This founder raised millions to build Fair, a neobank for immigrants

Fair, a multilingual digital bank and financial services platform, is launching to the public after raising $20 million in 40 days earlier this year.

Founder Khalid Parekh raised the capital primarily from the very demographic that Houston-based Fair aims to serve: from a group consisting of a number of immigrants, many of whom were first-time investors.

“There was not a single check from a VC or bank or from a family office,” Parekh told TechCrunch. “Ninety percent of our investors are minorities or are immigrants like myself that believed in the concept of Fair.”

One could say that it’s also fitting that Fair’s headquarters are in Houston, which at the time of the last census was the most ethnically diverse city in the United States.

Parekh is not your traditional fintech founder. He doesn’t have banking or financial services experience, although he does have experience founding and running a successful company: AMSYS Group, which is valued at nearly $350 million. His mission with Fair is largely personal. Upon arriving in the U.S. from India with just $100 in his pocket 22 years ago, he struggled to not only get a loan but also to open a bank account. 

Image Credits: Founder and CEO Khalid Parekh / Fair

“I was an engineer by background, but was very confused with the American banking system. There is not a lot of help for immigrants who don’t understand it well,” Parekh recalls. “My biggest challenge was sending money back home. There was just a lack of welcome.”

In 2020, he used his own cash to build out the technology behind Fair, which is designed to be an option to those who are new to the country, have no credit or need access to interest-free loans. Fair operates with Coastal Community Bank as its sponsor bank. Parekh’s goal with Fair is to provide “ethical, transparent banking” – to anyone – via a membership model that eliminates all banking fees. Members can pay a one-time membership fee of $99 (paid in full or in installments) to have access to all of Fair’s online banking and financial services.

“Another challenge that I saw is that there were hardly any options for insurance and retirement services for immigrants and low-income people,” Parekh said. “All big institutions catered to people with a lot of money. But we want to create an institution where we are fair to everybody, regardless of religion, race, color, net worth or how much is in their bank account. We want everyone to be treated the same.”

Over the past year, the nation has seen a surge of neobanks emerge aimed at specific demographics, including Greenwood, First Boulevard and Cheese. Welcome Technologies is also aimed at serving the immigrant population. 

Fair aims to differentiate itself, according to Parekh, by offering interest-free lending, as well as the ability to invest, get insurance and plan for retirement in one platform that is available in English, Arabic and Spanish (with more languages to come). Ultimately, his goal in Fair is to help address the “longstanding racial income inequalities and widening wealth disparities in the U.S.” He won’t get a salary for his role as CEO.

Among Fair’s features are free international transfer, early access to paycheck funds, “instant, interest-free” microloans — essentially buy now, pay later at the register — an annual dividend account, debit card accounts for kids and interest-free loans for home, auto and business that are equity-based. Those equity-based loans are Sharia compliant, meaning that it’s not kosher to take interest. They also comply with Jewish law.

Instead, if a member wants to buy a home, they can put 20% down, and Fair will provide 80% via an LLC, of which the member and bank will be co-owners.

“The members will have the option of buying out our shares on whatever schedule they wish,” Parekh said.

In partnership with Avibra, Fair is offering free supplemental life, accident medical and AD&D insurance to all members as part of its banking services.

Fair aims to practice socially responsible investing (SRI), an approach to investing that reduces exposure to companies that are deemed to have a negative social impact. The fintech also practices ESG investing, which measures the sustainability of an investment and its overall impact in three specific categories: environmental, social and corporate governance. And, it’s also working with the United Nations High Commissioner for Refugees and World Relief, and will donate 2.5% of profits to refugee missions globally, as well as racial economic empowerment initiatives.

Among Fair’s advisors are Manolo Sánchez, a director at Fannie Mae and Stewart Information Systems and former chair & CEO of BBVA Compass, and Samuel Golden, managing director at management consulting firm Alvarez & Marsal and founder of A&M’s Financial Industry practice.

Figure raises $7.5M to help startup employees better understand their compensation

The topic of compensation has historically been a delicate one that has left many people — especially startup employees — wondering just what drives what can feel like random decisions around pay and equity.

