US fintech Petal raises $35m in new funding as it spins off B2B data analytics unit Prism Data

US fintech Petal raises $35m in new funding as it spins off B2B data analytics unit Prism Data

Credit card and financial technology company Petal announced today that it has raised $35 million in new funding and has spun off its B2B-focused data infrastructure and analytics subsidiary, Prism Data.

Petal pioneered the use of automated cash flow underwriting in consumer credit beginning in 2016, and after years of developing, refining and advancing its proprietary CashScore™ technology in-market, established Prism Data to give other financial providers the same infrastructure and intelligence to improve underwriting decisions and expand access to credit.

This spinoff results in two independent, world-class financial technology companies that leverage cash flow underwriting and consumer-authorized financial information—sometimes referred to as “open banking data”—to provide products that expand consumer access to financial services. Instead of relying solely on traditional credit scores and reports, cash flow underwriting measures creditworthiness based on banking history—like consumer earning, saving, and spending trends. This advances financial inclusion by providing an effective measure of creditworthiness for the millions of consumers without accurate credit scores; it also provides a more precise assessment of creditworthiness overall for any consumer, one that is additive beyond a traditional score.

Petal uses this innovative approach to serve consumers directly, while Prism Data provides cash flow underwriting technology to financial institutions, fintechs, and other businesses, helping them leverage open banking to build better products and make better credit decisions.

Valar Ventures led this new investment, joined by Story Ventures, Core Innovation Capital, and RiverPark Ventures, among others. The funding includes strategic investments from Synchrony and Samsung Next. This new investment will be split between Petal and Prism Data.

Petal was founded in 2016 to help people establish and build credit responsibly, by providing access to high-quality Visa® credit cards (issued by WebBank). People can qualify for Petal cards even if they’ve never used credit before or have little previous credit history. To date, nearly 400,000 consumers have been approved for a Petal credit card, including more than 100,000 new cards approved in 2022. Petal generated more than $80 million in annualized revenue last year, putting the company on a path to reach profitability in 2024.

Prism Data’s open banking infrastructure and analytics platform helps clients improve underwriting capabilities, minimize first-party fraud, and better manage servicing of their portfolios. Prism has seen significant traction since its launch, signing more than a dozen clients and partners and completing over two dozen successful pilots, including with some of the country’s largest banks. To date, Prism’s CashScore has been used to inform nearly $2 billion in real-world credit originations for hundreds of thousands of consumers.

“The first wave of fintech was about inventing new approaches. We’ve seen this explosion in activity with companies testing out new models, technologies, and financial products,” said Jason Rosen, the CEO and co-founder of both Petal and Prism Data. “Not every new experiment works. But for breakthrough technologies that have proven effective, like the cash flow underwriting we’ve developed at Petal and Prism Data, the time has come to expand to the mainstream. This has profound implications for financial inclusion, and we couldn’t be more excited to partner with forward-thinking industry leaders like Synchrony and Samsung to drive true innovation at scale.”

“At Synchrony, we have a deep history of using data to make informed lending decisions and create faster, seamless personalized customer experiences,” said Trish Mosconi, Executive Vice President and Chief Strategy Corporate Development Officer at Synchrony. “The Prism Data platform is innovative in providing differentiated consumer insights, enabling financial institutions to make more data-driven decisions. We look forward to exploring partnerships with Petal and Prism Data to help improve access to credit.”

In December 2022, Prism announced CashScore v3, the first-ever consortium-based cash flow underwriting model, built using millions of anonymized, consumer-permissioned records from a variety of different credit providers, credit products and customer segments. Similar to traditional credit models like FICO or VantageScore, Prism’s CashScore v3 offers lenders a highly predictive tool they can use off-the-shelf to more precisely assess credit risk in any consumer context—from credit cards and personal loans to mortgages and auto loans, among others.

The CashScore is part of Prism’s larger suite of innovative software products, which enable lenders and other businesses to understand and use open banking data to build better consumer products and make smarter credit decisions. In addition to the CashScore, these products include Prism’s Insights, which distills categorized bank account transactions into thousands of trended attributes, including details on income stability and timing, balance trajectories, savings rates, rental payments, use of emerging forms of borrowing like Buy Now, Pay Later (BNPL) loans and much more.

“Prism Data was founded on the belief that open banking, and access to consumer-permissioned bank account transactional data, will change the way consumer finance works—in credit, payments, banking, insurance, real estate, financial advising, and more,” said Erin Allard (pictured), Prism’s General Manager. “With open banking’s arrival in the U.S., that is becoming a reality. And as an independent company, Prism is well-positioned to partner with financial providers and give them the tools and infrastructure they need to create next-generation products and capabilities.”

“Prism Data presents a sea-change opportunity in credit scoring and analytics,” said Arjan Schutte, Founder and Managing Partner of Core Innovation Capital. “While Prism is a new company, the core technology and approach have been honed in the market by Petal for many years. The potential for much-needed financial inclusion through a cash-flow-based score that is compliant with consumer regulation is massive.”

With the addition of this new funding, Petal has raised nearly $300 million in equity capital and more than $450 million in debt financing.