FinTech Credit Card Company Petal Raises $55 Million
Throughout the past few months, at a time when the whole world is feeling disrupted, startups once called “disruptors” have found their services becoming more important than ever. In turn, there seems to be a streak of investments in these companies. Case in point: this week, Petal revealed that it had raised $55 million as part of its latest funding round. According to TechCrunch, the raise actually closed in April but is only being officially announced now. The Series C was led by Valar, which also led Petal’s $30 million Series B last year and its $13 million Series A in 2018.
Petal’s claim to fame is offering a credit card that bases its approval decisions on what they call Cash Scores instead of just traditional credit scores. For example, their site explains that their Cash Scores consider such factors as banking history, on-time bill pay, income, and more. As a result, the card claims it may be able to offer better limits to users even if they may not have a stellar credit score. What’s more, the Petal Card also features some of the perks that regular rewards credit cards do, including cash back. Currently, cardholders can earn 1% back on everything they buy using their Petal card, with this rate increasing to 1.5% back after they make 12 on-time monthly payments. Also notable is that the card carries no annual fee and doesn’t charge late payment fees.
Even though Petal closed their funding round a few months ago, their service has likely only grown more relevant since. With the pandemic taking a toll on the finances of many Americans, the ability for individuals to build or rebuild credit could definitely be needed. Reflecting on this, Petal’s co-founder and CEO Jason Gross said, “Traditional credit scores have become less reliable in the COVID economy, forcing mainstream banks to significantly scale back access to credit at a time when many people need it most. Cash flow scoring allows Petal to continue making credit available even in these volatile economic conditions.” Meanwhile, Valar Ventures founding partner James Fitzgerald said of his company’s (now three-time) investment in the company, “We’re pleased to once again invest in Petal. They have created a better and more modern credit experience, and a game-changing technology platform that’s well-matched to these times. We’re happy to support them as they scale.”
Petal’s latest funding adds to what’s already been an impressive year in terms of FinTech investment. In fact, 20 of the largest rounds raised in 2020 so far total more than $3.8 billion. While that might seem strange given the economic conditions, it’s transactions like this one that actually highlight some of FinTech’s key strengths — in this case, creating a credit card that not only more accessible but also rewards users instead of preying on them. On that note, Petal and startups like them seemed poised for significant growth as more Americans discover their unique and much-needed services.