Last June, software engineers (and housemates) Miles Hobby and Geoffrey Tisserand set about trying to solve the problem for companies by developing a data-driven platform that aims to help companies structure their compensation plans and transparently communicate them to candidates.

Now today, the startup behind that platform, Figure, announced it has raised $7.5 million in seed funding led by CRV. Bling Capital, Better Tomorrow Ventures and Garage Capital also participated in the financing, along with angel investors such as AngelList co-founder Naval Ravikant, Jason Calacanis, Reddit CEO Steve Huffman and other executives based in Silicon Valley.

The startup has amassed a client list that includes other startups such as fintechs Brex and NerdWallet and AI-powered fitness company Tempo. 

Put simply, Hobby and Tisserand’s mission is to improve workflows and transparency around pay, particularly equity. The pair had both worked at startups themselves (Uber and Instacart, respectively) and ended up leaving money on the table when they left those companies because no one had properly explained to them what their equity, which changed at every valuation, meant.  

Image Credits: Figure co-founders and co-CEOs Miles Hobby and Geoffrey Tisserand. Image Credits: Figure

So, one of their goals was to create a solution that would provide a user-friendly explanation of what a person’s equity stake really means, from tax implications to whether or not they have to buy the stock and/or hold onto it.

“I’ve gone through the job search process many times before and there’s all these complex legal documents to understand why you’re getting 10,000 stock options, but obviously we knew the vast majority of people have no idea how that works,” Tisserand told TechCrunch. “We saw an opportunity there to help companies actually convey the value to their candidates while also making them aware of the potential risks of owning something that’s so illiquid.”

Image Credits: Figure

Another goal of Figure’s is to help create a more fair and balanced process about decisions around pay and equity so that there’s less inequality out there. Pointedly, it aims to remove some of the biases that exist around those decisions by systematizing the process.

“We saw a void in this kind of context around equity…and knew that there had to be a better way for companies to structure, manage and explain their compensation plans,” Hobby said.

To Hobby and Tisserand, Figure is designed to help stop instances of implicit bias.

“Compensation should be based on the work that you’re doing, and not gender or ethnic background,” Tisserand told TechCrunch. “We’re trying to give that context and remove biases. So, we’re trying to help at two different stages –– to surface inequities that already exist and make sure there are no anomalies, and then to help stop them before they can exist.”

Figure also aims to give companies the tools to educate candidates and employees on their total compensation — including equity, salary, benefits and bonuses — in a “straightforward and user-friendly” way. For example, it can create custom offer letters that interactively detail a candidate’s compensation.

“Our goal is for Figure to become an operating system for compensation, where a company can encode their compensation philosophy into our system, and we help them determine their job architecture, compensation bands and offer numbers while monitoring their compensation health to provide adjustment suggestions when needed,” Hobby said.

Post-hire, Figure’s compensation management system “helps keep everything running smoothly.”

Anna Khan, general partner of enterprise software at CRV, is joining Figure’s board as part of the funding. The decision to back the startup was in part personal, she said.

“I’d been investing in software for eight years and was alarmed that no one was building anything around pay equity when it comes to how we’re paid, why we’re paid what we’re paid and on how to build equity long term,” Khan told TechCrunch. “Unfortunately, discussions around compensation and equity still happen behind closed doors and this extends into workflow around compensation — equally broken — with manual leveling, old data and large pay inequities.”

The company plans to use its new capital to expand its product offerings and scale its organization.

TechCrunch Survey of Scottish Tech Hubs: Edinburgh, Glasgow, Dundee, Aberdeen

TechCrunch is embarking on a major new project to survey European founders and investors in cities outside the larger European capitals.

Over the next few weeks, we will ask entrepreneurs in these cities to talk about their ecosystems, in their own words.

This is your chance to put Edinburgh, Glasgow, Dundee, Aberdeen on the Techcrunch Map!.

If you are a tech startup founder or investor in one of these cities please fill out the survey form here.

We are particularly interested in hearing from women founders and investors.

This is the follow-up to the huge survey of investors (see also below) we’ve done over the last six or more months, largely in Europe’s biggest capital cities.

These formed part of a broader series of surveys we’re doing regularly for ExtraCrunch, our subscription service that unpacks key issues for startups and investors.

