Why we invested in Petal, a consumer credit card company that helps people access and build credit responsibly
Open banking is empowering consumers by helping them securely share their financial data, effectively shifting the power from incumbent financial institutions to consumers. Notably, the shift is welcomed by lenders since it provides consumer-permissioned financial data that is accurate, detailed, and current, making it easier for consumers to use their banking history to qualify for new and different financial products and services. At Samsung Next, we are particularly keen on identifying fintech innovations that both disrupt traditional industries and democratize financial services for underserved consumers.
We invested in Petal for this very reason. Petal, in partnership with WebBank (which issues Petal credit cards) makes credit more accessible by using personal banking history data, instead of relying solely on credit bureau scores, to evaluate creditworthiness through its inclusive methodology anchored by a CashScore. While traditional credit scores focus only on a few variables, the CashScore considers a wider financial picture, allowing more people to qualify for and build credit, including those with no-to-limited credit histories. To date, nearly 400,000 consumers have been approved for a Petal credit card (issued by WebBank), including more than 100,000 new cards approved in 2022. With an emphasis on supporting those who are underserved by mainstream providers, Petal has the potential to reach the nearly 150 million U.S. consumers currently sidelined by the credit industry. Petal can therefore have a broad social impact since credit scores influence everything from qualifying for housing to the approval, interest rates, and repayment terms for major consumer credit lines such auto financing, personal loans, and mortgages.
Petal’s unique advantage is its proprietary cash flow underwriting technology, which evaluates credit risk based on millions of parameters related to income, assets, savings, transactions, and financial volatility. While it was initially developed for use internally, Petal has started selling data analytics and underwriting technology to other financial services companies and fintechs through a division called Prism Data which provides Cash Scoring as a service to financial institutions, fintechs and other businesses via API. Prism’s offering helps customers build better products and improve underwriting capabilities. Once a Petal subsidiary, Prism Data is now a standalone B2B-focused data infrastructure and analytics company.
We joined Petal’s latest $35M funding round led by Valar Ventures, with participation from Synchrony, Story Ventures, Core Innovation Capital, and RiverPark Ventures, among others. As investors in both Petal and Prism Data, we’re excited to see how these two independent, world-class financial technology companies continue to grow and serve–directly and indirectly– overlooked populations in the U.S. and beyond.
Carlos Castellanos is an Investor at Samsung Next. Samsung Next's investment strategy is limited to its own views and does not reflect the vision or strategy of any other Samsung business unit, including, but not limited to, Samsung Electronics.