Jia is a company that gives entrepreneurs anywhere in the world power to control their financial destiny. Pulse 2.0 interviewed Jia CEO and co-founder Zach Marks to learn more.
Zach Marks’ Background
Marks spent most of his career working to expand financial access in emerging markets. Marks said:
“That came about thanks to my love of traveling to new places and hanging out with street food vendors. My first job after college was teaching English in India. While teaching, I became close friends with Jhumka, the chai wallah who served samosas and chai at my school. I saw this person who worked incredibly hard, was good at what she did, and wanted to grow her business to provide a better life for her family but couldn’t because she had no access to fair financing. As I traveled and spent more time with chai wallahs in India or taqueros in Mexico, or matatu drivers in Kenya, I saw just how universal this challenge was – hence the $5 trillion credit gap – and the real human cost behind that number. Solving that challenge has become the mission of my career.”
Formation Of Jia
How did the idea for Jia come together? Marks shared:
“My work at Jia is born out of my experience working on previous approaches to financial inclusion. After teaching in India, I started working with traditional community-based cooperatives – initially with farmer co-ops in South Sudan. I call this approach, similar to the Grameen Bank model, Microfinance 1.0. While these community finance groups work great at a local level, they don’t scale very well, and that led me to fintech lending – what I call Microfinance 2.0. While fintech lending has proven scalable, I believe it’s gotten away from microfinance’s community-based roots. This has made it very transactional and expensive. We’re working to change that at Jia, by building Microfinance 3.0, where borrowers aren’t just customers at the end of a one-way transaction; they are owners and builders of a global financial community.”
Favorite Memory
What has been Marks’ favorite memory working for Jia so far? Marks reflected:
“My favorite moments have been spending time with our initial borrowing members. These small business owners are really the local heroes who should be on the cover of Forbes. Last month I visited one of our first borrowers in the Philippines – a baker named Armando. Every day, he gets up three hours before sunrise, drives his scooter to his bakery, and gets the ovens going to make his trademark malunggay pandesal, a fluffy breakfast bun made with moringa. They are delicious and worth the round-trip ticket to Manila!”
“Armando is on his feet for eighteen hours, serving customers, taking and delivering orders, restocking flour and yeast, giving advances to his employees, and doing it all with a smile and never a complaint. This man is providing so much for his community – their staple daily bread, their jobs, and wages, food on his family’s table – and yet has been totally ignored by the world’s financial system. The fact that we can put people on the moon and develop brain implants that can help a paralyzed person walk but can’t think up a way to provide fair financing for a business like Armando’s is absurd to me. But seeing him get up every day in the face of that and go to work with a smile – that inspires me.”
Challenges Faced
What are some of the challenges Marks faced in building the company and has the current macroeconomic climate affected the company? Marks acknowledged:
“Small businesses in emerging markets are particularly vulnerable to economic shocks. If the Kenyan shilling or Philippine peso depreciates against the US dollar, they lose their savings and have to pay higher costs, squeezing their margins through no fault of their own. It also becomes harder for them to access capital as banks across the globe tighten up lending. That said, they are also incredibly resilient. Many sell essential goods and services that are ‘recession-proof’ so to speak. This just makes the role Jia plays even more important – providing them financing when other options dry up, but also providing sustainable returns to investors powered by real businesses that are uncorrelated to other asset classes like the US stock market or crypto.”
“We’re often our borrowers’ first touch point to the digital economy, and the first trusted partner they’ve worked with that can provide benefits of bringing their finances on the chain. For example, we can help them offset currency devaluation by holding stablecoins, and we help build an on-chain credit history and data footprint for them so they can tap into global capital they previously couldn’t access.”
Evolution Of Jia’s Technology
How has Jia’s technology evolved since launching? Marks commented:
“Of course – we’re really evolving every day as we learn from our users and iterate based on those learnings. For example, when we launched Jia, our MVP was simply providing capital to small businesses. Since we launched, we’ve learned how critical community is to our customer success. Our users want tips to get started selling online, help with branding and marketing, and just to connect with other entrepreneurs for support and guidance. That’s why we’ve launched a small business resource portal to provide education on entrepreneurship. We’re also building more of these types of resources into our product as loyalty rewards for positive borrowing history.”
“One other thing I’ll note is how our investment and underwriting mechanisms have evolved. We began financing small businesses through our own balance sheet, but we’ve since opened up those investment opportunities to global investors through on-chain liquidity pools. We’re essentially democratizing access to investment opportunities that were previously only available to development finance institutions, hedge funds, and institutional debt investors. We’re also excited to develop our borrowers’ credit histories on the chain, expanding on the alternative data we use to underwrite users at the start of their relationship with us.”
Core Products
What are Jia’s core products and features? Marks explained:
“In short, we provide small businesses with fair, affordable financing to help entrepreneurs buy inventory, cover expenses, and grow their businesses. We do this in markets where millions of entrepreneurs have been locked out of the traditional finance system. Borrowers apply for Jia financing by filling out a short application from their phone. We then underwrite them using our machine learning-powered credit models and quickly distribute financing. This is all done using blockchain technology.”
“The key aspect that makes Jia different from other lenders is that we then reward borrowers for repayment with actual ownership in the form of tokens. This allows borrowers to obtain better terms, earn rewards for the value they are providing, and build real wealth for themselves and their families. We’re really meeting small businesses where they are. At the same time, this helps unlock sustainable yields for global investors.”
