PayJoy Raises $20M To Boost Smartphone Ownership

PayJoy, the startup that enables people in emerging markets to purchase smartphones via installment payments and access cash loans, has raised $20 million in venture funding.

In a blog post, Josh McFarland, a partner at Greylock Partners, announced that the venture capital firm led a Series B round in PayJoy, and that he is joining the board of the San Francisco FinTech.

PayJoy enables people who don’t have bank accounts or credit profiles to buy smartphones via installment payments as well as access cash loans. The smartphone then becomes collateral for the loan. When payments aren’t made, PayJoy’s software locks the user out. Once the customer pays off the smartphone, they can use the remaining value of the device to get a cash loan.

With mobile financial services exploding, PayJoy and its backers are betting that financial inclusion will increase if more people own smartphones.

“When my colleague Seth Rosenberg and I first met co-founders Doug Ricket and Mark Heynen, we saw the characteristics of entrepreneurs and a startup that we love to back: Doug and Mark’s mission-driven approach to serve the underserved, the depth of the PayJoy technology, the non-obvious network effects and the insatiable demand from everyone in the ecosystem to provide access to modern financial services,” wrote McFarland in the post.

Other investors in the fundraising round included Union Square Ventures, EchoVC and Core Innovation Capital. Proceeds will go to expanding the business, inking more partnerships and  creating new technologies.

According to McFarland, before the launch of PayJoy, consumers had to pay for phones upfront or have a stellar credit score to get a loan to purchase the device. Now, they can access smartphones on a pay-as-you-go basis. “For more than one-third of PayJoy’s consumer customers, the PayJoy loan is the first line item in their credit history, which means PayJoy is opening access to the modern financial system for the first time,” he wrote.

The startup is currently operating in more than 10 countries, including Mexico, India, Indonesia, Nigeria, Kenya and Guatemala. In an interview with Reuters, PayJoy’s Co-founder and Chief Business Officer Mark Heynen said the company plans to launch in an additional six countries via partnerships with local companies, including Mutual in Brazil, Waynimovil in Argentina, MyBucks in South Africa, Panacredito in the Dominican Republic, Omnipagos in Honduras and COINFIN in Colombia.