Salmon raises $100 million in equity and debt to bring digital credit to unbanked Filipinos

The Philippines has millions without a bank account adults, and the consumer loan market is starting to catch up. Salmon, a Manila-based consumer finance app, just raised $60 million in equity and $40 million in debt to bring digital banking to Filipinos.

Salmon was founded by Pavel Fedorov, George Chesakov and Raffy Montemayor, who previously worked at Russian digital bank Tinkoff. Montemayor was, in fact, Tinkoff’s first employee in the Philippines and led the company’s expansion in the country since 2016. In March 2022, the three parted ways with Tinkoff and launched Salmon.

“We’ve seen the Philippines and broader Southeast Asia prove themselves in terms of innovation,” Fedorov told TechCrunch. “The Philippines is probably one of the most exciting markets for disruption in the financial services industry in the world.”

Indeed, the Philippines is one of the more active mobile markets in the world, with a new, tech-savvy populationand is often referred to as the social media capital of the world. But its financial system is struggling to keep pace.

Salmon targets unbanked Filipinos with little to no credit history, as well as people who are unhappy with existing lenders.” reliability issues.

Specifically, Salmon took a shortcut to set up shop: The company in January 2024 acquired a rural bank established in 1963 to secure its banking license. The startup currently creates a full range of financial products, including revolving lines of credit, installment loans, cash loans, motorcycle loans and deposits.

“We started by solving the hard ones first, by lending, and then we followed with many other products. So far, we have about seven or eight different products,” Fedorov said. “It is impossible for a traditional bank to solve this problem given the current credit market infrastructure in the Philippines.”

Fedorov says he’s attacking a market in which getting a loan for, say, a motorcycle sometimes requires weeks of paperwork, home visits and waiting. He claims that Salmon is changing this by digitizing the entire process.

“Customers fill out a form on their phone, upload some documents and get a decision in 20 seconds. The bike is ready for pickup the next morning. Instead of using credit history, we score borrowers in real-time using behavioral and digital data and quickly raise limits for those who repay on time,” he explained.

Salmon’s credit product offers a grace period of up to 62 days, which Fedorov says makes it interest-free for borrowers who pay on time. Its subsidiary, Salmon Bank, also offers time deposits with an interest rate of up to 8%.

With the new capital, Fedorov said Salmon will prioritize scaling its business and building new products. If the company does well in that market, it will likely look to expand internationally in the next couple of years, he added.

The dual funding structure of the recent round is by design, Fedorov said. As a lending business, Salmon needs two types of capital: equity to finance operations and growth, and debt to finance the loans it makes to customers. To finance its debt, the company turned to the Nordic bond market, he explained.

Salmon has raised $310 million to date, of which $160 million was equity and $150 million through bonds.

Investors in the recent round include Spice Expeditions, Washington University Investment Management Company, Moore Strategic Ventures and FJ Labs. Its previous backers include IFC, ADQ (Abu Dhabi’s sovereign wealth fund), Lunate and Antler VC.