A local startup that provides microloans to millions of people around the world who lack access to traditional banking just received its own financial boost.

Tala, a financial services company headquartered in Santa Monica, announced Wednesday that it has raised $110 million in Series D funding. The company has loaned more than $1 billion to four million people in five countries including Kenya and Mexico through an app that assigns users a credit score based on their mobile phone activity.

CEO Shivani Siroya founded Tala in 2014 after working with the United Nations Population Fund, where she interviewed thousands of people in India, Sub-Saharan Africa and other emerging markets to study the impact of microfinance on their lives.

Siroya said she realized that banks couldn’t lend money to many entrepreneurs in those countries because they lacked a documented financial history. When people she knew personally needed capital for their businesses but couldn’t access it, she became so frustrated by their situation that she started lending to some of these individuals out of her own savings.

“In doing so, I quickly realized how I was using details from their daily lives to decide who was trustworthy – not the traditional indicators used in formal institutions,” Siroya said. “I started to brainstorm ways to capture and use the data generated by people’s daily lives to build a credit score for them.”

The app that Siroya developed allows anyone with an Android smartphone to apply for a loan between $10 and $500. Tala collects thousands of data points about the device itself and certain behavioral patterns, such as texts, calls and transactions to assign each user a credit score. To combat bias in its scoring, Siroya said, the platform does not analyze gender or location.

More than 90% of customers repay their loans and 95% take out another loan, she said.

Siroya said the Series D investment will allow Tala to expand in India and other markets and launch new products on its platform, such as a medical microinsurance pilot and financial coaching programs.

“We are excited about our microinsurance pilot, which helps protect our customers in times of medical emergencies, and our financial coaching programs, which we offer online and offline to help customers become more financially savvy and even share their best practices with each other,” Siroya said.

The company will also grow its team across its offices in Santa Monica, Nairobi, Mexico City, Manila and Bangalore. An additional $100 million in debt financing will support Tala’s global portfolio.

The Series D funding round was led by late-stage venture capital firm RPS Ventures, which is based in Palo Alto, with participation from GGV Capital, a global venture capital firm based in Menlo Park.

Previous investors including IVP, Revolution Growth, Lowercase Capital, Data Collective VC, ThomVest Ventures and PayPal also participated in the funding round, which brings Tala’s total fundraising to $215 million.

“This round of investment will allow us to continue towards our vision of a world where the financial system works better for everyone,” Siroya said.

madeleine@smdp.com

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