‘Ship Now, Pay Later’ Startup Pomelo Raises $35M Series A from Secret Vy Capital, Founders Fund

Pomelo, a startup that combines international money transfers with credit, has raised $35 million in a Series A round led by Dubai venture firm Vy Capital, TechCrunch has learned exclusively. Additionally, the company announces an expansion of its warehouse facilities worth $75 million.

Founders Fund and A* Capital also participated in the financing, along with early investors Afore Capital and others.

The deal brings the total funds raised to date to $55 million in equity capital and $125 million for its warehouse facilities. TechCrunch covered GrapefruitLed by the Founders Fund Initial financing of 20 million dollars in 2022.

The new sponsor, Vy Capital, is an under-the-radar investment firm that has grown to more than $5 billion in assets and has made headlines in supporting Elon Musk in his purchase of Twitter. Notably, the raise was one of Keith Rabois’ last deals before his departure from Founders Fund, and also one of a handful of companies. in which he maintains his role as a board director after moving to Khosla Ventures.

“Both Keith Rabois and Kevin Hartz were super prorated in this round,” Pomelo founder and CEO Eric Velasquez Frenkiel said in an interview with TechCrunch, describing the Series A round as “preemptive.” He declined to reveal the valuation, saying only that it was a “bullish round.”

Hartz serves as co-founder and general partner of A*. Previously, he also 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.

In a written statement, Rabois said that “Pomelo stands out for a fundamentally different approach to remittance transfer by using credit as a basis.”

Remittance product on credit card rails

Grapefruit launched in the Philippines in 2022, allowing people in the United States to send money to the country while building their credit. In other words, Pomelo has created a remittance product based on credit cards.

Specifically, the startup has struck a deal with Mastercard to create what it describes as a product category called “Send Now, Pay Later” (SNPL), which it claims is “faster and without transfer fees” compared with traditional cross transactions. border money movement.

Pomelo works by allowing the user to set up an account that comes with credit cards. The account creator can set limits, pause cards, and view spending habits.

Senders can give cash, in the form of credit, to family members, which the startup believes will help with instant access to funds, protection against fraud and chargebacks and, for potential immigrants who can use this to send money to home, a way to boost your credit score with more transaction history. In case someone can’t pay, Pomelo charges a late fee, “so there’s no interest on the product,” Frenkiel said. The company makes money primarily through exchange revenue, with currencies being a minor component.

Since launching in 2022, Pomelo has added new payment options, including most recently the ability for users to send funds to GCash, a popular e-wallet (similar to Venmo in the US) in the Philippines, as well as cards. (According to a recent STL Partners article, 67% of Filipinos use GCash.)

This ability is particularly important in a country like the Philippines, where proof of ability to pay may be required before receiving medical treatment, Frenkiel said. He tells the client’s story. Danette Flores, a nurse who sends money to two relatives in the Philippines with Pomelo.

“My mother had suffered a heart attack and needed to be transferred to the ICU, but the hospital demanded proof of payment for it. “My brother used her Pomelo Card to get her admitted,” Flores said.

Pomelo offers its customers two options: an unsecured line of credit or a secured line of credit depending on your underwriting criteria at this time. The non-revolving line of credit for unsecured customers gives them the ability to transfer up to $1,000 per month. On the safe side, a customer can make a security deposit. In other words, Pomelo can hold funds in the application that can effectively be used to open a line of credit.

The startup’s new capital will be used to expand products and markets. Pomelo’s next target country is Mexico.

“Mexico is without a doubt the largest corridor for the United States: something close to $40 billion is sent to Mexico every year,” Frenkiel said.

Currently, Pomelo has 55 employees in the United States and the Philippines.

As Christine Hall recently reported, cross-border fintech is all the rage right now. The cross-border payments market is expected to reach more than $250 trillion by 2027, according to the Bank of England. And experts say fintechs are giving banks a run for their money (pun intended) here, especially in the business to business sector where artificial intelligence, machine learning and blockchain come into play, all emerging technologies that fintechs love.

But there are other startups focused on the consumer market, including Alza, a startup aimed at helping meet the various banking needs of Latin or Central Americans who have moved to the US. With Alza, users get a checking account and a card FDIC-insured debit cards. They also have the possibility of sending cross-border remittances to more than 20 countries in Latin or Central America integrated into their application through three methods, depending on the receiving country: bank transfer, pick-up window or transfer to a debit card. That company quietly raised $6.6 million in a round led by New York-based Thrive Capital in late 2021.

Want more fintech news in your inbox? Sign up to TechCrunch Fintech here.