TomoCredit Closes $122 Million Funding Round

With credit card interest rates on the rise, a company that offers an alternative credit product has announced a new injection of capital to continue its mission. Today, TomoCredit revealed that it had raised $122 million in its latest funding round. That total includes $22 million in Series B equity and $100 million in debt financing.

The equity portion of the round was led by Morgan Stanley’s Nex Level Fund with “oversubscribed” participation from Mastercard, GoldHouse, Asian Hustle network, and Hyphen Capital. Meanwhile, the debt portion was facilitated by Silicon Valley Bank. Tomo’s latest round follows a $10 million Series A in September 2021 and a $7 million seed round in February of that same year. With the new funds, the company plans to expand its offerings by applying its underwriting algorithm to other credit products, such as auto loans and mortgages, thus increasing accessibility to these much-needed options.

TomoCredit is a FinTech that offers what they call “No-FICO Credit.” Instead, as mentioned, the company utilizes a proprietary underwriting algorithm called TomoScore to assess creditworthiness. Currently, the startup offers its signature TomoCredit card, which is a no-annual-fee Mastercard. Notably, while the card is billed as a credit card, it operates closer to a charge card where customers will need to pay off their balance each month. Should they fail to do so, Tomo’s FAQ notes that their card will be frozen until the previous month’s balance is paid in full.

Explaining why TomoCredit elected to take on more investments at this time, the startup’s founder and CEO Kristy Kim stated, “We decided to add more capital for two key reasons. First, we were seeing incredible organic demands in the past two years, and we wanted to hire top talent to keep up with that organic growth. Secondly, we want to take full advantage of the newest consumer trends of avoiding high APR products. TomoCredit charges 0% APR with no fees.” Kim continued, “In recent months, many people who have 15 – 25% higher APR cards are ditching those products and flocking over to TomoCredit.”

Additionally, Morgan Stanley Next Level Fund co-portfolio manager Alice Vilma said of working with the company, “We are excited to be a part of TomoCredit’s journey as it works to democratize access to credit and build a more inclusive credit landscape.”

All things considered, a $22 million Series B may be considered modest by some standards. On the other hand, considering the caliber of investors TomoCredit has attracted, this latest funding round seems significant — especially since it comes at a time when the FinTech sector is seeing some setbacks. It’s also interesting to see what kinds of ideas Tomo has for its future. If they are able to pull off those plans and expand their algorithm’s implications, they not only have the potential to grow into a major FinTech force but could also help change the American credit system as we know it.

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Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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