Tongo Closes $7 Million Seed Round
For most Americans, there’s predictability that comes with their paychecks. After working their hours, they receive pay for that work within a couple of weeks. However, real estate agents traditionally haven’t enjoyed such a schedule as their pay depends on a home sale to close. That’s something the FInTech Tongo is looking to change — with the startup recently raising money to help fuel its growth.
This week, Tongo announced that it had raised $7 million. The seed round was led by MetaProp. New Valley Ventures, Good Friends, Launchpad, Elizabeth Street, Red Bike, Lab Ventures, and Entrepreneur’s Roundtable Accelerator also participated. To date, the company has now raised a total of $11 million. According to Tongo, the invested funds will be used to expand both the startup’s team and its product.
As mentioned, Tongo aims to help real estate agents access their future commissions before closing. This is done by partnering with real estate brokerages. With the Tongo Smart Card debit card, agents can spend their pending sales commissions or can make transfers to their checking account. In the event that a contract falls through and an agent already received Tongo commission funds from it, the agent will have options to pay down the owed amount once another commission is received.
Sharing more on Tongo’s model and the need for its product, the company’s CEO Brandon Wright explained, “Traditional credit products are not built for today’s commission economy. Their underwriting models prioritize steady, salaried incomes that work well with their monthly billing cycles. The combination of lower credit availability and strict monthly repayment generates an immense problem for tens of millions of self-employed people where income is more free ﬂowing, such as in real estate and other commission-driven professions. It presents a huge opportunity for Tongo to create ﬁnancial products that realign income and expenses.”
Wright added, “By effectively building a debit card for future income, Tongo gives agents an alternative to the credit ecosystem that reduces the volatile, cyclical nature of their income, and at the same time gives them a cost-effective source of capital to grow their business.”
For the time being, Tongo’s product seems relatively niche — yet, that hasn’t seemed to have stopped venture capital firms from seeing value in the FinTech. Perhaps that’s because the company’s model could be applied to other verticals. On that note, Tongo does refer to real estate as its “initial market” in their press release. Therefore, while Tongo may not exactly be a household name anytime soon, the firm definitely has potential as it builds up its platform.