Lerato Motolounge is a mother of two who works in a supermarket in Johannesburg, South Africa. After her cell phone was stolen, Ms. Mottlounge could not afford her new cell phone, so she had to go without one for nine months. Then in February 2024, she saw her billboard about PayJoy, a startup that provides loans to underserved populations in emerging markets. She was able to buy her first smartphone right away.
Motloung is one of the millions of customers that San Francisco-based PayJoy has helped since its founding in 2015. (She was the company's 10 millionth customer.) The company's mission is to “help individuals in emerging markets enter the modern financial system, build credit, achieve financial freedom, and access digital connectivity.” , provide a fair and responsible entry point.”
Image credit: PayJoy
PayJoy became a public benefit corporation last year and is an example of a company looking to do good while generating meaningful revenue and running a profitable business. And unlike other startups that provide loans to underprivileged people, the company says it does so in a non-predatory manner.
“We create access to financial services and pave the way for customers to enter the financial system, no matter where they are, without a bank account or formal credit history,” said Co-Founder and CEO ) said Doug Ricketts.
PayJoy empowers the estimated 3 billion adults around the world who don't have credit with a buy-now, pay-as-you-go model, allowing them to purchase a smartphone and pay weekly for three to 12 months. The mobile phone itself is used as collateral for the loan.
Ricketts said the loans are interest-free and there are no late fees or hidden fees, but the company increases the price of its phones by “multiples.” However, you share the full amount upfront before the customer signs the contract.
“Users will never spend more than the disclosed amount and can return the phone at any time and walk away debt-free,” he says.
By the fourth quarter of 2023, PayJoy achieved an annual operating rate of more than $300 million, Ricked exclusively told TechCrunch. This is up from $10 million in 2020, when the loan was first introduced. And the company achieved a “positive net profit” in 2023. We also succeeded in raising a large amount of capital in a difficult financing environment. Last September, PayJoy announced it had secured $150 million in Series C equity financing and $210 million in debt financing. Warburg Pincus led the equity raise, which included participation from Invus, Citi Ventures, and previous lead investors Union Square Ventures and Greylock.
PayJoy has come a long way since TechCrunch first profiled the company in December 2015, when it secured $4.3 million in equity and debt about 10 months after it was founded.
Image credit: PayJoy
The company currently operates in seven countries, including Latin America, India, Africa, and most recently the Philippines, and has provided more than $2 billion in credit to date. In October 2023, the company launched PayJoy Card in Mexico, offering a revolving line of credit to customers who successfully repay their smartphone loans. Ricketts said PayJoy uses data science and machine learning to underwrite loans and assess customers' creditworthiness, allowing it to “deliver cheaper credit and…lower default rates.” He said 47% of customers are women, 40% are first-time credit users and 37% are first-time smartphone users.
Ricket was inspired to start PayJoy after graduating from MIT and serving in the Peace Corps. He then spent two years as a volunteer teacher in West Africa, where he became interested in technology in the context of international development. After the Peace Corps, he joined his Google and helped create the world's first fully digital map.
Ricketts then returned to West Africa to work for D.Light Design in the pay-as-you-go solar industry. All that experience is integrated into PayJoy.
Ricketts said the company has strong momentum in Brazil, new product development and is on track to achieve more than 35% revenue growth this year. Currently, the company has 1,400 employees. The company has raised more than $400 million in debt and equity over its lifetime.
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