In the first wave of surveys, the cities we wrote about were largely capitals. You can see them listed here.

This time, we will be surveying founders and investors in Europe’s other cities to capture how European hubs are growing, from the perspective of the people on the ground.

We’d like to know how your city’s startup scene is evolving, how the tech sector is being impacted by COVID-19, and generally how your city will evolve.

We leave submissions mostly unedited and are generally looking for at least one or two paragraphs in answers to the questions.

So if you are a tech startup founder or investor in one of these cities please fill out our survey form here.

Thank you for participating. If you have questions you can email mike@techcrunch.com and/or DM on Twitter to @mikebutcher.

HoneyBook raises $155M at $1B+ valuation to help SMBs, freelancers manage their businesses

HoneyBook, which has built out a client experience and financial management platform for service-based small businesses and freelancers, announced today that it has raised $155 million in a Series D round led by Durable Capital Partners LP.

Tiger Global Management, Battery Ventures, Zeev Ventures, 01 Advisors as well as existing backers Norwest Venture Partners and Citi Ventures also participated in the financing, which brings the New York-based company’s valuation to over $1 billion. With the latest round, HoneyBook has now raised $215 million since its 2013 inception. The Series D is a big jump from the $28 million that HoneyBook raised in March 2019. 

When the COVID-19 pandemic hit last year, HoneyBook’s leadership team was concerned about the potential impact on their business and braced themselves for a drop in revenue.

Rather than lay off people, they instead asked everyone to take a pay cut, and that included the executive team, who cut theirs “by double” the rest of the staff.

“I remember it was terrifying. We knew that our customers’ businesses were going to be impacted dramatically, and would impact ours at the same time dramatically,” recalls CEO Oz Alon. “We had to make some hard decisions.”

But the resilience of HoneyBook’s customer base surprised even the company, who ended up reinstating those salaries just a few months later. And, as corporate layoffs driven by the COVID-19 pandemic led to more people deciding to start their own businesses, HoneyBook saw a big surge in demand.

“Our members who saw a hit in demand went out and found demand in another thing,” Oz said. As a result, HoneyBook ended up doubling its number of members on its SaaS platform and tripling its annual recurring revenue (ARR) over the past 12 months. Members booked more than $1 billion in business on the platform in the past nine months alone. 

HoneyBook combines tools like billing, contracts, and client communication on its platform with the goal of helping business owners stay organized. Since its inception, service providers across the U.S. and Canada such as graphic designers, event planners, digital marketers and photographers have booked more than $3 billion in business on its platform. And as the pandemic had more people shift to doing more things online, HoneyBook prepared to help its members adapt by being armed with digital tools.

Image Credits: HoneyBook

“Clients now expect streamlined communication, seamless payments, and the same level of exceptional service online, that they were used to receiving from business owners in person,” Alon said.

Oz and co-founder/wife, Naama, were both small business owners themselves at one time, so they had firsthand insight on the pain points of running a service-based business. 

HoneyBook’s software not only helps SMBs do more business, but helps them “convert potentials to actual clients,” Oz said.

“We help them communicate with potential clients so they can win their business, and then help them manage the relationship so they can keep them,” Naama said.

The company plans to use its new capital toward continued product development and to “dramatically” boost its 103-person headcount across its New York and Tel Aviv offices.

“We’re seeing so much demand for additional services and products, so we definitely want to invest and create better ways for our members to present themselves online,” Alon told TechCrunch. “We’re also seeing demand for financial products and the ability to access capital faster. So that’s just a few of the things we plan to invest in.”

The company also wants to make its platform “more customizable” for different categories and verticals.

Chelsea Stoner, general partner at Battery Ventures, said her firm recognized that the expansive market of productivity tools to serve small businesses and entrepreneurs was “a market of discrete and separate productivity tools.”

HoneyBook, she said, is a true platform for SMBs, “providing a huge array of functionality in one cohesive UX.”

“It unites and connects every task for the solopreneurs, from creating and distributing marketing collateral, to organizing and executing proposals, to sending invoices and collecting payments,” Stoner said. “The company is constantly innovating and iterating in response to its members; we also see a lot of opportunity with payments going forward…And, due to Covid-19 and other factors, the company is sitting on pent-up demand that will accelerate growth even more.”

