Petal, a US credit card startup that is ditching traditional credit scores in an effort to sign up young people and the underbanked, has closed a $30 million Series B funding round led by Peter Thiel's Valar Ventures.
Greyhound Capital, Third Prime Capital, Rosecliff Ventures, Story Ventures, RiverPark Ventures and Afore Capital all joined the round for Petal, which has now raised more than $80 million in equity and debt funding.
Petal says that decades-old traditional credit scoring methods put lower-income consumers, immigrants and people of colour in a Catch-22 situation - they can’t get access to credit without a credit history, and they can’t build a credit history without access to credit.
In contrast, it uses machine learning and "common sense" to measure objective components of each individual’s creditworthiness that aren’t typically considered in a credit approval decision, like how much an individual actually makes, saves and spends over time, and the bills they pay each month.
This, says the firm, gives a more accurate and precise understanding of how much someone can safely afford to borrow, beyond what is available in a traditional credit report, enabling it to serve people that most banks turn away.
The company launched its first product, the Petal Visa Card, in October, with no overdraft fee, late fee, international fee or annual fee.
Petal is also beefing up its management team, adding Parris Sanz, a longtime senior executive with CAN Capital, who is joining as general counsel, and Tom Greco as VP of customer operations.
Jason Gross, CEO, Petal, says: "Over the past two years, we’ve focused on building both an amazing team and a special product. Now, with new funding and new leaders onboard we’re ready to meaningfully scale our business and team."