In recent years, a growing number of new companies have appeared trying to make credit more accessible to consumers. One of these startups, Petal, announced a financing round of Series D of 140 million dollars.
The company's new valuation is $800 million, more than triple the valuation of Petal when he announced a round Serie C of 55 million dollars in September 2020.
Founded in 2016, Petal, based in New York, offers two Visa credit card products aimed at consumers with little or no credit history. The startup aims to help people "build credit, not debt." And it offers that credit based on cash flow rather than credit scores.
Specifically, Petal offers "modern" Visa credit cards, along with a mobile app, designed to help people build credit and manage their finances "responsibly."
the last investment occurs after a year in which Petal it has tripled its user base and more than quadrupled its revenue from 11 million to almost 50 million dollars.
There are almost 300.000 cardholders Petal, which the company refers to as “members”. It has been adding 10.000 to 25.000 new members per month, according to Jason Gross, co-founder and CEO of Petal. The members of Petal they are mostly young, digital-native consumers who are building credit for the first time, although the startup has also served many other customer segments, including those looking to refinance their credit, Gross said.
Petal it operated subtly until it launched its first product and announced its first financing in September 2017. Its technology analyzes banking history, assessing creditworthiness based on a person's income, expenses and savings to help people qualify even if they don't. ' I've never used credit before. The process is called cash scoring™ and the approach makes credit accessible to a larger group of people and "on terms tailored to each person's unique financial situation."
Most of the members of Petal had little or no credit history when they first applied for a card Petal, and a major bank denied credit for the first time to more than 40% of new members approved for a card Petal in 2021, the company said. The company claims that members who joined with no prior credit history have achieved an average credit score of 676, a "prime" score that qualifies them for car loans, mortgages "and other financial opportunities that were previously out of reach."
Cash Score de Petal became a product of its own in 2021 when the company announced the launch of its first B2B business service, PrismData. That new B2B platform, designed to help other fintech companies and financial institutions use the technology cash scoring™ of Petal to grow its own businesses, it went live in early 2021 and is described by Gross as a "sister company." Prism is a "next-generation data intelligence platform that translates raw transaction data into actionable insights and scores," making the technology Cash Score™ is available to the general market for the first time."
Erin Allard, who previously held executive positions at Bloom Credit, Green Dot and The Bancorp, has been named the company's general manager and will lead PrismData. Petal has more than 160 employees, doubling the team in the last year.
“We are following in the footsteps of other fintech firms like Lithic and Upstart who have created major new B2B platforms by producing the novel technologies they initially created to solve their own problems,” Gross said.
He added that PrismData was founded on the belief that open banking and access to transactional data from consumer-authorized bank accounts will change the way consumer finance works.
"With this change, credit scoring in the future will be a comprehensive, real-time, holistic assessment of a consumer's financial situation, including their income, cash flow and assets, in addition to debt and payment history," Gross said. . «PrismData is born to give financial providers the tools they need to build next-generation products and capabilities.”
Tarsadia Investments led the financing Series D de Petal, with the participation of Valar Ventures (which led its Serie C), CUNA Mutual, Encore Bank, Volery Capital Partners, Gopher Asset Management, RiverPark Ventures, Afore Capital, Gaingels, and “several” other new and existing investors. Till the date, Petal has raised more than $240 million in equity and more than $450 million in debt financing.
Rishi Reddy, chief investment officer for risk and growth at tarsadia, believes that the traditional credit system is broken and that consumers "desperately need more modern and accessible financial products."
“In addition to the exponential growth of users, Petal has demonstrated the power of its technology, as evidenced by exponential credit performance and rapid scaling of PrismReddy said. “We are excited to double down with Jason and the team as they pioneer a new way to accelerate financial inclusion.”
Gross said that Petal is hiring for more than 100 new positions in 2022 and that they will use the capital "to add hundreds of thousands of new cardholders in the next year." The company also plans to add new features and benefits to its cards.
