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This is Petal’s third funding round. Most recently, the company raised $13 million in January 2018. Previous investors in the company include Valar Ventures, Great Oaks Venture Capital, RiverPark Ventures and others. The round brings Petal’s total known funding to about $50 million, according to the company.
Founded in 2016, Petal aims to make financial services more accessible. Petal co-founder and CEO Jason Gross told Crunchbase News a close friend who had moved to the U.S. was unable to achieve basic financial goals— qualifying for a credit card, securing a lease, and getting a cell phone plan—due to his lack of a credit history in the U.S. His friend’s experience motivated Gross to start Petal.
“One of the major financial regulators also started to publish research about access to credit,” Gross explained. “They found that a tremendous number of people in the United States are excluded from the credit system […] because they haven’t yet had the opportunity to build credit.”
With that in mind, the mobile-first startup offers a no-fee credit card. Its approval process differs significantly from other providers, not taking into consideration a lack of past credit history. While the company doesn’t discount an applicant because of a lack of credit, credit history does carry weight in the process.
“We want to approve as many people as possible, but today we’re really built more for people that are new to credit and just establishing credit,” Gross said. “Chances are much higher that you will be approved if you haven’t had missed payments or bankruptcy.”
According to the company, its annual percentage rate is up to 50 percent lower than other entry-level credit cards, and Gross told Crunchbase News that the average credit limit for approved individuals is 10 times higher than that of bigger banks.
In addition to its credit card service, the mobile Petal platform gives its card holders insights into their payment history and habits. For example, the company sends individuals reminders and helps them assess how much interest will be paid based on the payment plan the individual has set in place.
The company, which was previously in beta, is officially launching the card publicly today. Gross told Crunchbase News that during its beta 100,000 individuals signed up to be notified of the launch. Gross also said that while debit and banking is an important aspect of financial services, Petal will be focused on credit for the foreseeable future.
“While 9 percent of the U.S. population doesn’t have a bank account, more than 50 percent of the US population has limited access to credit because they have a low or no credit score,” Gross explained. “And that’s the problem that we’re focused on solving today.”
With the round, Petal plans to increase its headcount from 50 to over 100 within the next year. It is focused on acquiring customers, launching its Android app, and building out features, including a rewards program, in the future.
iStock Photo / vladwel
Editorial Update: A previous version of this article stated the funding was Series B. It has since been updated.