Tala, known for its fast allotment of consumer microloans across emerging markets in Kenya, Tanzania, Philippines, and Mexico has just raised USD 110 million in a Series D round to enter India’s emerging online lending market.
The US-headquartered startup’s new funding round was led by RPS Ventures with participation from other investors including GGV Capital, IVP, Revolution Growth, Lowercase Capital, Data Collective VC, ThomVest Ventures, and PayPal Ventures.
The fund will be utilized for scaling up its operations in India, including its Bengaluru-based engineering hub, and developing new financial products in insurance. A tranche of the fund will also be used to extend Tala’s footprint further into South Asia and Latin America.
In the past few years Tala had raised an additional 100 million dollars in debt financing which included USD 50 million from Colchis Capital. Its current valuation now stands at USD 750 million, as per anonymous source’s disclosure to TechCrunch.
The Tala android app, which approves loans within minutes and disburses the money via mobile payment platforms, has till date lent over USD 1 billion to more than 4 million customers according to its Indian-American founder and CEO, Shivani Siroya.
While traditional banks and most online lenders assess an individual’s credit worthiness through past credit scores and financial history respectively, Tala has a different approach which is its unique selling point.
Tala’s proprietary technology analyses a person’s eligibility for loans by going through their mobile sourced texts and call logs; financial transactions like whether they pay their phone bills on time; app usage metrics like whether they read terms and conditions; and behavioral data like whether the user keys in both first and last names of a person in his or her phone contact list.
The intelligence arrived after mining this data through machine learning algorithms allow Tala’s android app to create a user’s credit profile. The result will decide the worthiness of a user to receive instant loans.
According to the company, 85% of its customers receive credit in less than 10 minutes and the loans disbursed to individuals usually average at USD 70 per person. And the bandwidth of loans generally range from 10-500 dollars. The average repayment period is 30 days with 11-15% interest charged. Later if the user wants to take a new loan, Tala will rescore the individual and offer different sized loans and rates.
Tala’s contemporaries in India, who offer small-sized loans to users, include Paytm and MobiKwik. In the overseas, Tala faces competition from the San Francisco-based startup Branch, which in its five years of existence has raised more than USD170 million to date and has tied up with Visa lately.
According to the World Bank, more than 2 billion people across the globe find it difficult to receive financial services and working capital. Many Indian folk have to face a lot of heartbreak to secure micro loans to fulfil dreams like sending their child to school or to set up a shop or to access quality healthcare.