DeFi platform Goldfinch raises $25m to continue emerging market lending

Andreessen Horowitz (a16z crypto) led a $25 million funding round that will help Goldfinch continue to offer uncollateralised DeFi loans to businesses in emerging markets.

Removing the crypto collateral requirement unlocks a new level of borrower capacity.

Goldfinch is a decentralised credit platform that broadens the pool of potential lenders beyond just banks. The protocol operates as an open marketplace for loans without collateral and decentralises the loan underwriting process. It also makes off-chain sources of yield available and composable on DeFi.

The protocol works by extending credit lines to lending businesses, which can then draw down stablecoins from the pool and deploy them on the ground in their local markets. In this way, the protocol provides the utility of crypto — specifically, its global access to capital — while leaving the actual loan origination and servicing to the businesses best equipped to handle it.

Investors can utilise Goldfinch by depositing crypto into the pool to earn yield. As the lending businesses make their interest payments back to the protocol, they’re immediately disbursed to all investors.

In just a few months, Goldfinch has shown there’s a huge global need for access to capital, growing from $250 000 in outstanding loan volume to over $38m.

The protocol is already serving over 200 000 borrowers in 18 countries around the world.

Protocol-supplied capital is being used for a wide range of productive uses from motorcycle taxis in Kenya, to small businesses in Brazil, and eco-friendly cookstoves for low-income households in India, among others.

Kenya, Nigeria, Uganda and Ghana are among the top five countries with active loans on the protocol as of January 2022.

This new funding will help the Goldfinch protocol achieve its mission of expanding financial inclusion with an open credit protocol. The round comprises a dynamic group of investors with diverse backgrounds — from crypto-native institutional investors and tech startup veterans to global credit-sector funds and traditional hedge fund titans.

Newcomers include Bill Ackman, Blocktower, Kingsway Capital, Helicap, YC Alumni Fund, Jinglan Wang, MSA Capital, and more.

All prior investors in Goldfinch participated as well, including Kindred Ventures and Stratos Technologies.

Read more: How SMMEs can leverage fintech to get a leg up

Featured image by Mustafa Omar/Unsplash