If you are a consumer struggling to gain access to credit in the first place, building a credit history can be difficult.
input TomoCreditHas developed a credit card focused on building a credit history for first-time borrowers. San Francisco-based startups today announced that they have raised $ 10 million in a Series A funding round. KB Investment Inc. (KBIC), a subsidiary of Kapor Capital and a major consumer bank in South Korea. Sam Wen, co-founder of Lewis & Clark Ventures, AME Cloud Ventures, Knollwood Investment Advisory, WTI, Bronze and Square We also participated in Series A funding.
The new capital is just over seven months after Tomo Credit raised $ 7 million in seed funding, bringing the total funding to $ 17 million this year. The company also announced today that it has appointed former American Express CRO Ash Gupta to its board of directors.
TomoCredit co-founder and CEO Kristy Kim came up with the concept of the company after being repeatedly denied mortgages in his early twenties.
As a child, Kim, who emigrated from South Korea to the United States with his family, was disappointed that the lack of credit history was a major obstacle, despite his “positive work and cash flow.”
So in January 2019 she worked with Russian immigrant Dmitry Kashlev to create a solution for other foreign-born individuals and young adults facing similar credit problems. That fall, a startup (short for Tomorrow’s Credit) was accepted by the Techstars-powered Barclays Accelerator.
FinTech offers credit cards aimed at enabling first-time borrowers to create a credit history based on cash flow rather than FICO or credit report valuation. The biggest differentiator, according to Kim, is the lack of fees, APR and credit pulls. While traditional credit products rely heavily on fees and APR, Tomo Credit makes money from merchant fees, she said.
TomoCredit uses Finicity (acquired by Mastercard last year) to leverage its data network and open banking technology to “securely” access the applicant’s bank account and obtain financial data for underwriting purposes. I can do it.
Once approved Applicant TomoCredit Mastercard.. The goal is to “introduce millions of individuals with insufficient credit scores into the financial system, and diverse consumer groups will make themselves eligible for mortgages, car loans, or other major life purchases. It’s about giving them the opportunity to position themselves better, “the company said. ..
According to Kim, TomoCredit has already pre-approved more than 300,000 customers and plans to issue a total of 500,000 cards by the end of the year.
“This year has grown tenfold since the beginning of 2021,” Kim said. “Still, this round got together earlier than expected.”
What is surprising to Kim is the interest of different types of consumers.
“Initially, I thought international students and immigrants were most interested in our products,” she told TechCrunch. “But after launch, we’ve realized that so many people can benefit, from gig economy workers to YouTubers to young people who haven’t yet had the opportunity to earn credits. The market is far more than we thought it would be. It’s big. “
In early 2022, the company plans to roll out the Tomo Black card, a product for existing customers that is “demonstrating good performance.” We are currently testing with some of our existing user base.
“This is a premium product that we can grow with our customers who want to keep it for the next 10 to 20 years,” Kim said. “”We don’t want our product to be a temporary solution. “
She adds that startups are planning to use new capital to hire more and enhance features such as weekly auto-payments and high credit limits in order to “raise credit scores faster.” rice field. Currently, TomoCredit employs about 30 people, up from 10 at the last salary increase in February.
“NSThe main focus is on hiring talented people, “said Kim, who said the company has already hired” some older people from Wells Fargo. ”
“When we hire and hire, we are interested in diversity,” she added. “We are traditionally building products for people who have not received sufficient service from major banks. To be in line with our mission, we do it when building a team. More than 50% of executives are women. The entire risk team is women. Gender and age because we want to truly understand our customers and create comprehensive products. , There is diversity in terms of ethnicity. “
Brian Dixon, a partner of Kapor Capital, There are about 45 million people in the United States, who need a credit score, but cannot take out a loan, get a credit card, or apply for a mortgage. And that number continues to grow.
“When we learned that Christie experienced these problems directly when she moved to the United States and figured out a way to avoid the predatory and broken credit card system, it deepened our confidence in her and the product itself. “He wrote in an email.
Dixon’s model of TomoCredit, which does not charge users,A safe and affordable alternative to what’s on the market. “
“Their mission is in line with our treatise on bridging the access and opportunity gap across credit spaces,” he added.
Kapor Capital, Square co-founder Sam Wen back TomoCredit in its $10M Series A funding round – TechCrunch Source link Kapor Capital, Square co-founder Sam Wen back TomoCredit in its $10M Series A funding round – TechCrunch