How a Mother and Daughter Started a Company to Help Former Inmates

  • Teresa Hodge and her daughter Laurin Leonard are the cofounders of background-check platform R3 Score.
  • Their firm goals to higher contextualize individuals dwelling with an arrest or conviction data.
  • In September 2020, R3 Score went by means of a reverse merger with Global Boatworks Holdings, Inc.
  • See extra tales on Insider’s enterprise web page.

A background examine and credit score scores are required for a lot of the issues we wish and want in life — a job, a home, a automobile, a mortgage.

However, a background examine can current a barrier for over 70 million Americans who’ve a legal report and are in search of a contemporary begin.

The uncertainty individuals who’ve been in jail face when making an attempt to begin their second likelihood on the precise foot loomed over Teresa Hodge and her daughter Laurin Leonard. Aiming to clear up the issue, the mother-daughter group developed R3 Score, a mannequin for overhauling how companies and monetary establishments consider candidates.

“We produce two products, a basic score and an advanced score, both of which better contextualize people living with the arrest or conviction records,” Leonard, 36, informed Insider.

A normal background examine makes use of government-affiliated databases to search for legal justice-related information hooked up to a particular person’s figuring out info. One of the issues that makes R3 Score totally different is that its two-step course of contains a 15-minute interview that enables the group to get further information instantly from the particular person being assessed. “From customer interviews, we have learned that the bias decision-makers have against people with records and consumers with thin credit files is that they are inherently riskier because they are less stable,” Leonard stated.

Most individuals, she added, are measured towards a very static profile when it comes to how we every carry out in life, and this profile is commonly male, white, college-educated, and a white-collar skilled. “This means people who don’t fit that profile are not even properly assessed for riskiness because not fitting that profile doesn’t make you risky; it just makes you different,” she stated. R3 Score is ready to generate various demographic profiles and measure the indications of how individuals are shifting towards stability for that profile sort.

R3 Score’s clientele base consists of human-resources departments assessing job seekers’ backgrounds and group improvement monetary establishments assessing entrepreneurs with data. “What we know and what the research has shown is that by having a criminal record, typically a person can expect a 40 to 69 point drop in their credit score,” Leonard stated.

“We are looking for holistic factors that can paint a better picture of who a person was, who they are today, and help to look at the dynamic choices they’re making,” she added.

Leonard and Hodge had been impressed by their private expertise with the justice system to begin R3 Score. They shared with Insider how they received the corporate off the bottom.

Imprisonment turns into a basis for enterprise success

From 2006 to 2011, Hodge served a 70-month jail sentence for mail fraud, together with three years of probation. 

During that point, she realized how difficult it was for the ladies she was in jail with to return to society.

“I sat in prison knowing that if I could just survive being in prison, that I had taken enough good skill sets, and if I could personally live past my own shame of going to prison, that I could come back and get back on my feet,” Hodge stated.

She added that she was fortunate to have Leonard as a assist system. “Most people who go to prison don’t have the luxury of having family support them the whole time for a variety of reasons,” she stated. “What could have been a permanently debilitating time in our lives and something that could have served as a wedge to drive us apart, we were able to somehow turn that into an opportunity to grow closer.”

Leonard was in faculty when her mom was on trial and had to reallocate her faculty financial savings to cowl the authorized charges. This left her with student-loan debt and no nest egg to transition into life after faculty. So she took the primary job accessible to her, as an earnings improvement supervisor on the American Cancer Society in Virginia Beach, Virginia, the place she volunteered in her undergraduate years, spent cash on fuel and resorts to go to Hodge, and put cash on her mother’s books. 

“It became a very weird dynamic in both of our lives where I went from taking care of her to she went to taking care of me,” Hodge stated. “But that speaks to the economic burden of incarceration.”

When Hodge received out of jail, the duo began a nonprofit referred to as Mission: Launch with the objective of serving to people who turned to entrepreneurship out of necessity. Through this, they found the alternatives beginning a enterprise provided previously incarcerated people. 

In 2015, the ladies aspired to create a enterprise accelerator to train and develop entrepreneurship for former inmates. 

“We did not know at the time how much you really needed to be either independently wealthy or connected to capital resources,” Hodge stated about beginning a enterprise. The problem was going to be entry to capital. “And that actually set us on the journey of really trying to figure out how to unlock capital,” she stated. “So we kind of continued down this pathway, and it was this pathway, ultimately, that led us to R3 Score.”

Raising cash and launching in a pandemic

Hodge stepped away from Mission: Launch to work on getting funding to begin R3 Score whereas Leonard saved operating the nonprofit. The girls went by means of tech cohorts like Techstars to increase capital and meet potential shoppers. They relocated to Austin, Texas, in 2019. 

“That gave us an opportunity to get some brand-name institutional investors, and also some high-level individual investors,” Hodge stated. In July 2020, Techstars reported the cofounders had raised a $500,000 pre-seed spherical and a $260,000 dedication towards a $500,000 extension spherical. Once the cohort ended, Hodge and Leonard had been ready to set some pilots in movement when the pandemic hit. 

“We ended up losing roughly about $3 million worth of anticipated pilots in contracts,” Hodge stated. “We had gotten off the startup track only to find ourselves not only back as a startup, but in really a very desperate mode of, are we going to make it?”

But the ladies believed of their product and what it might do, in order that they regrouped and saved conversations and relationships going to get shoppers to use their companies. They refocused their pilot technique to goal companies which have model recognition and function business leaders to assist generate extra leads and curiosity. “As an innovative company, we need to be validated and derisked, and having brand-name companies use our product does that,” Leonard stated. The two declined to reveal the businesses they accomplice with.

Teresa and Laurin_seated action 2

Teresa Hodge and Laurin Leonard.

Teresa Hodge and Laurin Leonard

In September 2020, R3 Score went by means of a reverse merger with Global Boatworks Holdings, Inc. “We are in a place where we can now access capital differently than had we stayed as a private company,” Leonard stated. 

During this course of, the ladies traded their positions, with Hodge stepping down to change into president of their nonprofit in order that her legal report wouldn’t intrude with the transition and Leonard changing into CEO of R3 Score.

Although their focus has been to assist former inmates, Leonard and Hodge have seen how their product can help millennials who’re recognized to have decrease credit score scores due to spending behaviors.

“I am fortunate. It’s kind of going full circle that I started this business, and all of the work that we’re doing with Laurin,” Hodge stated.

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