Shivani Siroya had built her Los Angeles-based small-business lending platform Tala methodically. The founder and CEO created a mobile platform for unbanked individuals--i.e., those without formal credit histories--that analyzes their likelihood of repaying their loans, which vary between $10 and $500. In 2013 and 2014, the business successfully expanded throughout Kenya. But customers weren't happy.
Siroya had a realization: "I don't think I'm having the impact I want us to be having," she told Inc.'s What I Know podcast.
It was her startup's partnership with traditional banks that was slowing down communications with and lending to customers--and the banks weren't always taking Tala's advice to re-lend to existing customers, Siroya says. They were similar to problems she'd encountered early in her career, working in international microfinance. So Siroya decided that since her business model was based on trust, she and her investors would have to be the ones willing to take on more risk. She turned Tala into not just the platform for lending, but also into the bank.
"It was deciding to say, 'OK, we're doing this. And sure, it's working, but are we really moving the needle?" Siroya says. "It was deciding to take the first risk."
Lending the company's own equity capital directly to small business owners who used Tala's Android smartphone app worked. Within years, the company was ready to expand to new markets. But in doing so, it didn't take the obvious or easy route.
"We didn't want to just launch another country in East Africa, because when we think about taking that first risk, what are you doing? You're really needing to prove that this can work globally," Siroya says. "And so we wanted to pick a completely different continent. We wanted to pick a different culture. We wanted to think about a market that didn't have the infrastructure that Kenya had."
It followed up its launch in the Philippines with a launch of services in Mexico, and then India. Today it operates across the four countries, and is delving into deeper services, including banking operations, for its customers. Tala has 540 employees in the U.S. and around the globe, and has raised $360 million in venture capital.