Pomelo, a startup that combines international money transfers and credit, has raised $35 million in a Series A round led by Dubai venture firm Vy Capital, TechCrunch has learned exclusively. Additionally, the company announced a $75 million expansion of its warehouse facilities.
Founders Fund and A* Capital also participated in the financing, along with early investors Afore Capital and others.
This transaction brings total funding raised to date to $55 million in equity and $125 million for warehouse facilities. TechCrunch highlighted $20 million in seed funding in 2022 led by Pomelo's Founders Fund.
The new backer, Vy Capital, is a low-profile investment firm that has grown to more than $5 billion in assets and made headlines for backing Elon Musk in acquiring Twitter. Notably, this raise was one of Keith Lavoie's last deals before leaving Founders Fund, and one of the few companies to retain his board position after he moved to Khosla Ventures. It was also one of the companies.
“Both Keith Lavoie and Kevin Hertz had very proportional results in this round,” Pomelo founder and CEO Eric Velasquez Frenkiel said in an interview with TechCrunch. described it as a “pre-emptive” move. He declined to reveal the valuation, saying only that it was an “upward round.”
Hartz serves as co-founder and general partner of A*. Previously, he co-founded Eventbrite and Xoom, an online money transfer service that went public in 2013 and was acquired by PayPal for $1.1 billion in 2015.
“Pomelo stands out by taking a fundamentally different approach to remittance transfers based on trust,” Lavoie said in a written statement.
Remittance products on credit card rail
Pomelo launched in the Philippines in 2022, allowing people in the United States to send money to the Philippines and build credit at the same time. In other words, Pomelo built a money transfer product on the rails of credit cards.
Specifically, the startup struck a deal with Mastercard to create a product category called “Send Now, Pay Later” (SNPL). The company claims that this is “faster and has no transfer fees” compared to traditional mutual services. Movement of money at borders.
Image credit: Pomelo
Pomelo works by allowing users to set up an account attached to a credit card. Account creators can set limits, pause cards, and review spending habits.
Remitters can give cash to family members in the form of credits. The startup believes this will help with instant access to funds, protection from fraud and chargebacks, and will also be a way to boost funds for potential immigrants who use it to send money back home. Credit scores for individuals with more transaction history. If someone can't pay, Pomelo charges a late fee, so “there's no interest on the product,” Frenkiel said. The company derives its revenue primarily from interchange income, with foreign exchange accounting for a small portion.
Since its launch in 2022, Pomelo has added new payment options, most recently allowing users to transfer funds to GCash, a popular e-wallet in the Philippines (similar to Venmo in the US), in addition to cards. Features have also been added. (According to a recent article by STL Partners, 67% of Filipinos use their GCash.)
Frenkiel said this ability is especially important in countries like the Philippines, where proof of ability to pay is required before treatment. He tells the story of a nurse client, Danette Flores, who along with Pomelo sends money to her two families in the Philippines.
“My mother had a heart attack and had to be transferred to the ICU, but the hospital asked for proof of payment. My brother used his Pomelo card to get her admitted,” Flores said. .
Pomelo offers two options to its customers. Based on current underwriting criteria, it can be either an unsecured line of credit or a secured line of credit. A non-revolving line of credit for unsecured customers allows you to transfer up to $1,000 per month. On the safe side, customers can put down a deposit. In other words, Pomelo allows you to keep funds within the app that can be effectively used to open credit lines.
The startup's new funding will go toward product and market expansion. Pomelo's next target country is Mexico.
“Mexico is certainly the largest corridor for the United States, with nearly $40 billion going to Mexico every year,” Frenkiel said.
Pomelo currently has 55 employees in the United States and the Philippines.
As Christine Hall recently reported, cross-border fintech is in the spotlight right now. According to the Bank of England, the cross-border payments market is expected to reach more than $250 trillion by 2027. And experts say this is where fintechs benefit banks (pun intended), especially in the business-to-business sector, where fintechs' favored emerging technologies of artificial intelligence, machine learning, and blockchain come into play. Pointed out.
But there are other startups focused on the consumer market, such as Alza, a startup that aims to meet the various banking needs of Latin American immigrants to the United States. With Alza, users can get their girlfriends an FDIC-insured checking account and debit card. The app also has the ability to send money cross-border to more than 20 countries in Latin America or Central America in three ways: bank transfer, cash pick-up, and transfer to debit card, depending on the recipient country. is also included. The company quietly raised $6.6 million in a round led by New York-based Thrive Capital in late 2021.
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