Jia, a blockchain-based fintech that provides loans to micro and small businesses in emerging markets, has raised $4.3 million in seed capital and an additional $1 million pledge for on-chain liquidity, in a round led by early stage financier TCG Crypto, with participation from a number of funds including BlockTower, Hashed Emergent, Saison Capital and Global Coin Research.
Angel investors Packy McCormick, the founder of Not Boring; Anand Iyer of Canonical Crypto, and Jared Hecht and Rory Eakin, the founders of fintech lending companies Fundera and CircleUp, also participated in the round.
The fintech plans to use the funding to double its operations in Kenya and the Philippines, before exploring new markets in West Africa, Latin America and Asia.
Jia was founded last year by Zach Marks, Cheng Cheng, Ivan Orone and Yuting Wang, all ex-Tala executives. The startup offers loans to borrowers, who receive tokens upon repayment, which they can later redeem at an agreed rate based on Jia’s profits.
“The idea is to provide affordable financing to micro-enterprises, and when they pay back, they take ownership by getting token rewards,” said Marks, Jia CEO and co-founder, adding that each token is claiming a revenue stream of Jia’s lending protocol.
The fintech is currently packaging the tokens as Jia points, which Marks says will be due and payable once the token system is fully implemented. Meanwhile, borrowers can use them as security for lower interest rates, higher loan amounts and more flexible loan terms.
Jia is trying to emulate the model of community finance groups (table banking) popular in markets like Kenya where members, who are also borrowers, own shares and earn from the groups.
The fintech has launched its first on-chain pool with Huma Finance, a decentralized finance protocol with income support.
Jia provides loans of up to $5,000 to small businesses to fill the gap currently left by digital lenders and loan apps that don’t offer credit over $1,000. Marks says this “makes it really hard to really serve a good business use case because if you want to grow, you need more money and for a longer term.”
The repayment period of Jia’s loan is based on the borrower and can be up to six months, earning approximately 2% to 6% interest per month, depending on the borrower’s profile. Borrowers who have access to inventory and invoice financing have up to three months to repay.
“So the loans range in size from about $200 to $5,000…they are really competitively priced. We charge about a third of the interest of the typical consumer fintech lender,” said Zachs.
Jia leverages customers by integrating into the apps of its local partners, including Ilara Health, which provides medical inventory to a network of more than 2,000 small clinics.
“Ilara’s focus is on helping clinics to grow. They sell the drug, cheap diagnostic devices. They don’t want to run with credit risk on their balance sheets and so we’re moving to fund a stock financing program for them. We get access to a lot of proprietary data that Ilara has on these clinics, which helps us underwrite in a way that banks and other lenders can’t,” Marks said.
Jia is one of the fintech companies working to bridge the gap in access to finance that hinders business growth in markets like Africa. Data shows that while small businesses make up 90% of African businesses, they face a funding gap of $330 billion. These companies must have collateral and meet a number of other time-consuming requirements before they can access loans from traditional lenders. Fintechs like Jia are stepping in to bridge this financial gap.
“What’s really exciting about what we’re doing is opening up the world’s capital to MSMEs so they can get affordable financing,” said Marks. “Jia is not just providing financing, we are providing a pathway to economic resilience and this opportunity to build wealth in a new way that has not been done before.”