Lending startup with focus on emerging markets raises $30M

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A Santa Monica, Calif., startup that makes small-dollar loans in Kenya and the Philippines has raised $30 million in new funding.

Tala taps into the vast array of data on people’s mobile phones to give credit scores to prospective borrowers, many of whom are living outside of the mainstream financial system. Once users have a credit score, they can apply for an unsecured loan, often around $40.

The company’s Series B financing round, announced Wednesday, was led by the venture capital firm IVP, which was joined by Ribbit Capital. Additional participants included Lowercase Capital, Data Collective and Collaborative Fund, all of which were already investors in Tala.

“By using smartphone data to build financial identity, Tala is pioneering a new model that can reach more than two billion people globally who have been underserved by traditional finance companies,” Jules Maltz, general partner at IVP, said in a press release Wednesday.

In connection with the financing, Maltz joined Tala’s board of directors.

Tala has distributed more than one million unsecured loans totaling more than $50 million, and its repayment rates top 90%, according to the press release.

The firm’s app analyzes users’ payroll information, their savings behavior, their payment history, and their social networks, among other types of information. Loan decisions are made instantly, and borrowers receive the funds on their mobile phones in less than five minutes, according to the company.

Tala CEO Shivani Siroya said in a recent interview that borrowers often use their loans to fund large purchases or to bankroll their small businesses. She said that the company is planning to expand to Mexico and India.

The United States figures to be a tougher nut to crack. When asked about domestic opportunities, Siroya noted that tens of millions of Americans are shut out of the banking system. But she also pointed to legal constraints on the use of data, in addition to the patchwork of state lending laws.

“I think that when we look at countries outside of the U.S., it’s definitely a little bit more open playing field,” she said.

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Mobile banking Emerging markets Venture funding Credit scores