Downtown-based fintech Perch Credit Inc. has raised $2.5 million in seed funding. 

Investors in the round included Marcy Venture Partners, Citigroup Inc., SoftBank Group Corp.’s opportunity fund, Concrete Rose Capital and Vilcap Inc.


The Perch platform is designed to help people — especially younger consumers — build credit through nontraditional payments such as video streaming subscriptions or rent to establish credit history and improve credit scores. 


The company also incorporates financial education into its platform in the form of short “microlearning” videos.


Perch co-founder and Chief Executive Michael Broughton created Perch after struggling to finance his own education at USC due to a lack of credit. He was featured in the Business Journal’s 20 in Their 20s special report this year.


Broughton described Perch as part of a movement to democratize access to credit, driven by demand from savvy young people. 


“There is a new era coming where people are feeling personal connections to their finances,” Broughton said. “Technology is enabling people to connect with and understand that.”


Perch’s platform is designed to be free to users, with the company instead earning revenue from business-to-business relationships with subscription services such as Spotify, Netflix Inc. and Chegg Inc.


“The traditional process of building credit can be complicated and expensive, which is why a lot of young people don’t do it,” Broughton said. “We purposely have this mission of making the product free.”


Perch acts as a middleman for payments to subscription services or for rent, structuring them so that they build credit for the payor. According to Broughton, the third-party subscription services benefit from his company by attracting a wider potential customer pool.


“Chegg (which provides subscription online tutoring and textbook rentals) is a great example for this,” he said. “A lot of college students want it, but they can’t afford the $15 per month. When you are now helping your credit with Chegg, it makes it easier (to justify the cost).”


Perch’s platform has been in testing for about a year, according to Broughton. The company launched the app to the public Dec. 16. The initial product, which Broughton described as a “soft launch,” will be refined in coming months through feedback from users.


Broughton’s goal for the year ahead is to improve the credit of at least 100,000 Perch users. Broughton said much of the current seed funding will be directed to marketing.

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