The Philippines has millions of unbanked adults, and its consumer lending market is starting to catch up.

Salmon, a Manila-based consumer finance app, just 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 Raffy Montemayor, all of whom previously worked at Russian digital bank Tinkoff.

Montemayor was, in fact, Tinkoff’s first employee in the Philippines, and led the company’s expansion in the country since 2016.

In March 2022, the three parted ways with Tinkoff, and launched Salmon.

“We saw that the Philippines and broader Southeast Asia were proving themselves in terms of innovation,” Fedorov said in an interview with TechCrunch.

“The Philippines is probably one of the most exciting markets for disruption in the financial services industry in the world.

” Indeed, the Philippines is one of the most active mobile markets in the world, with a young, tech savvy population, and is often cited as the social media capital of the world.

But its financial system has struggled to keep pace.

Salmon is targeting underbanked Filipinos, with little to no credit history, as well as people unhappy with the incumbent lenders’ reliability issues.

Notably, Salmon took a shortcut to set up shop: The company in January 2024 acquired a rural bank that was established in 1963 to secure its banking license.

The startup is currently building out a full suite of financial products, including revolving credit lines, installment loans, cash loans, motorbike loans, and deposits.

“We started by solving the hard things first, lending, and then followed up with many other products. By now, we have around seven or eight different products,” Fedorov said. “It’s impossible for a traditional bank to solve this problem given the current credit market infrastructure in the Philippines.

” Fedorov says he is attacking a market in which getting a loan for, say, a motorbike, sometimes requires weeks of paperwork, home visits, and waiting.

He claims Salmon is changing that by digitizing the entire process.

“Customers fill out a form on their phone, upload a few 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 raise limits quickly for those who repay on time,” he explained.

Salmon’s credit product offers up to a 62-day grace period, which Fedorov says makes it interest-free for borrowers who pay on time.

Its subsidiary, Salmon Bank, also offers term deposits at up to 8% interest.

With the new capital, Fedorov said Salmon will prioritize scaling its business and build new products.

If the company executes well in this market, it will probably look to expand internationally in the next two years, he added.

The recent round’s dual financing structure is by design, Fedorov said.

As a lending business, Salmon needs two types of capital: equity to fund operations and growth, and debt to finance the loans it extends to customers. For its debt financing, the company turned to the Nordic bond market, he explained.

Salmon has raised $310 million to date, of which $160 million was in equity and $150 million through bonds.

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

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