Tongo closes $7M seed round aimed at improving commission-based cash flow – Trade Observer

Seeking to smooth cash flow for commission-based residential real estate agents, fintech start-ups Tongo announced on Thursday that it has closed a $7 million funding round led by an early-stage venture capital firm MetaProp.

The funding will be used to expand its “cash on demand” debit card product that allows brokerages to offer agents on-demand access to pending commissions. Agents can use the card as a line of credit to grow their business and stabilize cash flow, according to Tongo.

New businesses in the valley, Good friends, Launching ramp, Elizabeth Street, red bike, Laboratory companies and Entrepreneur Roundtable Accelerator participated in the funding round of Manhattan-based Tongo. Founded in 2020, the startup has raised $11 million to date.

Brandon Wright. Photo: Tongo

“Tongo is the link between some things that we have been working on for a long time,” said the CEO Brandon Wright. “We felt like there was a huge problem that no one was paying attention to – by the end of this decade, about half of the dollars earned in the US economy would be going to commission-funded professionals. and transactions. But the financial system wrongly assumes that everyone is paid on salary, or at least it wants you to be paid on salary. They bill you monthly, they report you monthly, and that’s designed for the professional of salary.

Tongo’s attempt to solve this problem for the commission worker appealed to MetaProp.

“Tongo has developed a modern and elegant solution that eases this challenge, allowing agents to easily access future commission earnings on user-friendly and flexible terms with the swipe of a card,” said MetaProp General Partner. Zak Schwarzman said. “Tongo fills a glaring gap in the consumer credit market for agents and resonates just as strongly with brokerage firms, who partner with Tongo to deliver a powerful and differentiated financial management solution that makes an impact. on the lives and wallets of their agents.”

Tongo needs a significant balance sheet to fund its debit card, said Wright, who added that the startup has partnered with Visa to create the product. The company is looking to work with institutional funding partners as its business grows.

Wright is aware of the volatility in the compensation cycle of commission-focused brokerage firms and said Tongo is designed to address this reality. “We basically risk scoring [card users]and it helps us to effectively understand how much of their income we should advance and when we should expect to be reimbursed,” he said.

According to the agent’s risk profile, Tongo’s fees are as low as 3% for the first 30 days, Wright said. However, the rate increases over time, rising to 6% for 60 days and 9% for 90 days.

As for future expansion beyond residential real estate brokers to become commercial, “We would like to do commercial. We’re just not there yet.

Philippe Russo can be contacted at [email protected].

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