Fintech startup Float has raised $3 million through an angel round with contributors including Camp One Ventures, Funders Club and the 500 Startups accelerator program. The funds will be allocated toward product and relationship development along with marketing.
In a release, Float said 63 per cent of millennials do not own a credit card, one in three have never applied for one, and 45 per cent and considered “thin file”, industry slang for people with little track record at traditional credit bureaus.
“We believe access to affordable credit should not be reserved just for those with a lot of credit history and prime FICO scores,” Float cofounder and CEO Max Klein said. “As someone with plenty of experience dealing with overdrafts, I know the frustration first-hand felt by 40 per cent of my peers – I was getting charged a $35 overdraft fee for buying a $5 latte.
“We built Float to help consumers avoid costly overdraft charges while empowering them to begin building credit with transparent, affordable living capital.”
After commencing testing in the summer of 2016, Float saw a 124 per cent compound growth rate from July through November. They empower young consumers establish creditworthiness through personalized, non-FICO-based underwriting which helps Float make decisions in seconds. Applying with Float does not hurt one’s credit score but could actually help it, the company said.
Float offers open-ended credit lines ranging from $50-$1,000, and charges a flat five per cent transfer fee with no hidden costs, interest or APRs. Now serving consumers in California and Utah, they plan to expand to all 50 states by February, 2018.