Jia, a blockchain-based fintech that lends to micro and small businesses in emerging markets, has raised $4.3 million in seed funding and an additional $1 million commitment for on-chain liquidity in a round led by early-stage backer TCG Crypto, with participation from BlockTower, Hashed Emergent, Saison Capital, and Global Coin Research.
Angel investors included Packy McCormick (founder of Not Boring), Anand Iyer of Canonical Crypto, and Jared Hecht and Rory Eakin, founders of fintech lending companies Fundera and CircleUp, respectively.
The funding will be used to expand the fintech’s operations in Kenya and the Philippines before expanding into new markets in West Africa, Latin America, and Asia.
Jia was founded last year by ex-Tala executives Zach Marks, Cheng Cheng, Ivan Orone, and Yuting Wang. The startup uses decentralized finance to provide loans to borrowers, who receive tokens upon repayment that they can later redeem at a predetermined rate based on Jia’s profits.
“The idea is to provide affordable financing for micro-businesses, and when they repay, they become owners by getting token rewards,” said Marks, Jia CEO and co-founder, adding that each token has a claim to a stream of revenues from Jia’s lending protocol.
The tokens are currently packaged as Jia points, which Marks says are redeemable once the token system is fully established. Borrowers can use them as collateral for lower interest rates, larger loan amounts, and more flexible loan terms in the meantime.
Jia is attempting to replicate the model of community finance (table-banking) groups, which are popular in markets such as Kenya, where members, who are also borrowers, hold shares in the groups and earn income from them.
With Huma Finance, an income-backed decentralized finance protocol, the fintech has launched its first on-chain pool.
Jia offers small businesses loans of up to $5,000, filling the void left by digital lenders and loan apps that only offer credit of up to $1,000. According to Marks “makes it really difficult to really serve a proper business use case because if you want to grow, you need more money and for longer durations.”
Jia’s loan repayment period is determined by the borrower and can last up to six months, with interest rates ranging from 2% to 6% per month, depending on the borrower’s profile. Borrowers who use inventory and invoice financing have up to three months to repay their loans.
“The loans range in size from $200 up to $5,000 … they are really competitively priced. We charge about a third the interest rate of the typical consumer fintech lender,” said Marks.
Jia connects with customers by integrating into the apps of its local partners, such as Ilara Health, which provides medical inventory to over 2,000 small clinics.
“Ilara’s focus is on helping clinics grow by selling medicine, low-cost diagnostic devices. They don’t want to deal with credit risk on their balance sheet, so we step in to finance an inventory financing program for them. We get access to proprietary data on these clinics, which helps us underwrite in a way that banks and other lenders can’t,” said Marks.
Jia is one of the fintech companies working to close the access-to-finance gap that stifles business growth in places like Africa. According to data, while small businesses account for 90% of all businesses in Africa, they face a $330 billion financing gap. Before accessing loans from traditional lenders, these businesses must have collateral and meet a number of other time-consuming requirements. Fintechs like Jia are stepping in to fill this financial void.
“What is really exciting in what we’re doing is opening up the world’s capital to MSMEs, so they can receive affordable financing,” said Marks. “Jia is not just providing financing, we are providing a path to economic resilience and this opportunity to build wealth in a new way that hasn’t been done before.”
