Petal nears unicorn status with fresh $140M in capital to upend ‘broken’ traditional credit system – TechCrunch

In recent years, there has been an increasing number of startups tThese are trying to make credit more accessible to consumers.

One of these startups, petalToday, it announced that it has raised $140 million from its Series D funding round.

The company’s new valuation is $800 million – more than three times what Petal was valued at when it announced the release of $55 million from the Ceres shot. In September 2020, according to a source familiar with the deal.

Founded in New York in 2016, Petal offers Visa credit card producers aimed at underserved consumers with little or no credit history. The startup says its goal is to help people “build credit, not debt.” This credit is provided based on cash flow rather than credit scores. TomoCredit, also covered by TechCrunch, has a similar template. (The cards are issued by WebBank, a member of the FDIC).

specially, Petal offers “modern” Visa credit cards, along with a mobile app, designed to help people “responsibly” build credit and manage their finances.

Its latest increase follows a year in which Petal tripled its user base and more than quadrupled its revenue from $11 million to nearly $50 million. Today there Approximately 300,000 Petal card holders, which the company refers to as “Members”. It has been adding 10,000 to 20,000 new members per month, according to Jason Gross, co-founder and CEO of Petal. Gross noted that Petal members are largely younger consumers, digital natives who are building credit for the first time, although the startup has also served many other customer segments, including those seeking to rebuild their credit.

Petal worked undercover until the launch of its first product, and the announcement of its first financing, in September 2017. The company says its technology analyzes banking history — assessing creditworthiness by taking into account a person’s income, spending and savings to help people qualify Even if they have never used credit before. It calls the process “CashScoring” and says the approach makes credit accessible to a larger group of people and “on terms tailored to each person’s unique financial situation.”

Image credits: petal

The company said the majority of Petal members had poor or no credit history when they first applied for a Petal card, and more than 40% of new members approved for a Petal card in 2021 were rejected by a major bank. The company claims that members who joined without a previous credit history went on to achieve an average credit score of 676 — a “major” score that qualifies them for auto loans, mortgages, and “other financial opportunities that were previously out of their reach.”

Petal’s CashScore became its own product in 2021 as the company announced the launch of its first B2B service, Publication data. Designed to help fintech startups and other financial institutions use Petal’s “CashScoring” technology to grow their own businesses, this new B2B platform was launched in early 2021 and was described by Gross as a “sister company.” He went on to say that Prism is a “next-generation data intelligence platform that translates raw transaction data into actionable insights and results,” making CashScore™ technology “available to the broader market for the first time.”

Erin Allard, who previously held executive positions at Bloom Credit, Green Dot and The Bancorp, has been appointed as the company’s general manager and will lead Prism Data. Petal now has more than 160 employees, doubling its team over the past year.

“We are following in the footsteps of other fintech companies like Lithic and Upstart that have created great new B2B platforms by producing new technologies that they initially created to solve their own problems,” Gross told TechCrunch.

Furthermore, he added, Prism Data was founded on the belief that open banking and access to consumer-authorized bank account transaction data will change the way consumer finance works.

“With this change, a future credit score will be a complete, real-time, comprehensive assessment of a consumer’s financial position, including their income, cash flow and assets, as well as their debt and repayment history,” Gross said. . “Data Prism is there to give financial service providers the tools they need to create next-generation products and capabilities.”

Tarsadia Investments led the funding for Petal’s Series D, with input from Valar Ventures (which led Series C), CUNA Mutual, Encore Bank, Volery Capital Partners, Gopher Asset Management, RiverPark Ventures, Afore Capital, Gaingels and “a number” of other new companies and existing investors . To date, Petal has raised more than $240 million in equity capital and more than $450 million in debt financing.

Rishi Reddy, Tarsadia’s Head of Venture Investment and Growth, believes that the traditional credit system is disrupted and consumers “are in dire need of more modern and accessible financial products.”

“In addition to massive user growth, Petal has demonstrated the strength of its technology as evidenced by the excellent credit performance and rapid expansion of Prism,” Reddy said in a written statement. “We are excited to redouble the efforts of Jason and the team as they pioneer a new way to accelerate financial inclusion.”

Gross said Petal is hiring more than 100 new positions in 2022 and will use its capital “to add hundreds of thousands of new card members next year.” The company also plans to add new features and benefits to its cards.

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