TomoCredit, the US startup behind a credit card designed to help first-time borrowers build credit history, has raised $7 million in a seed funding round joined by Barclays.
KB Investment, a subsidiary of South Korea’s Kookmin Bank, Knollwood Investment Advisory, BAM Ventures, Passport Capital, Ulu Ventures, Strong Ventures, and a host of angels joined the round.
According to the Consumer Financial Protection Bureau, more than 30 million young adults in the US are considered “cash rich” but with limited credit histories, making their only option to use debit cards.
TomoCredit is targeting these young Americans, as well foreign-born people - both of the firm's founders are immigrants.
Applications for the TomoCredit card are screened based on real-time cash flow, not Fico or credit scores. Credit limits on average are $3,000, with payments made on a seven-day automatic schedule and no fees or APR.
Kristy Kim, CEO, TomoCredit, says: “We believe you can be financially sound, even without a credit history. We built the model so we are paid by the merchants, not the consumers.
"Unlike incumbent credit card issuers, we aren’t incentivized by slapping hidden fees on borrowers - we make money as our cardholders spend - so we grow as you grow.”
Separately, the company has appointed LendingClub senior executive Chaomei Chen as its acting chief risk officer.