Jia, a Blockchain-Based Lender to Small Businesses in Emerging Markets, Raises $4.3M in Seed

Jia, a blockchain-based fintech that provides loans to micro and small businesses in emerging markets, has raised $4.3 million in seed funding and an additional $1 million in on-chain liquidity commitments, in a round led by early-stage backer TCG Crypto, with participation from a number of funds including BlockTower, Hashed Emergent, Saison Capital and Global Coin Research.

Angel investors Packy McCormick, the Not Boring founder; 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 former Tala executives. The startup offers loans to borrowers, who receive tokens after repayment, which they can later redeem at a price agreed upon based on Jia’s profits.

“The idea is to provide affordable financing for micro-enterprises, and when they pay back, they become owners by getting token rewards,” said Marks, Jia CEO and co-founder, adding that each token is entitled to a stream of revenue from Jia’s lending protocol.

The fintech currently packages tokens as Jia points, which Marks says may be required once the token system is fully established. Meanwhile, borrowers can use them as collateral for lower interest rates, higher loan amounts and more flexible loan terms.

Jia is trying to replicate the model of community finance groups (table banks), popular in markets such as Kenya, where members, who are also borrowers, hold shares and earn from the groups.

Fintech has launched its first on-chain pool with Huma Finance, a revenue-backed decentralized finance protocol.

Jia provides loans of up to $5,000 to small businesses, filling the gap now left by digital lenders and lending apps that don’t offer credit of more than $1,000. Marks says this “makes it really hard to really earn a proper business use because if you want to grow, you need more money and for a longer duration.”

Jia’s loan repayment period is based on the borrower, and can extend up to six months, attracting approx. 2% to 6% interest per month, depending on the borrower’s profile. Borrowers who access inventory and invoice financing have up to three months to repay.

“The loans range in size from $200 up to $5,000 …they are really competitively priced. We charge about a third of the interest rate of the typical consumer fintech lender,” says Marks.

Jia acquires customers by integrating into the apps of its local partners, including Ilara Health, which supplies medical supplies to a network of over 2,000 small clinics.

“Ilara’s focus is on helping clinics grow by selling medicine, affordable diagnostic devices. They do not want to deal with credit risk on the balance sheet, so we are in favor of financing an inventory financing program for them. We get access to proprietary data about these clinics, which helps us underwrite in a way that banks and other lenders can’t,” said Marks.

Jia is among the fintech companies working to bridge the access-to-finance gap that hinders the growth of businesses in markets such as Africa. Data shows that while small businesses make up 90% of Africa’s businesses, they face a $330 billion funding gap. These businesses are required to 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 receive affordable financing,” Marks said. “Jia doesn’t just provide financing, we provide a path to financial resilience and this opportunity to build wealth in a new way that hasn’t been done before.”