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Credit fintech Petal seeks buyer - report

Credit fintech Petal seeks buyer - report

US credit fintech Petal has put itself up for sale amid Walls Street concerns about its ability to survive, according to Fortune.

The firm, which offers a Visa credit card that people can qualify for even if they’ve never used credit before, is exploring its options, according to Fortune, citing five sources from the private equity, banking and venture capital sectors.

Petal has already received several acquisition offers, says one source, adding that even if no deal is agreed the firm has $55 million in the bank from a funding round earlier this year.

However, other sources predict the startup will go out of business if it does not secure a buyer.

Petal cut around 20% of its workforce in June, says Fortune.

The following month it secured a $200 million debt facility, bringing its total funding to $300 million in equity capital and more than $680 million in debt financing.

The August facility gave the company "substantial fuel" to expand its card programme, according to a statement at the time.

Instead of relying solely on credit scores, Petal has built proprietary technology that analyses banking history—measuring creditworthiness based on income, spending, and savings.

Over the summer, it spun off its B2B-focused subsidiary Prism Data.

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 22 November, 2023, 12:06Be the first to give this comment the thumbs up 0 likes

It's a pity that fintechs got suckered by traditional lenders into believing that banks and NBFCs relied solely on credit scores. Since time immemorial, traditional lenders have required borrowers to submit payslips, bank statements, and other paperwork from which they extract data related to income, spending and savings. Hopefully, Petal and other lending fintechs have learned the lesson by now. 

According to a recent development in India, banks are finding a rising incidence of forged payslips and other documents submitted by loan applicants. In order to get the true data, they're seeking online access to income tax department portal, which is the golden source for data related to income, expense, savings, investments, assets, and the overall financial health of borrowers.