Mobile-based financial services company Branch has raised equity funding of $9.6 million, as it positions itself for further growth and expansion into new markets. The Series A funding will allow for the scaling of its operations, hiring talent in Kenya as well as expansion across East Africa in 2016.
The round was led by Andreessen Horowitz, a US-based VC firm that has previously backed top international technology companies such as Facebook and Airbnb.
The Nairobi and San Francisco-based mobile microfinance company recently disbursed its first loan in Tanzania, marking an important milestone towards its goal to expand to several African countries and disburse 1,000,000 additional loans to its customers.
“Over the last few months we’ve been growing rapidly”, Founder and CEO Matt Flannery said. “With this latest round of funding, we’re able to expand further to meet the huge demand for our credit product in Kenya and enter new markets.”
Flannery founded Branch after a decade of founding and running Kiva.org, the micro-lending website that today operates across 80 countries.
The microfinance startup says around 150,000 people in Kenya are using the app with customers taking three loans on average ranging from Sh250 to Sh50,000. The loans are typically approved within minutes.
“The combination of smartphones, digital money, and machine learning offers an opportunity to leapfrog old-fashioned credit infrastructure, and that’s precisely what Branch is doing,” said Alex Rampell, the partner who invested on behalf of Andreessen Horowitz.
Seed investors Khosla Impact and Formation 8 also participated in the Series A round.
The technology company launched the Branch app – which is available in the Google Play Store – in May 2015 to provide financial services to the rapidly expanding middle class in Kenya through its innovative Android phone application.
It uses advanced data science to calculate a credit score for its customers by analyzing the information on their phone such as call and SMS history. This enables Branch to meet the growing demand for credit among millions of Kenyans and disburse loans within minutes into customers’ mobile money wallets, while maintaining low default rates.
“Our product is simple. Forget about bank queues and month-long processes. Branch is like a bank in your pocket, there for you at all times,” explained Daniel Szlapak, Africa Director.
“The proprietary technology we have developed means that we are able to charge lower interest rates than our competition, and reward users who repay on time with lower fees, larger loan amounts and more flexible repayment terms as they continue to use the app.”