Our Investment in Tala and Next Generation Financial Institutions

Around the world today, legacy financial banks act more as utilities. They operate on razor-thin margins with billions in assets. They value predictable revenue over taking risks. They worry more about hitting this quarter’s number rather than focusing on innovating for the future. They cater to multinationals and the wealthy, whom they know will pay. They are risk-averse.

The existing financial system has created a big opportunity for risk-taking, nimble startups to serve the next generation of customers and their financial needs. These customers don’t need to visit a branch, but want a speedy transaction on their phone. They may not have as many questions, but they want to get quick answers via text or email when they do have a question. They don’t want any standard product, but a product specifically designed for their needs.

Which is why we are excited to announce our latest investment in Tala, a mobile-first lender serving the underbanked in emerging markets like Kenya, the Philippines and Tanzania who lack access to traditional banks. We believe Tala’s founder and CEO Shivani Siroya, the Tala team, and its technology are perfectly positioned to be a next-generation financial services business and support a massive lending market that legacy financial institutions have been unable to serve.

Tala’s mobile-based offering works to bring the underbanked into the financial system by allowing individuals and businesses to apply for a small loan ($10 to over $500) via thecompany’s mobile app and receive approval and funds in near real time using personalized datasets and proprietary credit-scoring algorithms. Tala has been able to help customers build a credit history and score so they become eligible for larger and lower-cost loans as they show their ability to repay, which creates a cycle of opportunity for them and growth for their emerging markets.

The opportunity in emerging markets identified by Tala is part of a larger trend that shows no signs of slowing down. Emerging economies are growing and have averaged 5% annual GDP growth over the last decade — 3x the rate of the US.

It’s been reported that sixty-five percent of the world’s population had a smart phone at the end of 2017, which means two out of three people globally have a window into the global digital economy and all of its computing power. Startups like Tala are taking advantage of global citizens being pulled directly into the digital age and supplying them with digital tools to start businesses, establish credit, and support their families.

As emerging markets grow into the connected age, they will demand a new set of digital-facing goods and services. Tala is well-positioned to deliver financial services — and unleash financial equality — for the 3 billion underbanked people around the globe.