Salmon raises $100 million in equity and debt to bring digital credit to underbanked Filipinos

The Philippines has millions of unbanked adults, and the consumer lending market is starting to catch up. Manila-based consumer finance app Salmon has raised $60 million in equity and $40 million in debt to bring digital banking to Filipinos.

Salmon was founded by Pavel Fedorov, George Chesakov, and Ravi Montemayor, all of whom previously worked at Russian digital bank Tinkoff. Montemayor was, in fact, Tinkoff’s first employee in the Philippines, and has led the company’s expansion in the country since 2016. In March 2022, the three parted ways with Tinkoff, launching Salmon.

“We have seen that the Philippines and Southeast Asia more broadly have proven themselves in terms of innovation,” Fedorov said in an interview with TechCrunch. “The Philippines is perhaps one of the most disruptive markets for the financial services industry in the world.”

In fact, the Philippines is one of the most active mobile markets in the world, with a young, tech-savvy population, and is often referred to as the social media capital of the world. But its financial system is struggling to keep up.

Salmon targets underbanked Filipinos with little credit history, as well as people dissatisfied with the reliability issues of existing lenders.

It’s worth noting that Salmon took a shortcut to setting up shop: In January 2024, the company acquired a rural bank founded in 1963 to secure its banking license. The startup is currently building a full suite of financial products, including revolving lines of credit, installment loans, cash loans, motorcycle loans, and deposits.

“We started by solving the hard stuff first, which is lending, and then we followed that up with many other products. Now, we have about seven or eight different products,” Fedorov said. “It is impossible for a traditional bank to solve this problem given the current infrastructure of the credit market in the Philippines.”

Fedorov says he is attacking a market where getting a loan to buy a motorcycle, for example, sometimes requires weeks of paperwork, home visits and waiting. He claims that Salmon is changing that by digitizing the entire process.

“Customers fill out a form on their phone, upload some documents, and get a decision in 20 seconds. The bike is ready for pickup the next morning. Instead of using credit history, we score borrowers in real-time using behavioral and digital data, and quickly lift limits for those who repay on time,” he explained.

Salomon’s credit product offers a grace period of up to 62 days, which Fedorov says makes it interest-free for borrowers who pay on time. Its Salmon Bank also offers term deposits with interest rates of up to 8%.

With the new capital, Fedorov said Salomon will prioritize expanding its business and building new products. He added that if the company does well in this market, it will likely look to expand internationally in the next two years.

The dual financing structure for the latest round was by design, Fedorov said. As a lending company, Salmon needs two types of capital: equity to finance operations and growth, and debt to finance the loans it makes to clients. He explained that to finance its debts, the company turned to the Nordic bond market.

Salmon has raised $310 million so far, including $160 million in stocks and $150 million through bonds.

Investors in the latest round include Spice Expeditions, University of Washington Investment Management Firm, Moore Strategic Ventures, and FJ Labs. Its previous backers include IFC, ADQ (Abu Dhabi’s sovereign wealth fund), Lunate, and Antler VC.