Micro-businesses — event organizers, photographers, personal trainers or a repair person — often don’t have protection in the (common) event that their client cancels last minute. On the other side of the transaction, these types of service providers also often have to chase clients down to get paid after they’ve completed the task.
Risk is also high on the client side, as there’s no guarantee that services will be completed after an initial upfront payment.
Caleb Gilbert grew a tutoring business while attending Kennesaw State University. “I was… getting a lot of business, but [students] would often not show up or cancel at the last minute. It would leave me in a bad financial bind,” says Gilbert.
Due to the uncertainly, he decided to go back to his old bartending gig despite the bad hours. He started thinking about why there wasn’t a way to protect service providers and customers engaging in one-time transactions.
He partnered up with recent Georgia Tech graduate Payton Jonson to co-found startup Esgro.
“Instead of sending the money directly through a cash app or Venmo and have it available immediately, you place it and hold it until certain agreed upon conditions have been met,” says Gilbert.
After conducting customer discovery with gig workers, Gilbert and Jonson realized how big the market for this is.
They found that the average business can lose more than $1,500 a month due to cancellations.
The app solves two main pain points service providers encounter often — last-minute cancellations and ensuring on-time payments.
Upon agreeing on a service and fee, the service provider sends a payment request to the client. Once the client completes the payment request, the money is stored in Esgro’s secure blockchain server in escrow until the work is completed. Terms can also be added to the request, like hours, tasks to be completed, etc.
Similar to a missed appointment at the doctor’s office, the service provider is able to set an optional retainer. In this case, the retainer, similar to a cancellation fee, is withdrawn from the payment and the rest of the money is returned to the client.
Once the gig is completed and both parties indicate their satisfaction with one click, the money will be transferred to the service provider and the transaction is complete.
Gilbert says that they do see Square as one of their main competitors, but they stand out due to the escrow feature built on a secure blockchain network. They have a transaction fee revenue model and once they publicly launch, will also offer a subscription option for businesses that use the app often.
The Atlanta-based team was recently accepted into the Queen City Fintech accelerator in Charlotte, North Carolina. Their public beta is currently open on their site and will fully launch in May with 50 businesses already signed on.
While they’re currently bootstrapped other than the accelerator program funding ($40,000), they will kickstart fundraising this summer to fund marketing for customer acquisition and product development.
