Petal looks to machine learning for the future of credit cards


Credit card provider Petal raised a $13 million Series A round led by Valar Ventures, a Peter Thiel-backed venture capital firm with a history of fintech investments. The two-year-old company raised a $3.6 million seed round and unveiled its card with a limited US launch last September before opening a waitlist, which now counts tens of thousands of applicants.

Why the request? The credit card does not require a credit score, has no fees and has high credit limits. It ignores the typical credit score requirement by adding what the company has dubbed “cash flow underwriting.” In other words, Petal’s technology relies on machine learning to analyze digital financial records to help vet its potential hackers.

Removing the credit score requirement helps young people enter the credit market, says founder and CEO Jason Gross. People in their 20s or early 30s often have difficulty accessing credit due to their lack of financial history. The card also offers people with bad credit another viable option. Gross cited members of the armed forces and people with international experience as examples of other potential users.

“Credit cards today are broken and unfair,” Gross told PitchBook. “There is a whole generation of consumers who are poorly rated by the current system.”

He added that under the current, outdated method of credit scoring, people “find themselves in a sort of Catch-22 where you can’t get credit without a borrowing history and without qualifying for a credit, you can’t develop that borrowing history”. .”

Consumer fintech – and specifically the realm of credit and debit card-related companies – is already a crowded space, with several VC-backed startups in the space securing seed funding in the second half of 2017. includes $7.7 million. funding for Jiko, which offers cash back on debit purchases, and a $19 million round for Deserve, which offers a student credit card. Here’s a look at some of the others:

But Gross said for Petal, competition is not a threat.

“There are many different solutions that can solve many different problems in financial inclusion,” he said. “It may seem like there are a lot of credit card startups, but to me, I don’t think there are enough.”

Related reading: CV attack Wall Street with new credit card offers.

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