Significant Milestones
What have been some of Jia’s most significant milestones? Marks highlighted:
“It’s been an incredible year for us since we began lending in Kenya and the Philippines in Q1. One of our biggest milestones was launching an on-chain liquidity pool for global investors in May. We opened up the opportunity to raise $100,000 and were oversubscribed within 24 hours due to the amount of investor interest. (We’ll be opening up a new liquidity pool for investment soon!). From that pool, we disbursed financing to over 200 small businesses in Kenya alone within one week.”
Customer Success Stories
Can you share any specific customer success stories? Marks cited:
“I’d love to share the story of Ms. Roselyn, an amazingly talented and creative entrepreneur in Manila. Ms. Roselyn was born on the island province of Capiz and came to Manila with the dream of becoming her own boss. She worked at a hotel until she saved up enough money to open a sari-sari shop, a sort of neighborhood convenience store, where she sold groceries and other household goods.”
“Like a true ‘negosyante’ (a talented hustler), Ms. Roselyn used Jia financing to significantly expand her operations. She uses Jia to buy clothes wholesale, which she then models on Facebook Live to help sell in her shop and online. She’s even started providing financial services herself to local rickshaw drivers because the cost of our capital is so much lower than the market rate. She is such an inspiration for us.”
Funding/Revenue
Can you discuss funding and how the company generates revenues? Marks revealed:
“We raised an oversubscribed seed round of $4.3 million in equity funding to expand our operations serving small businesses in emerging markets. We’re using this funding to deepen our product offerings and expand to new markets. We have also secured commitments of $1m in on-chain liquidity. We called the first $100k of this in our Jia Pioneer Fund Pool, which was fully subscribed in less than 24 hours. That funding goes directly to finance small businesses in emerging markets.”
“We generate revenue through operating profitable and sustainable credit portfolios. We charge a fair interest rate considerably below the market average and existing alternatives our borrowers have.”
Total Addressable Market
What total addressable market (TAM) size is Jia pursuing? Marks assessed:
“We are going after a $5 trillion opportunity — that’s the size of the credit gap for micro, small, and medium-sized enterprises (MSMEs) across emerging markets, according to the IFC’s recent analysis by the SME Finance Forum. This is devastating for communities around the world when you consider that these MSMEs account for 9 out of every ten businesses, half of global GDP, and two-thirds of jobs worldwide.”
“One of Jia’s first borrowers, Francis Njoroge, is a perfect example of the human cost and opportunity behind this gap. Francis sells spices from his shop in Githurai Market outside of Nairobi. He turns a healthy profit and should be able to access fair financing from a bank, but he can’t. For this reason, before Jia, he was previously unable to sell more than a small amount of spices at a time, despite his success.”
“If you ask a Kenyan bank why they don’t serve Francis, they’ll probably say two things. First, they’d say it’s not worth their time because Francis is too small for them to serve. Banks in emerging markets have traditionally been very conservative in lending to small businesses. Second, they’d say they can’t underwrite Francis because they don’t have data about him or his business.”
“Fintechs have moved to fill this gap in recent years, easily distributing credit through mobile apps. But what these lenders offer in speed and convenience, they give up in repayment and cost. Default rates tend to be high for these fintech lenders, and so they typically keep loans small, mostly under $300. The cost of loans can be outrageous, with fees up to 20% per month.”
“This leaves a massive space in the market for affordable loans sized $500 – $10,000. This is the exact size that most MSMEs in emerging markets need to run and grow their businesses, and this is what Jia is going after.”
Differentiation From The Competition
What differentiates Jia from its competition? Marks noted:
“I think three major factors differentiate Jia from our competition. The first is that we are providing loans that actually meet the needs of small businesses. That sounds simple, but it’s a differentiator. Most digital lenders offer less than $300 at a time to mitigate risk. But businesses often need much more than that. We’re providing loans between $500 and $10,000 when appropriate to really help these entrepreneurs cover what they need to grow.”
“Second is the cost of our capital. Most of our competitors are prohibitively expensive, with fees up to 20% per month, or 395% annualized in some cases. This eats into the already-thin profit margins small businesses generate. Now, take Jia. Our rates typically fall between 3% to 7%. With the capital efficiency gains and inclusivity of different investor classes enabled by the crypto economy, Jia can provide more attractive interest rates for both borrowers and investors.”
“The last, and perhaps most important, is a sense of community and ownership. Our core thesis is that being an owner changes the behavior and participation of small business owners within a financial community. So the main value proposition for entrepreneurs to join Jia is the ability to grow their businesses in a financial community where they participate not only as customers but as owners. We are confident this leads to a much higher sense of loyalty among our borrowers.”
Future Company Goals
What are some of Jia’s future company goals? Marks concluded:
“We’re building a global financial community to unlock financial freedom for small businesses around the globe. Our goal is not just to help people borrow but to help them build real wealth for themselves and their families. We’re beginning by providing accessible, affordable, and rewarding financing to entrepreneurs. From there, we’ll expand to serve a broader range of financial needs – we’ve already begun by providing a community where entrepreneurs can share information and advice and access resources to grow their businesses; soon, we’ll help them better manage their money, and grow their reserves for the future.”
“I’d just like to share how you can get involved if our story resonates with you. If you have access to a network of entrepreneurs in Africa, Asia or Latin America and want to offer them financing, please do get in touch at jia.xyz/partner. And if you want to invest and earn sustainable yields powered by productive businesses in emerging markets, we’re launching a new credit pool shortly. You can sign up for the waitlist here. Finally, if you want to come to work with us and help reimagine the way the economy works in emerging markets, check out our careers page at jia.xyz/careers. Our DMs are always open at @jia_DeFi, so please give us a follow and drop us a line!”
