Spinning Forward

It’s a big day for the teams at Petal and Prism Data

This morning, Petal announced $35 million in new funding, raised in the most difficult technology funding environment in a decade. We also announced that Petal has spun off Prism Data into an independent company.

We’re thankful for the continued support of Valar Ventures and our other investors, and proud to welcome onboard Synchrony, Samsung Next and Core Innovation Capital — amazing firms who share our commitment to creating a more inclusive financial system.

In 2016, we founded Petal around a transformational idea: it was clear to us that two trends — advances in machine learning, and the advent of open banking — would soon make it possible for consumers to use their banking history to establish a credit history. We believed this approach, which we refer to as cash flow underwriting, could make credit more accessible to millions of people who have long been overlooked by the financial system.

That idea was unproven. We spent years building novel technology, infrastructure, and data models to test the approach. And we found that it worked — better than we ever expected. Over time, we developed our own score — the CashScore™ — to predict credit risk based on banking history instead of credit history. The CashScore analyzes thousands of data points that are missing from traditional credit scores, including economic fundamentals like the money you earn and the bills you pay on a monthly basis. The result is a more inclusive, more accurate, and more fair way to measure creditworthiness. The CashScore can be used to evaluate millions of consumers who lack traditional credit scores, and also adds significant insight beyond credit scores when they’re available.

The results speak for themselves: a majority of consumers approved for Petal credit cards since our 2018 launch had either thin or no credit history when they were first approved. And members who joined with no prior credit history have gone on to achieve an average credit score of 681 after 12 months as Petal cardholders. That’s a fantastic step forward in peoples’ financial journeys.

In 2021, we established Prism Data to help other businesses benefit from cash flow underwriting. We believed that cash flow underwriting had the potential to change the way consumer finance works across the board — not only in credit cards, but everywhere that creditworthiness is evaluated, from personal and Buy-Now-Pay-Later loans to auto loans, mortgages and more, offered by anyone from the biggest banks to the smallest fintechs. Prism took the cash flow underwriting technology initially created by Petal, combined it with a lot more data, and developed it into a full suite of products that make it easy and fast for clients to incorporate banking data into underwriting or financial decision-making.

Prism’s products add material predictive power beyond traditional credit scoring models; they can surface hidden obligations like rent, BNPL usage, and payday loans; they can detect first-party fraud before it happens; they can guide more effective servicing of existing portfolios; they can further a CRA or financial inclusion strategy; and they can be easily integrated with existing in-house tools and processes.

Since launch, the market response to Prism has been stunning. Spinning it out now, with open banking on the horizon in the U.S. and lenders increasingly focused on reducing risk, will accelerate the adoption of cash flow underwriting technology across the financial services industry. Prism will be a catalyst for making an entire spectrum of financial services much more accessible for millions of people — in the U.S. and around the world.

Simply put: Prism Data will finally bring credit scores into the 21st century.

Although the foundations for Prism go back many years, today marks the beginning of a whole new journey. We’re grateful to so many people for helping us reach this milestone, including the hundreds of investors, employees, partners and friends of Petal and Prism Data who have contributed along the way. Thanks in particular to our small but mighty Prism Data team, and in particular Erin Allard who has been integral to Prism’s success. We couldn’t have done this without you all, and we look forward to the incredible opportunities ahead.

Best wishes,

Jason