Sorbet raises $6M Seed led by Viola Ventures to tackle the thorny financials of Paid Time Off

A US/Israeli startup, Sorbet — which is tackling what companies do with the financial risks as employees accrue Paid Time Off (PTO) — has raised $6 million in a Seed funding round led by Viola Ventures, with participation by Global Founders Capital, Meron Capital.

The economics of Paid Time Off is relatively hidden in the business world, but essentially,
Sorbet takes on the burden of this PTO from employers and then allows employees to spend it. This gives the employers far more control over the whole process and the ability to forecast its impact on the business.

Sorbet says that in the US, employees use only 72% PTO balances, even though it’s the most sought-after benefit. But this, effectively, comes out at 768 million unused days off a year, worth around $224 billion. This creates a difficult problem for CFO’s and accountants because its creates balance sheet liabilities on the company’s books, says Sorbet. If the employee doesn’t use all of their PTO, the employer can end up owing them a lot of money which creates a cash flow liability on the company’s books. So Sorbet buys out these PTO liabilities from employees, then loads the cash value of the PTO on prepaid Credit Cards for the employees.

Speaking to me on a call, CEO and cofounder Veetahl Eilat-Raichel, said: “We researched this whole idea of paid time off and found this huge, massive market failure and inefficiency around the way that PTO is constructed. It’s kind of one of those things where, on the face of it, there’s this boring bureaucratic payroll item that turns into a boring balance sheet item. But under it is a $224 billion problem for US businesses… If you think about it, employers are borrowing money from their employees at the worst terms possible and employees aren’t benefitting either. So everyone’s hurting here.”

She said: “Sorbet assumes the liability on ourselves and so then we can allow the company to control their cash flow and decide when they want to pay us back. They gain a lot of financial value because we are able to be very, very attractive on our funding. So it saves costs, it provides them with complete control of their cash flow, and it allows them to give out amazing financial benefits to employees at a time where we can all use some extra cash right now.”

The platform Sorbet has built will, it says, sync with calendars, HR, and payroll systems, identifies habits, and then proactively suggests personalized, pre-approved 3-6 hour “Micro Breaks”, 1-4 day “Micro Vacations” and +1 week Vacations. This, says the startup, increases PTO used by as much as 15%.

Employers can constantly renegotiate the terms of the loan with Sorbet, thus matching future cash flow, insulating themselves against salary raises (wage inflation), and take advantage of other benefits.

The cofounders are Eilat-Raichel, who previously worked at L’Oreal and Lockheed Martin, and a Fintech entrepreneur; Eliaz Shapira, co-founder and CPO; and Rami Kasterstein co-founder and board Member.

Biden’s labor secretary thinks many gig workers should be reclassified as employees

Biden Labor Secretary Marty Walsh charged into the white hot issue of the gig economy Thursday, asserting that many people working without benefits in the gig economy should be classified as employees instead.

In an interview with Reuters, Walsh said that the Department of Labor is “looking at” the gig economy, hinting that worker reclassification could be a priority in the Biden administration.

“… In a lot of cases gig workers should be classified as employees,” Walsh said. “In some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board.”

Walsh also said that the labor department would be talking to companies that benefit from gig workers to ensure that non-employees at those companies have the same benefits that an “average employee” in the U.S. would have.

“These companies are making profits and revenue and I’m not [going to] begrudge anyone for that because that’s what we are about in America… but we also want to make sure that success trickles down to the worker,” Walsh said.

Walsh’s comments aren’t backed by federal action, yet anyway, but they still made major waves among tech companies that leverage non-employee labor. Uber and Lyft stock dipped on the news Thursday, along with Doordash.

In the interview, Walsh also touched on pandemic-related concerns about gig workers who lack unemployment insurance and health care through their employers. The federal government has picked up the slack during the pandemic with two major bills granting gig workers some benefits, but otherwise they’re largely without a safety net.

Reforming labor laws has been a tenet of Biden’s platform for some time and the president has been very vocal about bolstering worker protections and supporting organized labor. One section of then President-elect Biden’s transition site was devoted to expanding worker protections, calling the misclassification of employees as contract workers an “epidemic.”

