Branch Partners With Visa, Announces $170 Million In Fresh Funding
Branch International, has raised $170 million in Series C financing and announced a new partnership with Visa.
According to Forbes, Foundation Capital and Visa led the round, which also included B Capital, Andreessen Horowitz, Formation 8 and Trinity Ventures.
With more than 3 million customers and more than 15 million loans issued in Kenya, Nigeria, Tanzania, Mexico, and India, Branch, who is also an alumnae of Nairobi Garage is working to expand access to credit in countries where the average middle class borrower might not have a credit history or even a bank account.
Matt Flannery, Branch’s co founder and CEO, says he took his inspiration for Branch in part from the success of M-Pesa, a mobile money service that launched in Kenya more than 10 years ago.
Easy access to credit helps create room for small businesses to grow. “They’ll take a $50 loan, go to the market, buy a bunch of stuff, make meals at their restaurant and then two weeks later do it again,” says Flannery of a typical Branch borrower.
After a potential borrower downloads the app and verifies their identity, Branch’s machine learning algorithms determine their creditworthiness and can grant loan approval within minutes. Of course, this quick and easy process comes with a price: data.
Branch uses smartphone data like text messages, call logs, contacts, and GPS alongside a borrower’s loan repayment history to make its determinations. Loan durations range from a few weeks to more than a year, and the typical loan amount hovers around $50.
In the new partnership with VISA, Branch will now have access to a global network of local ATMs so that borrowers will be able to withdraw funds from an ATM using “virtual” Visa credentials within that code, no physical debit debit card or bank account required.
As part of the new partnership, Branch will also offer preferential loan terms to merchants who accept Visa on mobile phones in Kenya, Tanzania, and Nigeria.
Currently, Branch borrowers might visit a local convenience store or bank to retrieve their loan using a code sent to their smartphone. But with Visa on board
“As we look to the future, we are looking for the opportunity to reach people who are outside of the formal economy or in places that are underserved,” says Bill Sheedy, Visa’s executive vice president of strategy, of the new investment with Branch. “It’s about tapping into their distribution to help shape the future of microfinance.”
Branch launched its first operations in India last month and has added more than 30,000 users so far via word of mouth. “I think it speaks to it speaks to the latent demand,” says Flannery of the quick uptake. Branch plans to use this new round of capital to continue to build its presence in India as well as in Latin America (Branch is already operating in Mexico).
Alex Rampell, a general partner at investor Andreessen Horowitz, says the potential of Branch’s business model has only become more clear as Branch grows: “The idea has become even better as time has gone on, and the market uptake shows it.”
In August 2018, Visa, and Branch International also announced a partnership under which Branch was tasked with offering custom financing to merchants who accept payment via Visa (Visa on mobile or Card).
The loans were set to provide merchants with funds to grow their business through supplemental stock, infrastructure investment, and other key operational needs.
Earlier this year Branch also announced their largest commercial paper issuance to date, where they raised Ksh500 million.
This is the third time the financial services firm issued a commercial paper, following a Ksh350 million issuance in 2018 and a Ksh200 million issuance in 2017.
All commercial paper issuances have been arranged by the Centum-owned advisory firm, Barium Capital.
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