Founded by Matt Flannery, the co-founder and ex-CEO Kiva.org, micro-lending startup Branch is set to raise a massive funding round to launch in Uganda and Tanzania as well as bolster its local operations in Kenya in a few weeks time.
Speaking to TechMoran at his Nairobi office, Flannery said, “Our mission is to provide world-class financial services to the mobile generation, practically speaking that means we want to be a bank branch in your pocket, even more pracitcal we have an Android app you install on your smartphone.”
At the moment, Branch has about 70,000 downloads and almost 30,000 people borrowing an average of $40 each and the users are moving up the ladder pretty fast.
“We are launching in Uganda and Tanzania in January. I’ll soon announce a big fundraising round. I can’t announce it here but it will be one of biggest fundraising rounds ever in Kenya,”said Flannery. “You got to raise more money to be a lender. I’m just closing a lot more funders in the next couple of weeks and will announce it. It’s exciting changing the mindset of Silicon Valley investors. It’s exciting to see people start to invest in businesses in Africa.”
If its huge, it’ll beat InVenture’s $10m series A it announced in September. The raise will help Branch to become a long-term lender it wants to be and not a short-term micro-credit lender like some of the players in the market. Flannery adds that Branch is just starting and will offer more financial services soon. Branch is looking to hire great engineering talent in Nairobi to join its team.
“We will in future offer savings, money transfer like PayPal among other financial services but we are brand new and don’t have a mobile licence yet so we just started with credit.”
Branch works simply. Users download the Branch App., then provide their personal details to sign up. Then one invites friends to join so they form a network of trusted friends within Branch. The network increases one’ ability to access quick, fast loans. Loans are send to the reciepient’s M-PESA within 24 hours after approval. Once a borrower pays back the principle plus the fees, they can start to borrow and repay becoming eligible for larger, cheaper loans into the future.
The firm charges around 6 to 12 percent on each loan it issues and the more someone borrows the cheaper their loans become because it’s unsecured but based on machine learning algorithms which query Facebook connections and a user’s M-PESA transactions before qualifying them for loans. The loans are from 2 weeks to six months.
Branch uses the trust networks from its users digital connections as credit scores so the friends one has matters. Branch says it aims to bridge the financing gap to increase banking options and flexibility to allow its customers to pursue their dreams.Branch will compete players such as Mkopo Rahisi, Kenya’s CBA and Safaricom’s M-SHWARI and KCB and Safaricom’s KCB-MPESA. The advantage it has over others is that it’s going into long-term lending and not short-term lending as its competitors.