Nigerian credit management fintech, Bfree has raised $1.7 million in a pre-Series A round to expand across emerging markets, bringing the total capital raised by the Lagos-based startup to $2.5 million, in addition to the $800,000 raised in a seed round last May.
The funding round led by 4Di Capital, Octerra Capital, VestedWorld, Voltron Capital, Logos Ventures, and several other angel investors, will expectedly facilitate expansion beyond Nigeria where it started operation in August 2020 before entering Kenya in July last year.
In line with the expansion drive, the fintech has begun a recruitment drive for the 16 new markets including Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan and Indonesia.
What they are saying
Speaking on the development, Julian Flosbach, Bfree co-founder and CEO said the fintech aims to develop better, ethical and tech-inspired debt-collection tools and processes following the first-hand experience of the founders; Chukwudi Enyi (COO), Moses Nmor (CPO), and Flosbach, working for digital lenders in Nigeria.
Explaining how the company had come to channel the focus around the use of ethical debt collection standards working closely with defaulters for tailor-made settlement options to increase repayment rate and customer satisfaction, he said, “We saw that there was like a little bit of a breach in the value proposition of lenders — they are good at giving out loans, but the aftersales services of the credit market didn’t work as collections processes were inefficient and not user friendly.”
Notably, Bfree has secured the services of leading industry professionals such as CTO Konrad Pawlus formerly of SALESmanago and Yohan Theatre who had previously worked at investment management firm PIMCO. The duo is expected to work to improve the startup’s new business working to disrupt traditional finance by leveraging blockchain technology for secondary debt markets.
Theatre said, “Lenders in the US or in Europe have the opportunity to sell significant chunks of their debt portfolios to third parties. This means they only carry a portion of the risk of the loans they issue. In emerging markets, this is typically not the case. Lenders have to carry the entire credit risk on their own. A key driver for this difference lies in higher transaction costs and contractual uncertainties.
“The arrival of DeFi (decentralized finance) is a game-changer: transaction costs can be slashed while contractual certainty is increased by smart contracts. These are some of the risk-sharing instruments that we are now actively providing to lenders and borrowers,”
What you should know
The platform claims it has so far followed up with 1.1 million defaulters to date, and are currently handling around 800,000 customers, majority of them in Nigeria further anticipating that the startup will hit the 1.4 million profiles by the end of next month.
Bfree also said it is currently working with 30 credit institutions, including digital lenders, micro-finance institutions and banks to build the user profiles of defaulters, and run their data through an algorithm to predict their behaviour and recommend the best collection method using data provided by the lenders.
