On November 12, 2013, the Yale School of Management Entrepreneurship and Net Impact Clubs welcomed CommonBond Co-Founder and CFO Michael Taormina to speak about his experiences starting the peer-to-peer “platform that connects MBA student borrowers with financing.” Tom Melton (SOM Class of 2014), who interned at CommonBond’s Brooklyn office in the summer of 2013 in investor relations, introduced Mike as the company’s “eternal optimist.”
Mike began his talk with a brief introduction of himself and of his start-up. Though he previously worked as a trader at JPMorgan, Mike found that he was most passionate about his “professional extracurriculars,” which were philanthropic activities with organizations like the Juvenile Diabetes Research Foundation.
When he began pursuing an MBA at the Wharton School, he set his sights on starting a company with a positive social impact. Mike described the student loan industry as a “$1 trillion problem,” in which both students and investors receive poor value. Motivated to solve this issue and to introduce a one-for-one philanthropic model to education, Mike and classmate David Klein dropped out of Wharton to focus on CommonBond.
After a tough summer trying to raise money, the team eventually gained attention through some creative initiatives, including a wildly successful gala to raise funds for their non-profit venture. They were able to leverage this publicity to raise $2.5 million from Wharton alumni to refine and launch their business model.
Today, with 11 full-time staff and a recently completed $100 million round of financing, CommonBond is looking to expand by hiring “good and smart people with the strategic chops to think at a high level, but the executional chops to get things done.”
During the Q&A session, Jeff Woodward (SOM/FES ’14) asked for advice on how MBAs could convince traditionally MBA-unfriendly startups to hire them. “You need to show your value-add,” responded Mike. “Startups have risk, and you need to help take this out.”
Other questions revolved around the rates that CommonBond investors yield (currently around 5%), problems with government loans (they’re completely undifferentiated—everybody gets the same rate), and how to find the right investors—both for startups and for CommonBond’s students (the key is finding values that link both parties). Mike also spoke about his surprise over how disconnected various MBA programs are from each other, and the community events CommonBond is organizing to try to address this issue.
The event concluded with a special announcement. CommonBond is now partnering with the education nonprofit organization Pencils of Promise to expand their social impact and to help more students. According to CommonBond’s website, for every MBA degree fully funded on CommonBond’s platform, the company will fund the education of a Pencils of Promise student for a full year, including tuition, supplies, school uniforms, and other costs such as transportation.