Fintech: Petal's $200MM debt facility from Victory Park Capital; Scaling Twitter, Bunq, and Goldman Sachs
Petal is expected to use the debt to spur growth of its credit card program that does not require a credit score.
The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
đsubscribe here.
Hi Fintech Futurists âÂ
Before we dive into todayâs agenda, we would like to remind you about our upcoming Digital Event.
đ TOPIC: From Disruption to Dominance: How Embedded Finance is Revolutionizing Global Payments
đ DATE: August 10 at 11am ET
Join Michael Tannenbaum, COO, Brex, and Phillip Reichardt, Airwallex, as they share insights into how they built a formidable competitive moat by seamlessly integrating embedded finance into their product offerings. This 30-minute digital event will cover key challenges and emerging trends in embedded finance, how to unlock growth opportunities, best practices, success stories and more.
We hope to see you there.
Youâre the best, todayâs agenda below.
CREDIT: Petal Closes New $200 Million Debt Facility from Victory Park Capital, Raises Additional Debt and Equity Funding (link here)
LONG TAKE: The craft of scaling fintechs beyond their niche -- analyzing Twitter, Bunq, and Goldman Sachs (link here)
PODCAST CONVERSATION: From gift cards to a global payments network of digital value, with Runa CEO Aron Alexander (link here)
CURATED UPDATES
To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.
Digital Investment & Banking Short Takes
CREDIT: Petal Closes New $200 Million Debt Facility from Victory Park Capital, Raises Additional Debt and Equity Funding (link here)
Petal has received a $200MM debt facility from alternative asset investment firm Victory Park Capital. It brings Petalâs total fundraised equity capital to $300MM and debt financing to $680MM for its credit card offering that doesnât require a credit score. This feature is Petalâs key differentiator, dubbed the cash flow underwriting process, which allows users to use their banking history to qualify for credit and start building a credit history. The approach looks to increase access to credit for Americans, particularly those whose credit scores are not representative of their financial situation and those without credit histories. The debt facility is expected to be used to spur growth of Petalâs credit card program, which has 400k customers, 100k of which were approved last year.
Petalâs offering is particularly valuable given that the rejection rate amongst credit card applicants is the highest since 2018. It increased 21.8% last year, primarily impacting those with scores below 680. The extent of the challenge is highlighted by the Consumer Financial Protection Bureauâs (CFPB) upcoming rules on Dodd-Fraction Section 1033 that look to provide consumers with the ability to share and access cash flow data for credit underwriting purposes. CFPB backed up their ruling with an analysis detailing how cash flow data can be a strong indicator of creditworthiness, allowing for better risk management and greater access to capital. And the proof is in the pudding - 40% of Petal users in the past two years were been first denied credit by a major bank.Â
Whilst credit rejection rates are at a 5-year high, and with incumbents tightening their standards, Petal is making strives towards making traditional credit more accessible. But competition is rife in the credit space and there is a range of models to compete against. Products like BNPL and virtual cards are on the rise, particularly among those who do not want to use credit cards. We agree with novel mechanisms for assessing creditworthiness but the jury is out as to whether credit cards will maintain their prominence or if they are superseded by other credit services with a simpler UX and lower commitment.Â
Blueprint Deep Dives
Long Take: The craft of scaling fintechs beyond their niche -- analyzing Twitter, Bunq, and Goldman Sachs (link here)
We want to riff on the underlying drivers behind successful growth and unsuccessful attempts at growth in fintech.
This is in response to seeing the recent raise from Bunq, a profitable European neobank, watching Goldman shut down its consumer ambitions, as well as an interview we had done a few weeks back with Public. The custodian Altruist and lender SoFi also come to mind. Last, weâll frame the transition of Twitter to X, and why that feels bad to everyone involved.
Podcast Conversation: From gift cards to a global payments network of digital value, with Runa CEO Aron Alexander (link here)
In this conversation, we chat with Aron Alexander - Founder and CEO of the digital value and infrastructure provider Runa.
Aron has been deeply engrossed in the commerce world since his early days spent in his family's retail and grocery stores. This interest would later expand into managing a family office and leading a division at a B2B2C payment company. However, it was an exasperating experience of trying to spend a ÂŁ5 paper voucher received by mail that served as the spark for his entrepreneurial journey.
Curated Updates
Here are the rest of the updates hitting our radar.
Neobanks
â CNBCâs top 200 global fintech companies: The complete list - CNBC
Mercado Libreâs Q2 profits doubles on stronger sales, fintech revenue - Fintech Nexus
Payments
â PayTech Pockit raises $10m in growth round - Fintech Global
MSUFCU partners Nymbus for SMB âbank in a boxâ solution - Fintech Futures
Worldpay From FISâ Merchants Now Have Access to Alipay+ - Fintech News
Credit Card Transactions in Brazil May Have Peaked as Pix Continues to Surge - Businesswire
Fintech Platform Croissant Launches with $24 Million in Initial Funding and a Mission to Change the Future of Commerce - Businesswire
Shopify Credit Adds Business Credit Cards to Streamline Small Business Working Capital Processes - PYMNTS
Digital Investing
â Novo launches Novo Funding w/$125M facility- Gov UK
AI
â TIFIN and J.P. Morgan Launch TIFIN.AI for AI-powered Fintech Innovation -- Fagen Wasanni Technologies
Shape your Future
Wondering whatâs shaping the future of Fintech, Digital Wealth and Web3?Â
At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech.Â
Sign up to the Premium Fintech Blueprint newsletter and get access to:
Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis Â
Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives
Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoptionÂ
Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts
Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives
Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi spaceÂ
Access to our CEO & Founder focused 'Building Company Playbook' series, offering insider tips and advice on constructing successful fintech ventures.
Merci