US fintech Petal puts itself up for sale amid concerns regarding its ability to survive
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A US-based credit financial technology company called Petal has announced recently that it is seeking a buyer. The firm put itself up for sale due to recent Wall Street concerns regarding its ability to survive in the current market, which caused many other companies in the fintech sector to close down shop, file for bankruptcy, or seek a different solution.
Petal is a company that offers Visa credit cards, seeking to make them more accessible, even to those who never used credit before. Since access to credit in the US is relatively limited to those who have a reputable credit score, a company like Petal was expected to see great demand.
However, according to a recent report by Fortune, five unnamed sources from the private equity, banking, and venture capital sectors have shared that the company is now forced to explore its options and find a way to stay in business. So far, Petal has supposedly decided that the best course of action would be an acquisition by a more successful buyer.
Conflicting reports: Can Petal stay in business?
One of the sources claims that the firm had received several acquisition offers already. However, it has yet to pick one and attempt to reach a favorable deal. The source added that the firm also holds $55 million in the bank from a funding round held earlier this year, so even if no deal is made in the near future, the firm still has enough in funding to keep going for a while longer.
Fortune reported Petal is for sale, and I can independently confirm via someone familiar with the situation that there are multiple offers on the table.
— Jason Mikula (@mikulaja) November 20, 2023
Another source disagreed, predicting that the startup is likely to go out of business if it fails to find a buyer in the near future. Fortune also noted that Petal has been considering its options for a while, and one of them was to cut costs where possible. To achieve this, the firm laid off 20% of its workforce in June 2023. But, while this seemingly allowed it to stay in business for a bit longer, it appears that it was not enough to act as a long-term solution.
After that, in August, the company secured a $200 million debt facility, which pushed its total funding to $300 million in equity capital. Simultaneously, it also saw $680 million in debt financing.
The August facility provided the firm with “substantial fuel,” which allowed it to expand its card program. Petal even built its own proprietary technology for analyzing banking history-measuring creditworthiness, so that it doesn’t have to rely only on credit scores. Instead, it took into account other financial aspects of its customers, including income, spending, and savings.
