura offers loans ranging from $ 300 to $ 4,000 through a network of retail partners, including the DolEx money transmission chain. The company is certified as a community development financial institution, a government designation for companies that serve economically disadvantaged communities.
During the pandemic, Aura cut its customers’ payments to just $ 5 to keep them on track. “We’re really, really focused on remaining your solution and not becoming your problem,” said Florez.
He pointed out that the company’s default rate is currently around 3%, but it could rise significantly if Congress does not extend the extended unemployment benefits that expired on July 31.
“As we know, COVID-19 has created so much hardship in the nation, which disproportionately affects color communities,” Florez said Monday in a blog post published by the company. “Looking to the future, Aura will continue to support its borrowers and lead the fight for economic justice.”
This isn’t the first time Gutierrez has stepped down as CEO of a consumer lender he founded. In 2005 Gutierrez was a student at Stanford University’s Graduate School of Business when he founded Progreso Financiero, now known as Oportun.
His departure from Oportun in 2012 was bitterwhich led to a legal saga that dragged on for several years. In court records, Gutierrez Oportun and his venture capital industry supporters accused him of verbal abuse, racial discrimination, and promoting a hostile work environment.
Oportun hit back last year on allegations that Gutierrez embezzled company funds during his tenure as CEO and that his efforts to raise equity from outside sources were unsuccessful. Both sides of the litigation have denied the opposing party’s allegations.