$170 million to assess creditworthiness using a Smartphone

Branch International, a Silicon Valley start-up that offers loans to first-time borrowers and customers without bank accounts in Africa, India and Mexico, has raised $170 million in new financing. The deal, made up of a combination of equity and debt, forms part of a new alliance with payments group Visa… Branch is vying with its California-based rival Tala to become the first provider of financial services to the emerging middle class in developing markets, who are underserved by traditional banks. This latest round brings Branch’s total financing to $260 million, comprised of $100 million in equity and $160 million in debt. The company started operating in Kenya in 2015… Branch collects data from potential borrowers’ Android smartphones, including the contents of their text messages, address books and other apps they have installed, to assess their likely creditworthiness… Branch expects to lend about $350 million this year, usually in loans of $20-$40, which are primarily financed by its own borrowings. The new venture round, which was led by Foundation Capital and Visa with participation from existing investors such as Andreessen Horowitz and Formation 8, will be used to develop new markets after expanding from Africa into India and Mexico.

Tim Bradshaw