Lerato Motloung is a mother of two who works in a supermarket in Johannesburg, South Africa. After her phone was stolen, Motloung had to go without a mobile phone for nine months because she couldn’t afford a new one. Then, in February 2024, he saw a sign PayJoy, a startup offering lending to underserved emerging markets. Soon she was able to buy her first smartphone.
Motloung is one of the millions of customers San Francisco-based PayJoy has helped since it launched in 2015. (She was its 10 millionth customer.) The company’s mission is to “provide a fair and responsible entry point for people in emerging markets to enter the modern financial system, build credit, achieve financial freedom and access digital connectivity.”
Image Credits: PayJoy
PayJoy became a public benefit company last year and is an example of a company that strives to do good while generating significant revenue and running a profitable business. And, unlike other startups that offer loans to the underserved, it does so in a way that isn’t predatory, he says.
“We meet customers where they are — even without a bank account or formal credit history, we create access to financial services and carve a path through the financial system,” said co-founder and CEO Doug Ricket.
PayJoy applies a buy now, pay-as-you-go model to approximately 3 billion adults worldwide who do not have credit, allowing them to purchase a smartphone and pay weekly over a period of 3 to 12 months. Phones are used as collateral for the loan.
While the loans are interest-free, with no late fees or hidden fees, the company raises the price it charges for the phones by a “multifold,” Ricket said. But he shares the full price upfront before customers sign a contract.
“Users will never pay more than the amount disclosed and can return their phone and walk out debt-free at any time,” he says.
By the fourth quarter of 2023, PayJoy had achieved an annual run rate of more than $300 million, Ricked told TechCrunch exclusively. That’s up from $10 million in 2020, when it first introduced lending. And the company was “netly profitable” in 2023. It 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 funding 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 it in December 2015, when it had secured $4.3 million in equity and debt roughly 10 months after its launch.
Image Credits: PayJoy
Today, the company operates in seven countries in regions including Latin America, India, Africa and most recently, the Philippines — providing over $2 billion in credit to date. In October 2023, the company launched the PayJoy Card in Mexico, providing customers who have successfully paid off their smartphone loans with a revolving line of credit. Ricket says PayJoy can “enable cheaper credit and … reduce default rates” by using data science and machine learning to underwrite its loans to assess a customer’s creditworthiness. It says 47% of its customers are women, 40% are new to credit and 37% are first-time smartphone users.
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 world’s first comprehensive digital map.
Ricket then returned to West Africa where he worked for D.Light Design in the pay-as-you-go solar industry. All this experience has been combined in PayJoy.
The company is on track to achieve more than 35% revenue growth this year, with strong momentum in Brazil and new product offerings underway, according to Ricket. The company currently employs 1,400 people. She has raised more than $400 million in debt and equity during her lifetime.
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