San Francisco-based startup Juvo wants to help mobile users in emerging markets improve their financial standing by combining data and identity to provide micro-loans. It’s an ambitious goal, and to help achieve it, the company has raised $40 million in funding led by NEA and Wing Venture Capital.
Juvo joins companies like Branch and Tala in bringing financial services to the underserved in developing markets. But how Juvo differentiates is by working with mobile operators as the entry point to its relationship with the consumer. It does this by offering micro-loans to pre-paid mobile customers when they are short on data or minutes.
In many developing markets, mobile users operate on pre-paid plans which they top off every couple of days, often by purchasing more talk time or data at a nearby store. That means the mobile operators don’t have any relationship with the end user, but it also means consumers can run out of data at inopportune times.
With the Juvo app, those users can borrow small amounts of money, which allows them to stay connected for longer periods of time. In places where cash is king, it also gives the unbanked a financial identity and the ability to build up credit over time.
For users, that means walking up a financial ladder to earn more credit over time. The company starts with very small loan amounts — just enough to pay for another day or two of mobile service — and as those loans are repaid, Juvo borrowers gain access to larger and larger amounts of credit.
While Juvo’s loans start by helping users keep their mobile phones connected, it doesn’t end there. The company is working to make its credit score “portable” so that users who have shown positive financial habits can gain access to other financial services.
Juvo’s micro-loans aren’t just good for consumers — they’re also good for mobile carriers. The company has partnerships with seven different mobile carriers in 25 countries around the world, giving it a reach of more than 500 million subscribers. By partnering with Juvo, those carriers are able to drastically reduce churn while also increasing their average revenue per user by up to 15 percent.
One example is Cable & Wireless, which operates telco services in 18 countries throughout the Caribbean and Latin America. Like other service providers in developing markets, the majority of the telco’s customers are on pre-paid plans, according to Cable & Wireless VP of products James McElvanna.
Juvo started with a small trial in Antigua, but exceeded Cable & Wireless’ expectations in just three or four months. The partnership was extended to other markets and now the telco has more than 200,000 unique customers using the service, McElvanna told me.
“We’ve seen double-digit ARPU growth in some markets,” he said.
Juvo started out by serving Latin American markets, but has been gradually expanding to other parts of the world, including Southeast Asia and Eastern Europe. But there’s a lot of work ahead.
“There are 5 billion mobile subscribers in the world and 3.5 billion are in developing markets,” Wing general partner Peter Wagner reminded me. “For those individuals mobile is a lifeline service… and it’s their most important regular transaction.”
While Juvo’s current addressable market of 500 million subscribers is large, it’s just scratching the surface of the bigger opportunity. That’s part of the reason Wing decided to invest heavily in this round, after being an early investor in the company’s seed round.
The company was founded by Steve Polsky and John Esrey, who have decades of experience working with telcos and building products that leverage user data in interesting ways. Polsky, a five-time entrepreneur, was mostly recently a founder, president and COO of Flixster (owner of Rotten Tomatoes). Meanwhile, Esrey was on the founding team of MetaTV, which provided interactive TV software to companies like Comcast, Cox and Echostar, before founding investment firm Golden Peak Equity.
Juvo had previously raised $14 million in funding from investors that include Freestyle Capital, as well as the former CEOs of AT&T Wireless, NYSE, Sprint, Telefonica International and Vodafone Group, all of whom participated in this round.
While the company has been able to grow a tremendous amount with less than 50 employees to date, the new funding will be used to expand into more markets, strike more partnerships with carriers and bring other partners on-board to provide financial services that go beyond mobile micro-loans.