Founder of consumer lender Aura steps down as CEO

Register now

The CEO of the consumer lender Aura Financial has abruptly resigned from his post but remains on its board of directors, and is trying to arrange a financing package to help keep the struggling company afloat.

James Gutierrez opted to step down from day-to-day management duties to avoid any potential conflicts of interest, as he seeks to put together a financing package for the privately held company in which he can be a participant, according to Dean Florez, a member of Aura’s board.

Aura, which Gutierrez co-founded in 2012, offers installment loans to low-income immigrants.

James Gutierrez has been CEO at Aura since co-founding the firm in 2012.
James Gutierrez has been CEO at Aura since co-founding the firm in 2012.

The San Francisco company, which has made more than $800 million in loans over the last six years, named Anne Myong as its interim CEO. Myong is a former Walmart executive who joined Aura as chief financial officer earlier this year. Also getting a promotion is Joe Martin, a former Indiegogo executive who joined Aura in January and has now been elevated to chief operating officer.

During an interview Monday, Florez indicated that the pandemic has made it more difficult for Aura to access financing. He also noted that the economic crisis has had a big impact on the company’s customers, many of whom are migrant workers. “We do see continual challenges moving forward,” Florez said.

When asked about a potential sale of the company, Florez said that he is hoping that the financing effort led by Gutierrez will be successful, and that the firm can continue to operate as it has been doing.

Aura, formerly known as Insikt, raised $50 million in a 2017 funding round that was led by the Mexican conglomerate Grupo Coppel. David Coppel, a board member at Grupo Coppel, is currently a member of Aura’s board, as is Rick Heitzmann, a managing director at the venture capital firm FirstMark, which has also invested in Aura.

Aura offers loans of $300 to $4,000 through a network of retail partners, including the money transmission chain DolEx. The company is certified as a community development financial institution, a government designation for firms that serve economically disadvantaged communities.

During the pandemic, Aura has lowered its customers’ payments to as low as $5 in an effort to keep them on track. “We’re really, really focused on just staying their solution, not becoming their problem,” Florez said.

He indicated that while the company’s delinquency rate is currently around 3%, it could rise substantially if Congress doesn’t renew the expanded unemployment benefits that expired on July 31.

“As we know, COVID-19 has created so much hardship in the nation, disproportionately affecting communities of color,” Florez said Monday in a blog post published by the company. “As we look to the future, Aura will continue to support its borrowers and lead the way in the fight for economic justice.”

This is not the first time that Gutierrez has departed as the CEO of a consumer lender that he founded. Back in 2005, Gutierrez was a student at Stanford University’s Graduate School of Business when he started Progreso Financiero, which is now known as Oportun.

His departure from Oportun in 2012 was acrimonious, resulting in a legal saga that dragged on for several years. In court papers, Gutierrez accused Oportun and its venture-capital industry backers of subjecting him to verbal abuse, discriminating against him on the basis of race and fostering a hostile work environment.

Oportun last year hit back with allegations that Gutierrez misappropriated corporate funds during his tenure as CEO and was unsuccessful in his efforts to raise equity funding from external sources. Both sides in the litigation have denied the allegations made by the opposing party.

For reprint and licensing requests for this article, click here.
Consumer lending Coronavirus
MORE FROM AMERICAN BANKER