TomoCredit Raises $7 Million for Unique Credit Card Product

A startup looking to revolutionize the credit-building card market has just earned itself a significant investment. As reported by TechCrunch, TomoCredit has announced that it recently raised $7 million. The seed round included participation from KB Investment Inc., BAM Ventures, Knollwood Investment Advisory, Strong Ventures, Passport Capital, Ulu Ventures, and Barclays — with the FinTech also being a Barclays Accelerator alum. Additionally, angel investors as well as individual investors Arlan Hamilton, Michael Vaughan, and James Kim contributed to the funding round.

Short for “tomorrow’s credit,” TomoCredit offers a unique credit card that helps users build credit while practicing responsible spending. Tomo (which partners with Community Federal Savings Bank to issue its cards) does not check applicants’ credit history and instead relies on an algorithm to determine creditworthiness. Even more interestingly, the FinTech doesn’t charge fees, offers 1% cashback on purchases, and has 0% APR. To accomplish this, the card sets up a seven-day auto pay, effectively turning the credit card into a debit card on time delay. However, this strategy allows cardholders to build positive payment history, while also keeping their credit utilization to a minimum. On that note, although credit limits for Tomo range from $100 to $10,000, TechCrunch reports that the average limit is around $3,000.

Since officially launching TomoCredit cards last summer, the company says it now has more than 10,000 active users. With the newly-raised funds, the company intends to invest in product development and grow its team to 15 employees. In fact, the startup recently recruited Chaomei Chen (formerly of peer to peer loan platform Lending Club) to serve as acting chief risk officer.

In an interview with TechCrunch, TomoCredit co-founder and CEO Kristy Kim shared her inspiration for creating the product, saying, “We set out to build something that wasn’t just more inclusive, but fundamentally different from existing consumer credit card offerings. Unlike incumbent credit card issuers, we aren’t incentivized by slapping fees on borrowers for making late payments — we make money as our cardholders spend — so we grow as you grow.” That vision has also attracted like-minded investors, with Backstage Capital founder Arlan Hamilton stating, “I spend a lot of my time these days investing in and catalyzing products that right the wrongs that my family and so many others endured as I was growing up. One of those themes is in establishing and maintaining good credit and having an alternative to predatory lending. TomoCredit feels to me like it is tackling this in a hugely scalable, mainstream way.”

TomoCredit is the latest FinTech to rethink the existing Catch 22 that is the credit system. Nevertheless, the company’s solution takes on a unique structure as it not only incorporates the increasingly popular idea of algorithmic credit risk assessment but also takes a two-pronged approach to helping users build up their credit. For those reasons, it’s no wonder that the startup has found investors for this seed round — and seems poised for many more funding rounds in the future.


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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