Tally Technologies Inc., a startup that automates credit card payments, has tripled its valuation to $855 million in a funding round led by Sway Ventures.
(Bloomberg) — Tally Technologies Inc., a startup that automates credit card payments, has tripled its valuation to $855 million in a funding round led by Sway Ventures.
Participants in the $80 million Series D round included Israeli insurance company Menora Mivtachim, along with earlier investors Kleiner Perkins, Andreessen Horowitz, Shasta Ventures and Cowboy Ventures. Tally was valued at $280 million in a round led by Andreessen Horowitz in 2019.
Tally uses machine learning to determine the ideal amount and timing of payments on customers’ credit cards, with the overall goal of minimizing the time to full repayment.
The company issues its customers a line of credit and then pays down their debt, automating their card payments to save on interest and late fees. Tally makes money from the interest on the line of credit and also offers some customers the option of paying an annual fee, which comes with a lower annual percentage rate and higher credit limit.
$900 billion of debt
US credit card debt has increased to $900 billion from $700 billion over the past decade and affects four in 10 households, according to Tally Chief Executive Officer Jason Brown. He said his experiences with financial insecurity as a child inspired him to start the company.
Brown said he expects credit card debt — and Tally’s total addressable market — to continue to increase given inflation and interest rate hikes.
“I think what we’re going to see, unfortunately, over the next couple of quarters, is that the absolute amount of credit card debt is going up, and also the cost of carrying that debt is increasing,” Brown said in an interview. “It’s really driven by the fact that for banks and financial institutions, credit cards are the single most profitable consumer product that they have.”
San Francisco-based Tally specifically targets consumers carrying revolving debt.
“The thing about the $900 billion of credit card debt is that roughly 96% of that is current, meaning it’s people who are paying on time. They’re just flushing billions of dollars down the toilet in interest and fees,” Brown said.
“The industry labels them as ‘revolvers,’ which is like treading water,” Brown said. “Tally is really designed for people who have the ability to pay their cards but just are not making progress, which is the majority of people with card debt.”
Student loans
Brown said his company will use the new funds to invest in additional engineering talent to expand its offerings to cover more types of debt, including student debt. The national conversation about the crippling effect of student loans has intensified this year, and Brown says student loan repayment support is the product most frequently requested by Tally customers.
The plan announced by the Biden administration in August to partially forgive loans for eligible borrowers is currently being challenged in court by six Republican-led states.
Sway General Partner Ken Denman has joined Tally’s board as part of the round. He said in an interview that the round came together during a difficult time in the financial markets.
“We were confident nevertheless, given strong metrics and performance,” Denman said. “We believe the problem Tally is attacking gets even bigger in this window.”
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