Biden echoed his previous support for labor unions during a joint address to Congress Wednesday night, touting the Protecting the Right to Organize Act — legislation that would protect workers looking to form or join unions. That bill would also expand federal whistleblower protections.

“The middle class built this country,” Biden said. “And unions build the middle class.”

The TechCrunch Survey of Dutch tech hubs: Calling Delft, Eindhoven, Rotterdam, Utrecht

TechCrunch is embarking on a major new project to survey European founders and investors in cities outside the larger European capitals.

Over the next few weeks, we will ask entrepreneurs in these cities to talk about their ecosystems, in their own words.

This is your chance to put Delft, Eindhoven, Rotterdam, Utrecht on the Techcrunch Map!. We covered Amsterdam here.

If you are a tech startup founder or investor in one of these cities please fill out the survey form here.

We are particularly interested in hearing from women founders and investors.

This is the follow-up to the huge survey of investors (see also below) we’ve done over the last six or more months, largely in capital cities.

These formed part of a broader series of surveys we’re doing regularly for ExtraCrunch, our subscription service that unpacks key issues for startups and investors.

In the first wave of surveys, the cities we wrote about were largely capitals. You can see them listed here.

This time, we will be surveying founders and investors in Europe’s other cities to capture how European hubs are growing, from the perspective of the people on the ground.

We’d like to know how your city’s startup scene is evolving, how the tech sector is being impacted by COVID-19, and generally how your city will evolve.

We leave submissions mostly unedited and are generally looking for at least one or two paragraphs in answers to the questions.

So if you are a tech startup founder or investor in one of these cities please fill out our survey form here.

Thank you for participating. If you have questions you can email mike@techcrunch.com and/or reply on Twitter to @mikebutcher.

The gig is up on 21st-century exploitation

Today’s app-based or “gig” economy is frequently dressed up in talk about “modern innovation” and the “21st century of work.” This facade is a wolf in sheep’s clothing.

Precarious, contingent work is nothing new — we’ve always had jobs that are low-paying, insecure and dismissed as “unskilled.” Due to systemic racism and a historically exploitative economy, workers of color have always been, and continue to be, heavily concentrated in the most exploitative industries.

The only difference is that today, companies like Uber, DoorDash and Instacart claim they don’t have to play by the rules because they use digital apps to manage their workforce. Even as many of these tech giants remain unprofitable, they have been allowed for far too long to shirk responsibility for providing safe and just working conditions where workers can thrive on and off the job.

Even as many of these tech giants remain unprofitable, they have been allowed for far too long to shirk responsibility for providing safe and just working conditions where workers can thrive on and off the job.

Workers’ rights in the so-called gig economy are often positioned as a modern problem. But when we think about the problems faced by gig and app-based workers, who are predominantly people of color, we must learn from the past in order to move forward to a just economy.

The federal government has long failed to address widespread worker exploitation. Since the passage of the National Labor Relations Act, jobs like agricultural and domestic work, which were largely performed by workers of color, were carved out of labor rights and protections. The “independent contractors” of today, who are largely workers of color, fall into this same category of workers who have been excluded from labor laws. Combined, Black and Latinx workers make up less than 29% of the nation’s total workforce, but they comprise almost 42% of workers for app-based companies.

Gig companies argue that the drivers, delivery people, independent contractors and other workers who build their businesses, take direction from them and whose pay they set are millions of tiny businesses that do not need baseline benefits and protections. They do this in order to shield themselves from taking responsibility for their frontline workforce. Corporations then avoid paying basic costs like a minimum wage, healthcare, paid sick leave, compensation coverage and a litany of other essential benefits for their employees. For many workers, these conditions only serve to proliferate inequality nationwide and ultimately uphold a deeply flawed economy built upon worker exploitation and suffering.

App-based companies are the face of a larger, sinister trend. Over the last four decades, federal policies have greatly eroded the bargaining power of workers and concentrated more power in the hands of corporations and those who already have substantial wealth and power. This has perpetuated and worsened the racial wage and wealth gaps and contributed to the ever-increasing degradation of working conditions for too many.

