Branch International, a Micro lending platform for African countries, raised USD 70 Mn recently in equity and debt financing. Trinity ventures led the USD 20 Mn equity round along with International Finance Corporation, Andreessen Horowitz, and CreditEase Fintech Investment Fund. The balance USD 50 Mn was raised as a debt facility from Victory Park Capital.
Since its launch in 2015, the app has been downloaded onto more than one million mobile phones in Sub-Saharan Africa, as claimed by the startup. During its launch, it had targetted young Kenyans and offered credit amounts ranging from USD 20 to 1,000. The young startup is based in San Francisco, Nairobi, Lagos, and Mumbai and uses technology to reduce the cost of delivering financial services in emerging markets. Branch likes to compare itself to a bank since credit is its first product.
As per the team, 75% of their customers take loans for expanding their business. Lending decisions are based on machine learning algorithms, that process thousands of data points to assess a customer’s credit profile. This is done by accessing information on customer’s phone with permission, in order to be able to suggest the most suitable product.
The platform incentivizes customers with credit history, to transact with Branch more often, by decreasing the fees, larger loan amounts and flexible terms. The products are custom built for each client. The loans offered by this startup does not have late penalties or rollover fees.
The funds will be utilized to grow the company in other countries including India. The company claims to be growing at 20 percent month over month, and it plans to roll out savings accounts next.
Matt Flannery, Founder of Branch, had previously co-founded Kiva, a not-for-profit, peer-to-peer lending model, that allowed consumers to support women and micro-entrepreneurs in emerging markets. He then changed his focus on making this a commercial success by lending space by applying data science to business lending in Sub-Saharan Africa. He stepped down from an operational role at Kiva and started Branch with USD 1.6 million from Khosla Impact and Formation 8.
The startup in the past has also partnered with Uber in East Africa that allows drivers to leverage their Uber data to unlock favorable credit terms from Branch.