Petal Raises $140M to Help Underserved Consumers Build Credit

This Series D caps off a year of significant growth for Petal, and will be used to expand its platform and hire 100 more employees over the next several months.
Written by Ellen Glover
January 6, 2022Updated: January 6, 2022
NYC-based Petal raised $140M Series D, hiring 100
Photo: Petal

Petal, a fintech startup that helps underserved consumers build up their credit, has raised $140 million in fresh funding. The Series D was led by Tarsadia Investments, and will be used to build out Petal’s product and grow its team. The company also says it would like to hire 100 more people this year, listing more than two dozen open tech positions at its NYC headquarters. 

Founded in 2016, Petal is considered a pioneer in this burgeoning financial space. The company offers two kinds of Visa credit card products aimed at folks with little to no credit history, as well as a mobile app that helps them “responsibly” build credit and manage their finances.

This fresh funding follows a year in which Petal tripled its user base and quadrupled its revenue, and comes on the heels of a $126 million debt facility raise. It is also the latest of several companies trying to make credit more accessible to turn investors’ heads recently. Just a couple months ago, Kafene, which offers “buy now, pay later” options to the underbanked, got $75 million in fresh funding, joining similar startups like Affirm, Klarna and Billie. And mobile banking app Current more than tripled its valuation to $2.2 billion in April when it closed on a $220 million Series D led by VC heavyweight Andreessen Horowitz.  

Beyond the financial positives over the last year, co-founder and CEO Jason Gross says Petal has had a significant social impact as well.

“A majority of Petal members had thin or no credit history when they were first approved for a Petal Card, and more than 40 percent of new members approved for a Petal Card in 2021 were first denied credit by a major bank,” Gross explained in a recent blog post, adding that members with no prior credit history have gone on to achieve an average credit score of 676 — a “prime” score qualifying them for auto loans, mortgages and other opportunities that had previously been out of reach. 

Gross attributes this success to its CashScore process, which is an alternative to traditional credit scoring. And he says he hopes the impact will be accelerated even more with Petal’s new Prism Data service, which makes its data intelligence offerings available to banks and other fintech companies.

“We believe that in the 21st century, credit scores should reflect accurate, up-to-date, and holistic financial data, and should be available to consumers who have been historically underserved,” Gross added. “For decades, businesses, policymakers, and academics have searched for effective ways to expand credit access to thin-file and credit invisible consumers. We have found a solution and believe that substantial change is on the horizon.”

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