Fintech Farm seeks $ 7.4M to launch neobanks in Nigeria and other emerging markets - TechCrunch
Fintech Farm, a new UK - based fintech startup that will create digital banks in emerging markets, confirmed to TechCrunch today that it has raised $ 7.4 million in seed funding.
The round seed led by Flyer One Ventures and Solid. TA Ventures, Jiji, u.ventures and AVentures Capital also participated. The company said it plans to use the investment to launch neobanks in eight countries over the next 24 months.
Digital banks, neobanks, opposition banks or whatever you call them, are among the largest recipients of VC investments in fintech.. Globally, hundreds have emerged in the last few years trying to challenge investors in their own markets.
In Eastern Europe for example, the Ukrainian Monobank neobank, in just years of activity, has collected more than 4.5 million customers and more than $ 100 in revenue, as reported the company last year. Having helped with the scale of Monobank in Europe, Dmytro Dubilet, one of its co - founders and chief technology officer, aims to do the same in emerging markets throughout the company. his new.
He started Fintech Farm with Nick Bezkrovnyy, former director of KPMG UK, where he led M&A in global fintech, and Middleware founder Alexander Vityaz..
In November 2021, Fintech Farm took over their first market, Azerbaijan, using a credit - driven neobank approach and lending to customers with a thin credit history through cards and a mobile app.
On a call with TechCrunch, Dubilet said Fintech Farm's operating model, in Azerbaijan, and futures markets, launched its app through partnerships with local banks.
"It's usually a 50-50 partnership with a local bank," he said when asked how this partnership works.. According to him, Fintech Farm is responsible for business side of things - the app decision making and credit processes. The partner bank, with its local knowledge, retains the license and the capital as both parties co-invest in the industry. equivalent.
As a UK-based fintech, Fintech Farm is somewhat different from the standard model in the country and Europe, where neobanks (Monzo, Starling Bank, Revolut) prefer to have their own banking license. and offer their own range of financial services. .
But considering its operating approach, that is, providing financial services to emerging markets, it makes sense to have a different business model. Fintech Farm uses a different name in each country in which it launches, but the same design and mascot - a funny lion with a lilac handle.
Two months since its launch in Azerbaijan as Leobank, Fintech Farm has issued more than 100,000 cards; by the end of the year, it expects to increase this number to a million.
And in the next two years, Fintech Farm plans to enter eight emerging markets across Africa and Asia, the first of which is Nigeria..
“We have a plan to launch similar businesses in around eight other markets a few larger than Azerbaijan in fact, "Dubilet said." In fact, Nigeria is our next market, we have already visited Nigeria twice and it is one of our favorite countries, "Dubilet said, adding say that the launch may take place in the first quarter of 2022.
At the same time, despite the company's original plan to work with a bank in each of the countries to which it has expanded, Fintech Farm has done the opposite in Nigeria so far. Currently, the company has obtained its own microfinance banking license - the license of most fintechs in the country missing to have. The founders said that after Fintech Farm acquired up to 200,000 customers, it will partner with a bank to scale further. according to Bezkrovnyy, will ensure the selection of a partner bank, as well as licensing and infrastructure support, as soon as they can move to capture millions of customers and bring in hundreds of millions (dollars) passed in loans.
The main product of Fintech Farm is a card that acts as a debit card where customers can withdraw money from investments and a credit card where a loan facility is linked in the name of the customer. Savings, investments and transfers account are some of the features of the app.
The Nigerian population is hungry for credit and a credit-driven neobank Fintech Farm will meet the demand (most of their income comes from these loans) which companies like FairMoney and Carbon have been making for years. However, unlike these indigenous neobanks, Fintech Farm wants to use credit cards to provide cheaper and more affordable credit.
“in terms of the credit result, we see an opportunity for a “major credit card” in Nigeria. Currently, credit cards are issued by traditional banks restricted to the upper middle class, " Bezkrovnyy said in a statement. “At the same time, APRs of credit contributions from neobanks and other lenders may be well above 100%. We are about to fill this gap and accept those customers who are neglected by traditional banks and offer them fair interest rates. ”
The West African country, unlike most developed countries, lacks an advanced credit bureau system to detail people's credit history, so there is some skepticism about how Fintech Farm uses credit cards to operate . But Dubilet is confident, citing the company's data science teams that he claims are "one of the best in the world" for working magic..
As part of this funding round, Vladimir Mnogoletniy, co-founder of Genesis, Jiji’s leading African online sorting platform company, will join the board of Fintech Farm. He is also a partner of investor co - director Flyer One.
The founders of Fintech Farm believe that the knowledge and understanding of Mnogoletniy and his team will be crucial in the growth of their company.
In a statement, Mnogoletniy said Jiji, having built one of the largest e-commerce platforms on a GMV basis, was looking for the right partner to go into neobanking and investment in Fintech Farm as a strategic investment for that.
As Fintech Farm uses the investment to fulfill its expansion plans, it also plans to invest heavily in marketing and hiring talent, particularly engineers and data scientists.