Kapor Capital & Sam Wen Invest $10M in Tomocredit Series A

Addressing Credit Access Challenges with TomoCredit

For many consumers, establishing a credit history can prove to be a significant hurdle, particularly when initial access to credit is limited.

TomoCredit has emerged as a fintech company dedicated to assisting first-time borrowers in building their credit. The San Francisco-based startup recently announced the successful completion of a $10 million Series A funding round.

Funding Details and Key Investors

This funding round was co-led by Kapor Capital and KB Investment Inc. (KBIC), a subsidiary of a prominent South Korean banking institution.

Additional participation came from Lewis & Clark Ventures, AME Cloud Ventures, Knollwood Investment Advisory, WTI, Bronze, and Sam Wen, the co-founder of Square.

This new injection of capital follows a $7 million seed funding round secured just over seven months prior, bringing the company’s total funding for the year to $17 million.

Furthermore, TomoCredit has appointed Ash Gupta, formerly the CRO at American Express, to its board of directors.

The Genesis of TomoCredit

The concept for TomoCredit originated with co-founder and CEO Kristy Kim, who experienced firsthand the difficulties of securing an auto loan in her early 20s.

Having immigrated to the U.S. from South Korea, Kim found that her lack of established credit history was a major impediment, despite having stable employment and consistent income.

In January 2019, she partnered with Dmitry Kashlev, also an immigrant, to develop a solution for individuals facing similar credit challenges. Later that year, the startup was accepted into the Barclays Accelerator, powered by Techstars.

A Unique Approach to Credit Building

TomoCredit offers a credit card designed to help first-time borrowers establish a credit history based on their cash flow, rather than traditional FICO scores or credit reports.

A key differentiator, according to Kim, is the card’s absence of fees, APR, and credit checks. Unlike conventional credit products that rely on these elements, TomoCredit generates revenue through merchant fees.

TomoCredit utilizes Finicity’s data network and open banking technology, acquired by Mastercard, to securely access applicants’ bank account data for underwriting purposes.

Expanding Financial Inclusion

Approved applicants receive the TomoCredit Mastercard, with the aim of integrating “millions of individuals lacking a credit score into the financial system.”

This initiative seeks to empower a diverse range of consumers to qualify for mortgages, auto loans, and other significant financial products.

TomoCredit has already pre-approved over 300,000 customers and anticipates issuing a total of 500,000 cards by the end of the year.

The company has experienced substantial growth, with a tenfold increase in users since the beginning of 2021, prompting an earlier-than-expected Series A round.

Broader Market Appeal

Kim has noted a surprising level of interest from a diverse consumer base.

Initially targeting international students and immigrants, TomoCredit has discovered that its product benefits a wider audience, including gig economy workers, content creators, and young adults who have not yet had the opportunity to build credit.

Future Plans: The Tomo Black Card

In early 2022, TomoCredit plans to launch the Tomo Black card, a premium product designed for existing customers demonstrating positive financial performance. The card is currently being tested with a select group of users.

Kim emphasizes the company’s commitment to long-term customer relationships, aiming to provide a product that evolves with their needs, rather than serving as a temporary fix.

The startup intends to utilize the new funding to expand its team and enhance features like weekly autopay and increased credit limits, with the goal of accelerating credit score improvement.

Currently employing around 30 individuals, up from 10 at the time of its previous funding round, TomoCredit is prioritizing talent acquisition.

Diversity and Inclusion as Core Values

Kim highlights the importance of diversity in the company’s hiring practices, stating that they prioritize recruiting individuals who reflect the communities they serve.

With over 50% of executives being female and an entirely female risk team, TomoCredit strives to build a team that understands and addresses the needs of traditionally underserved consumers.

Addressing a Significant Market Need

Brian Dixon, partner at Kapor Capital, points out that approximately 45 million people in the U.S. lack credit scores, hindering their ability to access loans, credit cards, and mortgages.

Dixon commends Kim for identifying this issue firsthand and developing a solution that circumvents the shortcomings of the existing credit card system.

He believes TomoCredit’s fee-free model offers a “safe and affordable alternative” and aligns with Kapor Capital’s mission of expanding access and opportunity in the credit space.