American credit card startup Petal has raised $13m in a series A funding led by Valar Ventures to launch credit card for people without credit history, such as millennials and the underbanked.
The funding round was also joined by Third Prime Capital, RiverPark Ventures, Afore Capital, Brooklyn Bridge Ventures and Social Entrepreneurs’ Fund.
Instead of traditional credit scores, Petal created an alternative technique called cashflow underwriting to establish the creditworthiness of an individual.
The technique leverages machine learning, big data and ‘common sense’ to analyse digital financial records, such as earnings and savings, in real-time.
Petal CEO and cofounder Jason Gross said: “Something is terribly wrong when the industry decides an entire generation is sub-prime.
“Today’s credit system unfairly labels young Americans and other new-to-credit borrowers as high-risk, then punishes them with high interest rates and excessive fees. Petal breaks that cycle, using technology to give tens of millions of people the credit they deserve.”
The firm initially introduced its no-fee credit card in September 2017 through waitlist on an early-access programme. It intends to use the new funds for nationwide rollout of the card.