Pomelo, a startup that combines international money transfer with credit, has secured a $35 million Series A funding round led by Dubai venture firm Vy Capital. TechCrunch has obtained exclusive details on this financing. Additionally, the company is expanding its warehouse facility with a $75 million investment.
Founders Fund and A* Capital, along with early investor Afore Capital and others, participated in this round. With this funding, Pomelo has raised a total of $55 million in equity capital and $125 million for its warehouse facility after its initial $20 million seed funding covered by TechCrunch in 2022.
Backer Vy Capital, a prominent investment firm managing over $5 billion in assets, has supported key ventures like Elon Musk’s Twitter acquisition. Notably, this funding round marked one of Keith Rabois’ final deals at Founders Fund before his transition to Khosla Ventures, maintaining roles in a few selected companies as a board director.
Pomelo’s CEO Eric Velasquez Frenkiel described the Series A round as “preemptive,” with significant participation from Keith Rabois and Kevin Hartz. The funding amount and valuation were not disclosed, only hinted as an “up round.”
Hartz, co-founder and general partner at A*, has a proven track record with successful ventures like Eventbrite and Xoom, acquired by PayPal for $1.1 billion in 2015.
According to Rabois, Pomelo’s unique approach to remittance transfer through credit as its foundation sets it apart in the market.
Remittance product on credit card rails
Pomelo’s launch in the Philippines in 2022 introduced a novel concept allowing US residents to send money while building their credit. Essentially, Pomelo created a remittance product utilizing credit card infrastructure.
A partnership with Mastercard led to the development of “Send Now, Pay Later” (SNPL), a faster and fee-free alternative to traditional cross-border transfers.
Image Credits: Pomelo
Pomelo’s platform enables users to manage accounts tied to credit cards, offering flexibility in limits, card management, and spending insights.
The innovative model of providing credit-based remittances supports instant access to funds, fraud protection, and credit score enhancement through transaction history. Pomelo charges late fees rather than interest, primarily generating revenue from interchange fees.
Expanding payment options to include services like GCash in the Philippines caters to critical needs, as evidenced by customer stories like Danette Flores, a nurse using Pomelo to support family members’ medical emergencies.
Customers can choose between unsecured or secured credit lines based on Pomelo’s underwriting criteria, enhancing financial inclusion and usability for diverse user segments.
With plans to enter the Mexican market next, Pomelo aims to address a significant cross-border corridor and continue its strategic expansion. The company currently operates with a team of 55 employees across the US and Philippines.
The dynamic landscape of cross-border fintech continues to evolve rapidly, with opportunities in the consumer and business sectors attracting considerable interest and investment.
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