A Springfield-based financial start-up business has secured more than $4.6 million in financing to support product development.
HUTN Group Inc., a unit of HUTN Inc., closed on the financing from JPMorgan Chase & Co., according to a news release from the company. HUTN Inc. is the holding company of EF Hutton Inc., a start-up financial firm that moved into downtown Springfield in 2016 in the former Credit Life Building.
Jeff Kursman, a HUTN spokesman, declined to provide further details about the transaction. The financing will be used to “support product development and marketing of new digital services by subsidiaries EF Hutton Inc., Vibrant Mobility Inc. and Megga Inc.,” the news release says.
The money also will be used for “general corporate purposes, and the redemption of existing, high-cost floating-rate debt.”
The new financing is due on Feb. 1, 2019, the news release says, and was guaranteed by major shareholders.
The financing will “add fuel to the execution of our marketing strategies, supporting customer development and user acquisition for the various products and platforms of our subsidiaries,” CEO Christopher Daniels said in the news release.
Last fall HUTN announced the November launch of meggalife, a collection of online applications that allows users to accrue points that can be deposited in a 401(k) account and redeemed for retirement income at age 68. A news release at the time encouraged users to visit meggalife’s website and pre-register for a chance to win cash.
The cash contest didn’t produce a winner, Kursman said.
A Springfield News-Sun review of the site this week showed many of the programs remain in development.
The site is still in the testing stages and meggalife hasn’t begun its official launch, Kursman said. Individuals who pre-registered received an initial email confirming pre-registration, he said.
“We have that list of people who registered, which is well into the thousands of people, and we have not sent any message to them saying, ‘Hey it’s time to come online,’” Kursman said.
Meggalife is on schedule to become fully functional, Kursman said, but he didn’t disclose when it’s expected to be fully function.
“This is the developmental process,” Kursman said. “When you’re developing a platform to the depth and breadth of what we are creating, it’s a process where it doesn’t launch all at once. It is not really all out there publicly yet.”
Meggalife hasn’t begun to solicit users or market the site, he said.
“The only thing we did back on Nov. 1 was we collected names of people who are interested in the concept from a pre-registration standpoint who we would notify when the public beta was available,” Kursman said.
The site will award points to users as they use its apps for tasks like searching the internet, listening to music or sharing messages, HUTN leaders said when they announced it. Meggalife will generate advertising revenue and deposit a portion into a trust overseen by independent third-party trustees, based on the number of points accrued. Meggalife users will be able to redeem those points at the age of 68. The points have no value until redemption.
It’s not uncommon for a start-up firm to solicit basic customer information before a site fully launches, said Grant Easterbrook. He has spent much of his career tracking financial tech companies. His start-up, Dream Forward, has developed artificial intelligence to walk customers through the process of starting and maintaining a 401(k) program.
New social media sites are often boom or bust, Easterbrook said. The meggalife site appears to be promoting several apps for users, he said, and one challenge it may face is that it can be difficult to excel at providing a variety of tools instead of focusing on one area of expertise. He said it will be interesting to see how the site attempts to build an ecosystem that can attract users to their products.
“Usually for early-stage start-ups, venture capitalists strongly encourage you to focus on one thing and do it really well,” Easterbrook said.
The company’s concept is not to compete with firms like Facebook and Google, Kursman said. Instead, meggalife will rely on users interested in the idea of using the company’s apps to accrue points that can eventually be redeemed for a retirement account.
“As a user whose information is ultimately supporting the attraction of advertisers whose revenue will be coming in, we want that revenue, a significant portion of it after expenses, to go back to you as a user,” Kursman said.
The Springfield News-Sun is a tenant in the EF Hutton Tower building.