In the ever-expanding world of web3, most of the major investment has traditionally been directed toward products in the U.S. However, a growing number of startups are now focusing on developing nations, where conventional financial systems often fail to meet the needs of the population.
One such startup is Goldfinch, a decentralized lending platform that aims to address a key issue in crypto lending. Unlike traditional platforms, which require users to offer large amounts of crypto as collateral, Goldfinch allows businesses and organizations to secure loans without the need for significant crypto holdings.
This innovative approach allows fintech companies from developing countries to access capital without needing to possess substantial crypto assets upfront. Instead, the platform leverages capital pools and accepts non-crypto collateral, enabling borrowers to present their case to lenders within the Goldfinch ecosystem.
Goldfinch recently raised $25 million in funding from Andreessen Horowitz’s crypto arm, along with other investors such as Coinbase Ventures, SV Angel, Blocktower, and Bill Ackman. Founders Mike Sall and Blake West, who previously worked at Coinbase, launched Goldfinch in 2020. This marks the second funding round for the startup, following an $11 million raise in June 2021.Sall emphasized the potential to expand capital access for borrowers in emerging markets: “We see enormous potential to bridge the gap between crypto lenders and borrowers in the real world.
”Goldfinch’s focus is on developing regions where securing a loan has often been difficult. The platform has already seen significant adoption in countries such as Kenya, Nigeria, Uganda, and the Philippines. One of the startups benefiting from Goldfinch’s protocol is Tugende, which offers motorcycle loans to East African taxi operators, allowing them to pay for the bikes over time. Another is Greenway, an Indian company that provides clean cook stoves to low-income households.
The platform is designed to balance risk for its investors through a dual-pool structure. The “junior” pool allows investors to make more targeted, riskier bets on specific borrowers, while the “senior” pool diversifies investments, offering lower risk and prioritizing payouts to investors.Goldfinch has currently facilitated $39 million in active loans, reaching over 230,000 borrowers across a range of fintech firms.
