Fintech Bfree Ethical Credit Recovery from Nigeria Receives $ 1.7M, Expands to Asia, Europe, South America and Across Africa - TechCrunch
Bfree, a Nigerian credit management fintech, has embarked on a global expansion after raising $ 1.7 million in a pre-Series A round, to take advantage of the opportunities in emerging markets, where digital lending apps have appeared in droves recently.
Funds that took part in the latest round included 4Di Capital, Octra Capital, VestedWorld, Voltron Capital, Logos Ventures and several other angel investors, bringing the total capital raised by the Lagos-based start-up company to $ 2.5 million, after making $ 800,000 in last seed round. May.
Bfree has now embarked on a major recruitment drive for the 16 new markets in which it is establishing operations, covering Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan and Indonesia. This is how it grows beyond Nigeria, where it began operations in August 2022 before joining Kenya last July.
“We are entering markets with large numbers, creditworthiness and an underdeveloped regulatory environment, where a carrier collection approach is likely to work,” Bfree co-founder and CEO Julian Flosbach told TechCrunch.
Bfree was founded by Chukwudi Enyi (COO), Moses Nmor (CPO) and Flosbach (CEO), who sought to develop better, ethical and tech - inspired debt collection tools and processes following their personal experience. working for digital lenders in Nigeria.
“We have seen a slight breakdown in lenders' value proposition - they are good at lending, but credit market after-sales services have not worked due to inefficient collection processes and lack of ease of delivery. used, ”said Flosbach.
Flosbach told TechCrunch that Bfree uses ethical debt collection standards and works closely with defaulters for specific settlement options, with the ultimate goal of increasing the repayment rate and futures satisfaction.
Ethical debt collection standards ensure the privacy of messenger information throughout the process, explore flexible repayment options and do not lead to unnecessary penalties such as late fees and debt embarrassment (as with many lenders digital current).
The start-up company currently works with 30 credit institutions, including digital lenders, microfinance institutions and banks. Using messenger data provided by the lenders, the beginner builds the losers' user profiles, and runs their data through an algorithm to predict the behavior and method recommend best collection.
Based on a customer risk profile, Bfree either directs them to a self-service platform, where lenders set up new payment plans using their phone number, or track debt balance through automated communications (chatbots, callbots or IVR technology) or direct calls. The beginner also conducts financial literacy campaigns on a regular basis.
In recent years emerging markets have seen an increase in digital lenders crediting a population that has been short of formal lenders. The credit offered is often cheap, immediate and non-alignment, unlike loans from formal banking institutions (such as banks) where lenders are at least required to keep track, have regular accounting activity and maintain a minimum operating balance. In addition, traditional lenders need some form of alignment to keep them from getting lost when lenders do not repay.
Digital lenders use the much-needed credit for people locked out by formal banking institutions, but have a high base rate (by mid-2022, Kenya's digital lending base stood at 23%) , which forced them to set up collection services. agencies, which, among other methods, use debt-defying tactics such as calling lenders' friends and relatives.
Bfree has so far continued with 1.1 million authenticators to date, and currently handles around 800,000 customers, mostly in Nigeria. Flosbach expects the startup business to handle 1.4 million images by the end of next month.
In preparation for its next growth phase, Bfree has secured services from leading industry professionals, including CTO Konrad Pawlus, formerly of SALESmanago, and Yohan Theater, formerly of investment management company PIMCO . Theater takes over as head of data decision making and financial engineering. The two will be part of the team that will lead the startup's new business while working to curb traditional finance by using blockchain technology for secondary debt markets.
"Lenders in the US or Europe have the opportunity to sell large portions of their debt records to third parties. This means that they carry only a fraction of the risk from the loans they provide. In emerging markets, this is usually not the case. Lenders must bear all credit risk on their own. Higher trade costs and contract uncertainty are the main reasons for this difference, "said Theater.
“DeFi's (decentralized finance) revenue is a game changer: trading costs can be reduced while contractual security is enhanced with smart contracts. These are some of the risk - sharing instruments that we are now actively providing to lenders and borrowers, ”he said.