In a blog post, Arianna Simpson, a partner at Andreessen Horowitz (a16z) announced the VC’s investment into Goldfinch Finance, a DeFi startup, for $25 million.
Goldfinch Finance is a decentralized credit platform that is leveraging the growing capital in crypto to expand access to loans for underserved markets.
Goldfinch’s protocol operates as an open marketplace for loans without collateral expanding the lending of credit beyond just banks.
The protocol works by extending credit lines to lending businesses which can then draw down stablecoins from a pool and deploy them on the ground in their local markets. Investors can utilize Goldfinch by depositing crypto into the pool to earn yield. As the lending businesses make their interest payments back to the protocol, they’re immediately disbursed to all investors.
” Goldfinch provides the utility of crypto – specifically, its global access to capital – while leaving the actual loan origination and servicing to the businesses best equipped to handle it.”
– Arianna Simpson, Partner, a16z
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Goldfinch’s service is game-changing since most web3 lending protocols only support overcollateralized loans which lend against existing assets. This limits borrowers who can benefit from DeFi – mostly to borrowers who already hold crypto assets that they can use to seek credit.
According to Goldfinch, providing loans without collateral remains the missing piece in DeFi – one that can help it scale across the world.
“The vast majority of borrowers in the world can’t actually borrow on DeFi today because it requires overcollateralization with crypto. By removing that crypto collateral requirement, the Goldfinch protocol unlocks an entirely new level of borrower capacity.”
– Goldfich Finance
Goldfinch has already made progress so far in providing diverse lending organizations with credit drawn from its crypto pools.
Since January 2021, when it was launched, Goldfinch has grown its active loans from $250,000 then to over $38M in January 2022. In the same period, the protocol has grown from lending to 100 borrowers to over 230,000 borrowers currently.
In Kenya, Goldfinch has extended its pools to Tugende, a credit and asset finance firm which provides loans to help people purchase motorbikes for business.
Participants in the round include new investors:
- Bill Ackman
- Blocktower
- Kingsway Capital
- Helicap
- YC Alumni Fund
- Jinglan Wang
Repeat investors include:
- Kindred Ventures
- Stratos Technologies
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RECOMMENDED READING: 5 Cross-Chain Bridges Powering the DeFi Movement
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