It’s clear that, in order to build an economy that works for all people, “gig” and app-based companies cannot be allowed to exploit their workers under the guise of “innovation.” These companies claim their workers want to remain independent contractors, but what workers want is good pay, job security, flexibility and full rights under federal laws. This is a reasonable and just demand — and necessary to close generational gender and racial wealth gaps.

App-based companies are pouring significant resources into promoting government policies that prop up their worker exploitation model. Uber, Lyft, DoorDash Instacart and other app-based companies are loudly peddling misinformation in state legislatures, city councils and federal offices. Elected leaders at all levels need to recognize these policies for what they are — corporate efforts to rewrite the laws to benefit them — and reject the corporate interests behind the policies that carve out workers from universal protections.

Congress must also reject exclusions that lock people of color out of basic employment protections and pass legislation to extend protections to all workers, including app-based workers. The PRO Act is a great first step, which extends bargaining protections to workers who have been wrongly classified as “independent contractors” by their employers.

Across the country, app-based workers have organized to protect their health and safety and demand that their rights as workers be recognized and protected. Elected leaders cannot keep falling for corporate propaganda claiming a “21st-century” model. Work in the 21st century is still work; work that is organized on an app is still work.

We call on Congress to recognize the labor rights and protections of all workers and act boldly to ensure that app-based companies cannot block workers from equal rights in the name of “flexibility” and “innovation.”

Score a Free 30-day Extra Crunch membership when you buy a pass to TC Sessions: Mobility 2021

Does the science, technology — and yes, art — of creating new ways to transport people and parcels get your EV motor running? Then join us on June 9 at TC Sessions: Mobility 2021.

We’ll pack the day with interactive presentations and breakout sessions. Explore new tech, find emerging trends, discover what’s catching investor interest — and learn about evolving regulatory issues that affect the way mobility startups engage with cities and towns around the globe.

Buy your pass and take advantage of this extra perk — one free month of access to Extra Crunch, our members-only program featuring exclusive daily articles for founders and startup teams. Can you say value add? Yes, yes you can.

Pro Tip 1: Did you already buy a pass? No worries — we’ll email existing pass holders details on how they can claim their free Extra Crunch membership. All new ticket purchasers will receive information via email immediately after they complete their purchase.

Pro Tip 2: Do you already subscribe to Extra Crunch? Simply email extracrunch@techcrunch.com, tell us you’re an existing Extra Crunch member who bought a ticket to TC Sessions: Mobility 2021, and we’ll happily extend your membership.

TechCrunch always delivers the top experts in their field, and this event is no exception. You’ll connect and engage with the mobility movers, shakers, influencers and makers. It’s an opportunity to expand your network, find funding, forge new partnerships and yes, scope out your competition, too.

Here’s a peek at just some of the super speakers who will grace TC Mobility 2021’s virtual stage.

Can mobility be accessible, equitable and profitable? We tapped three heavy hitters to tackle this hot topic: Tamika L. Butler, a community organizer, transportation consultant and lawyer, Remix Co-founder and CEO, Tiffany Chu and Frank Reig, Revel co-founder and CEO.

Joby Aviation founder, JoeBen Bevirt and Reid Hoffman, a LinkedIn co-founder and an investor who knows a thing or two about SPACs, will share their expertise on building a startup, keeping it secret while raising funds, the future of flight and, of course, SPACs.

What do people say about their Mobility experience? Rachael Wilcox, a creative producer at Volvo Cars — and a serial TC Sessions: Mobility attendee — told us why she makes it a point to attend every year.

“I go to TC Sessions: Mobility to find new and interesting companies, make new business connections and look for startups with investment potential. It’s an opportunity to expand my knowledge and inform my work.”

TC Sessions: Mobility 2021 takes place on June 9. Early bird savings remain in effect until May 5, at 11:59 pm (PT). Buy your pass now, save money and enjoy one month of free access to Extra Crunch. Yay!

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2021? Contact our sponsorship sales team by filling out this form.

