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BFD Expert Voices - Private Credit

BFD Expert Voices

Divine, a blockchain-based micro-lending company, raised $6.6 million in a Paradigm-led seed round, it tells Axios Pro exclusively.

Why it matters: Investors are betting that recent stablecoin adoption could open up a new lending ecosystem.

How it works: Divine doesn't ask for a credit check or proof of salary. Anyone that can prove their identity via Sam Altman's Worldcoin is eligible.

Its loans start off small — $5 to $10 in the form of Circle's USDC — and it has issued some 175,000 loans to date. It allows borrowers to exchange the USDC into their local currency through third-party players.

After successful repayment of loans, Divine gradually ups the loan size to as high as $1,000. 

"Our vision is that we can offer our service to anyone, and people have to provide the least amount of information that we need to function," CEO Diego Estevez says.

Friction point: Divine's identity verification is currently limited to the 16 million verified users of Worldcoin, but the company plans to eventually grow beyond that.

Context: Divine started in Argentina, where consumer credit is still developing: Household debt represented about 4.7% of GDP last year, compared to 36.4% for Brazil, per the IMF. 

Argentina is currently its largest market, though it also has a significant base in Colombia and Southeast Asia.

Behind the scenes: Divine doesn't makes the loans itself. It aggregates and lends capital from several lenders, largely individuals seeking returns.

Lenders are then given interest payments, determined algorithmically, in part based on the risk profile of the borrower. 

The big picture: Venture capitalists have funded microlenders Prosper, Funding Circle, and LendingClub, but they've fallen out of investor favor over the last decade. 

Shares of LendingClub are down some 86% since it went public in 2014.

Estevez believes blockchain has changed the calculus because Divine can theoretically offer loans more quickly, scale faster and source liquidity from a much broader, global pool. 

What we're watching: How the company navigates regulation. In the early innings of the P2P market, the SEC ordered Prosper to register its product as securities in the U.S.

Divine has ambitions to enter the U.S. market and Europe in coming weeks, and is hoping to design its U.S. launch in a way that its products won't be declared a security

 "It's something that we are  monitoring closely in terms of making sure we meet all of the regulations," says CTO Monchi Estevez.

Exclusive: Blockchain-based microlender Divine raises $6.6M

The company primarily operates in Argentina and Colombia.

Illustration of a pattern of piggy banks in various shades of pink and brown.  

Divine, a blockchain-based micro-lending company, raised $6.6 million in a Paradigm-led seed round, it tells Axios Pro exclusively.Why it matters: Investors are betting that recent stablecoin adoption could open up a new lending ecosystem.

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Exclusive: Blockchain-based microlender Divine raises $6.6M

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