Lerato Motloung is a mother of two and works in a supermarket in Johannesburg, South Africa. After her cell phone was stolen, Motloung had to go without a cell phone for nine months because she couldn’t afford a new one. Then, in February 2024, she saw a sign about PayJoy, a startup that offers loans to underserved people in emerging markets. She was soon able to buy her first smartphone.
Motloung is one of millions of customers San Francisco-based PayJoy has helped since it was founded in 2015. (She was its 10 millionth customer.) The company’s mission is to “provide a fair and responsible entry point for individuals in emerging markets to enter the modern financial system, build credit, achieve economic freedom and access digital connectivity. “
Photo credit: PayJoy
PayJoy became a nonprofit corporation last year and is an example of a company trying to do good while generating meaningful revenue and running a profitable business. And unlike other startups that offer loans to underserved people, it does so in a way that isn’t predatory, they say.
“We meet customers where they are – even without a bank account or formal credit history, we create access to financial services and forge a path into the financial system,” said co-founder and CEO Doug Ricket.
PayJoy applies a buy-now, pay-as-you-go model to the estimated 3 billion adults worldwide who lack credit by allowing them to purchase smartphones on a weekly basis for a period of 3 to 12 months to pay. The phones themselves serve as security for the loan.
While the loans are interest-free and have no late or hidden fees, the company is increasing the price it charges for the phones “many times over,” Ricket said. However, the full price is shared in advance before the customer signs a contract.
“Users never pay more than the advertised amount and can return their phone at any time and walk away debt-free,” he says.
By the fourth quarter of 2023, PayJoy had reached an annual run rate of more than $300 million, Ricked told TechCrunch exclusively. That’s up from $10 million in 2020, when the company first launched lending. And the company achieved a “profitable net income” in 2023. He also managed to raise significant capital in a difficult fundraising environment. Last September, PayJoy announced that it had secured $150 million in Series C equity financing and $210 million in debt financing. Warburg Pincus led the capital raising, 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 it in December 2015, when it secured $4.3 million in equity and debt about 10 months after its founding.
Photo credit: PayJoy
Today, the company operates in seven countries in regions such as Latin America, India, Africa and most recently the Philippines, providing over $2 billion in loans to date. In October 2023, the company launched the PayJoy Card in Mexico, offering a revolving line of credit to customers who have successfully repaid their smartphone loans. Ricket says PayJoy can “enable cheaper loans and…reduce default rates” by using data science and machine learning to underwrite its loans and assess a customer’s creditworthiness. He says 47% of customers are women, 40% are new to lending and 37% are using a smartphone for the first time.
Ricket was inspired to start PayJoy after serving in the Peace Corps after graduating from MIT. 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 landed at Google, where he helped create the first complete digital map of the world.
Ricket then moved back to West Africa where he worked for D.Light Design in the pay-as-you-go solar industry. All of these experiences were bundled in PayJoy.
Ricket said the company is on track to deliver over 35% revenue growth this year, with strong momentum in Brazil and new product offerings in development. The company currently employs 1,400 people. During its existence, the company has raised more than $400 million in debt and equity capital.
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