Pomelo, a startup that mixes international money transfer with lending, has raised $35 million in a Series A round led by Dubai enterprise capital firm Vy Capital, TechCrunch has learned exclusively. Additionally, the corporate is announcing a $75 million expansion of its warehouse facility.
Founders Fund and A* Capital in addition to early investor Afore Capital and others also participated within the financing.
The deal brings the whole funds raised thus far to $55 million in equity and $125 million for the warehouse facility. TechCrunch reported on the $20 million in seed funding led by Pomelo’s Founder Fund in 2022.
New backer Vy Capital is an under-the-radar investment firm that has grown to over $5 billion in assets and made headlines supports Elon Musk in buying Twitter.
Pomelo’s recent funding round was amongst Keith Rabois’ last deals before he recently left Founders Fund for Khosla Ventures, and he stays on the board.
“Both Keith Rabois and Kevin Hartz were super-participating in this round,” Pomelo founder and CEO Eric Velasquez Frenkiel said in an interview with TechCrunch, describing the Series A round as “preemptive.” He declined to disclose the valuation, saying only that it was an “upward round.”
Hartz is co-founder and general partner of A*. He also previously co-founded Eventbrite and Xoom, a web based money transfer service that went public in 2013 and was acquired by PayPal in 2015 for $1.1 billion.
In a written statement, Rabois said: “Pomelo is characterized by a fundamentally different approach to remittances, using credit as the foundation.”
Transfer product on bank card rails
Launched within the Philippines in 2022, Pomelo allows people within the United States to send money to the country while constructing their credit rating. In other words, Pomelo has developed a credit card-based transfer product.
Notably, the startup has reached an agreement with Mastercard to create a product category called “Send Now, Pay Later” (SNPL), which is “faster and has no transfer fees” in comparison with traditional cross-cards. Border money movement.
Photo credit: Pomelo
Pomelo works by allowing a user to establish an account equipped with bank cards. The account creator can set limits, pause cards, and examine spending habits.
Senders may give money to relations in the shape of loans – which the startup believes helps provide immediate access to funds, protects against fraud and chargebacks, and is a way for would-be immigrants who could use it to send money home to spice up their very own credit rating with more transaction history. In the event someone cannot pay, Pomelo charges a late fee, “so there’s no interest on the product,” Frenkiel said. The company makes money primarily through interchange revenue, and foreign exchange accounts for a smaller portion.
Since its launch in 2022, Pomelo has added recent payment options, including most recently the power for users to send money alongside cards to GCash, a well-liked e-wallet (much like Venmo within the US) within the Philippines. (According to a recent article from STL Partners, 67% of Filipinos use GCash.)
This ability is especially vital in a rustic just like the Philippines, where proof of ability to pay could also be required before medical treatment, Frenkiel said. He tells the story of customer Danette Flores, a nurse who uses Pomelo to send money to 2 relations within the Philippines.
“My mother had suffered a heart attack and had to be transferred to the intensive care unit, but the hospital asked for proof of payment for this. “My brother used his Pomelo Card to let them in,” Flores said.
Pomelo offers its customers two options: either an unsecured line of credit or a secured line of credit, based on current underwriting criteria. The non-revolving line of credit for unsecured customers gives them the choice to transfer as much as $1,000 per 30 days. On the secured site, a customer can place a deposit. In other words, Pomelo can hold funds within the app that may effectively be used to open a line of credit.
The startup’s recent capital will flow into product and market expansion. Pomelo’s next destination is Mexico.
“Mexico is certainly the largest corridor for the United States – almost $40 billion is transferred to Mexico every year,” Frenkiel said.
Pomelo currently employs 55 people within the United States and the Philippines.
As Christine Hall recently reported, cross-border fintech is all the fad right away. According to this, the marketplace for cross-border payments is anticipated to succeed in a volume of over 250 trillion US dollars by 2027 Bank of England. And experts say fintechs are giving banks a run for his or her money here (pun intended), particularly within the US Business-to-business sector where artificial intelligence, machine learning and blockchain come into play – all recent technologies that fintechs love.
But there are also other startups focused on the buyer market, including Alza, a startup that goals to fulfill the assorted banking needs of Latin or Central Americans who’ve moved to the United States. With Alza, users get an FDIC-insured checking account and a debit card. In addition, within the app they’ve the choice to send cross-border transfers to greater than 20 countries in Latin or Central America, in 3 ways depending on the recipient country: bank transfer, money pickup or transfer to a debit card. That company quietly raised $6.6 million in a round led by New York-based Thrive Capital in late 2021.
