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Tongo raises $7M seed funding for agent commission advance cards

The funds will be used to enable brokerage agents with on-demand access to pending commissions.

Tongo, a real estate brokerage-focused fintech company, today announced raising a $7 million seed funding round led by proptech venture capital firm MetaProp, according to a press release.

The funding brings the startup’s total fundraising to $11 million, and also included participation from New Valley Ventures, Good Friends, Launchpad, Elizabeth Street, Red Bike, Lab Ventures and Entrepreneur’s Roundtable Accelerator. 

It aims to use the funds to expand into its “initial market of real estate” and enable brokerage agents-on-demand access to pending commissions. Tongo says agents can then use this card-based product as a line of credit to advance their businesses and stabilize cash flows. 

“The lumpy, irregular and uncertain nature of commission revenue defines the income patterns of many of the 3 million licensed real estate agents in the U.S., complicating their ability to invest in their businesses and manage personal expenses,” stated MetaProp’s General Partner Zak Schwarzman, in the release.

“Tongo addresses a glaring gap in the consumer credit market for agents and is resonating equally strongly with brokerage firms, who are partnering with Tongo to offer a powerful and differentiated financial management solution that impacts their agents’ lives and wallets.”

Tongo CEO Brandon Wright says traditional credit products are unfit for the current commission economy due to today’s underwriting models focus on salary incomes, convenient for monthly billing cycles.

“The combination of lower credit availability and strict monthly repayment generates an immense problem for tens of millions of self-employed people where income is more free flowing, such as in real estate and other commission-driven professions,” Wright said in the statement. 

Tongo says this will provide the opportunity to innovate products that are more suitable for incomes and expenses, by creating a debit card for future incomes. The purpose of the card will be to provide agents a cost-effective source of capital for their businesses and reduce dependency of credits that have a “volatile” and “cyclical” effect on their incomes, he added.

The release explains that Tongo’s model comprises partnerships with real estate brokerages, offering agents “flexible, real-time and low-cost access to future commission income before closing via a card-based product.” Its smart card can be used anywhere debit cards are accepted, and can move funds into checking accounts, Moreover, when a commission is received, the borrower can pay the remaining balance. 

On the other hand, if a contract falls through, Tongo offers flexible payments until an agent gets the next commission. According to the statement, “Tongo only gets repaid when an agent collects” and brokers do not have to advance money to agents.

“The commission economy is something real estate agents are intimately familiar with, and thousands of agents rely on transaction closings to provide commission income,” New Valley Ventures’ Managing Director Dan Sachar also said in the statement. “We know first-hand this growing part of the labor force needs better liquidity solutions to manage their budgets and lives. Tongo’s next-generation platform provides a modern and easy-to-use approach for real estate agents.”

In other recent proptech news, California-based real estate investor, Mosser Companies, launched an environmental sustainability strategy that will operate in San Francisco, Oakland and Los Angeles. Stanford University also acquired a 759-unit property in Palo Alto, called the Oak Creek Apartments.

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