Pomelo, a startup amalgamating international money transfer with credit services, has secured $35 million in a Series A funding round led by Dubai-based venture firm Vy Capital, TechCrunch has learned exclusively. Additionally, the company has announced a $75 million expansion of its warehouse facility.
Founders Fund and A* Capital also joined the financing, alongside early investor Afore Capital, among others.
This deal brings Pomelo’s total funds raised to $55 million in equity capital and $125 million for its warehouse facility. TechCrunch previously reported on Pomelo’s $20 million seed funding led by Founders Fund in 2022.
New investor Vy Capital is an under-the-radar investment firm managing over $5 billion in assets, notable for backing Elon Musk in his acquisition of Twitter.
Pomelo’s latest funding round was among Keith Rabois’ final deals before departing Founders Fund for Khosla Ventures. Rabois continues to serve on Pomelo’s board.
“Both Keith Rabois and Kevin Hartz heavily participated in this round,” said Pomelo founder and CEO Eric Velasquez Frenkiel in an interview with TechCrunch, characterizing the Series A round as “preemptive.” He declined to disclose the valuation, stating only that it was an “up round.”
Hartz, co-founder and general partner at A*, previously 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 statement, Rabois noted that “Pomelo distinguishes itself through a fundamentally different approach to remittance transfer, leveraging credit as its foundation.”
Remittance Product on Credit Card Infrastructure
Pomelo debuted in the Philippines in 2022, facilitating money transfers from the United States to the country while simultaneously assisting users in building credit. Essentially, Pomelo has developed a remittance product utilizing credit card infrastructure.
The startup has partnered with Mastercard to establish a product category termed “send now, pay later” (SNPL), which it claims is “faster and incurs no transfer fees” compared to conventional cross-border money transfers. Pomelo operates by enabling users to establish accounts with accompanying credit cards, allowing account creators to set limits, pause cards, and monitor spending patterns.
Senders can provide cash, in the form of credit, to family members — a feature Pomelo believes aids in instant fund access, fraud prevention, chargeback protection, and, for potential immigrants using the service, credit score enhancement through increased transaction history. In instances where payment cannot be made, Pomelo imposes a late fee, ensuring no interest is accrued on the product. The company primarily generates revenue through interchange fees, with foreign exchange constituting a smaller portion.
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Since its launch in 2022, Pomelo has expanded its payment options, most recently enabling users to transfer funds to GCash, a prominent e-wallet (similar to Venmo in the U.S.) in the Philippines, in addition to cards. (According to a recent report by STL Partners, 67% of Filipinos utilize GCash.)