Nigerian fintech Bfree raises $1.7 M to expand across Africa, other emerging markets
Nigerian credit management fintech startup, Bfree has secured $1.7 million in a pre-Series funding round to expand its operations across Africa, into Asia, Europe, and South America. Having raised $800,00 in a seed round in May 2021 brings the total raised funds to $2.5 million.
Participants in the funding round included 4Di Capital, Octerra Capital, VestedWorld, Voltron Capital, Logos Ventures, and several other angel investors.
Lagos-based Bfree became operational in August 2020 before extending to Kenya in July 2021. Bfree has begun a recruitment drive for 16 new markets, including Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan, and Indonesia.
Bfree was founded by Chukwudi Enyi, Moses Nmor, and Julian Flosbach. The founders were looking to develop better, ethical, and tech-driven methods of debt collection and processes, having had firsthand experience working for digital lenders in Nigeria.
Bfree is expanding into markets with large populations, with credit deepening, and environments where credit facilities are poorly regulated.
CEO Flosbach said, “We saw that there was like a little bit of 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 processed were inefficient and not user friendly.”
Bfree’s approach to debt collection meets ethical debt collection standards. They work closely with defaulters; offering bespoke settlement options so as to ensure an increasing repayment rate and customer satisfaction.
This process assures the privacy of customers as it explores flexible repayment plans and does not lead to undue penalties such as lateness fees and debt-shaming.
As part of the expansion process, Bfree has secured the services of leading professionals, including CTO Konrad Pawlus formerly of SALESmanago, and Yohan Theatre who previously worked at the investment firm PIMCO. Theatre takes over as the head of data decision-making and financial engineering. The duo will direct the startup as it works to alter traditional finance by leveraging blockchain technology for secondary debt markets.
“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 risks of the loans they issue. In emerging markets, this is typically not the case. Lenders have to carry the entire credit risks on their own. A key driver for this difference lies in higher transaction costs and contractile uncertainties,” Theatre said.
He went on to say that with the arrival of DeFi (decentralized finance), transaction costs can be slashed while contractual certainty is increased by smart contracts. These are some of the risk-sharing instruments that would be offered to lenders and borrowers.
The platform is said to be presently working with 30 credit institutions, including digital lenders, microfinance institutions, and banks to build the user profiles for defaulters, and run their data through an algorithm to predict their behavior and recommend the suitable method using provided data by lenders.
Bfree claims to have followed up 1.1 million defaulters so far as it is currently handling about 800,000 customers, a great number in Nigeria, as it anticipates to hit 1.4 million profiles by the end of February.