Tribal Credit, which provides credit cards to startups in emerging markets, raises $34.3M

The B2B payments space has seen an explosion in demand, and investor interest, in the wake of the COVID-19 pandemic as businesses try to figure out how to pay each other digitally. The challenges become even more complex when dealing with cross-border payments.

Startups that were formed before the pandemic stand to benefit from the shift. One such startup, Tribal Credit, launched its beta in late 2019 to provide payment products for startups and small to medium-sized businesses (SMBs) in emerging markets.

Today, Tribal Credit announced it has raised $34.3 million in a combined Series A and debt round led by QED Investors and Partners for Growth (PFG). Existing backers BECO Capital, Global Ventures, OTG Ventures and Endure Capital also participated in the round, along with new investor Endeavor Catalyst. The raise follows “10x” year-over-year growth, according to CEO and co-founder Amr Shady.

As part of the investment, Tribal received $3 million from the Stellar Development Foundation, a nonprofit organization that supports the development and growth of the open-source Stellar blockchain network. 

Tribal uses a proprietary AI-driven underwriting approval process to evaluate businesses and approve them for credit lines. Those businesses can then use those credit lines to spend on Tribal’s products, Tribal Card and Tribal Pay. Tribal Card is a business Visa card that allows users to create physical and virtual multi-currency cards. Tribal Pay allows them to make payments to merchants and suppliers that don’t accept credit cards. 

The company says its value proposition lies not only in its ability to provide SMEs with virtual and physical corporate cards, but also a digital platform that allows founders and CFOs “to give access to and manage the spend of their distributed teams.”

“We’ve seen more demand for making B2B online payments amidst the ongoing COVID-19 pandemic, with many SMEs migrating to digital and spending more on online products and services,” Shady told TechCrunch. “Companies in this new economy are digital and global first. The need for a corporate card was accelerated. As card spend grew during the pandemic, this meant greater liability on founders’ using their personal cards, or other competing cards linked to their personal credit.” 

Tribal, he said, underwrites the company without impacting the founders’ credit. 

Another accelerator for its products was how the pandemic forced teams to work remotely. Founders and CFOs needed a way to provide access to corporate payments while maintaining control, Shady pointed out. Tribal’s platform aims to streamline financial operations for a distributed team. 

Of course, Tribal is not the only company offering credit cards for startups. Brex, which has amassed $465 million in venture capital funding to date, also markets a credit card tailored for startups. While the companies are similar, there is a distinct difference, according to Shady: “Emerging market SMEs have different pains, particularly when it comes to cross-border payments.”

Tribal’s initial efforts are focused on Latin America, in particular Mexico, which is the startup’s biggest market.

Its new capital will go toward accelerating its growth in the region, according to Shady. In particular, the equity will go toward growing Tribal’s leadership team in Mexico, while the debt will fuel the company’s customers’ growing credit lines, Shady said.

“We have invested heavily in our product over the past year,” Shady said. “We’re the first mover in our segment in LatAm with a diverse suite of SME products that includes corporate cards, wire payments and treasury services. We’re incredibly excited by the future ahead of us in Mexico and beyond.” 

Customers include Minu, Ben and Frank, Fairplay and SLM, among others.

Looking ahead, Tribal is exploring four other Latin American markets and expects to be operational in one new market by year’s end, according to Shady.

Image Credits: Tribal Credit

QED Investors partner Lauren Morton said her firm has been following payments and the lending needs of SMEs in emerging markets closely.

“Compared with everything else we’ve seen in this market, Tribal has a differentiated and superior product that meets customers’ needs in a way that no competitor can match,” she said in a written statement. 

Morton went on to note that Tribal has had strong traction in Mexico, with adoption from “fast-growing startups” across the country, including many companies within QED’s own portfolio. 

PFG is providing the debt facility for Tribal. In addition to funding from PFG’s global fund, the firm will be co-investing from its Latin America Growth Lending Fund in partnership with IDB Invest and SVB Financial Group, the parent company of Silicon Valley Bank. 

Tribal Credit previously raised $7.8 million in a series of seed rounds. The latest round brings its total raised to $42.1 million. Tribal Credit also joined Visa’s Fintech Fast Track Program, a move that it said should accelerate its integration with Visa’s global payment network.  The company currently has 75 employees, up from 31 last year.