A Nigerian credit management fintech Bfree has embarked on global expansion after securing $1.7 million in a pre-Series A round, in a bid to have its fair share in emerging markets, notably where digital lending apps are believed to have recently sprung up in droves.
Investors that participated in the latest round include 4Di Capital, Vested World, Octerra Capital, Voltron Capital, Logos Ventures, in addition to several other angel investors, this brings the total capital raised by the Lagos-based startup to $2.5 million, having secured $800,000 in a seed round last May.
In a bid to deliver in respect to global expansion, Bfree has now taken the bull by the horn, which led to a massive recruitment drive for the 16 new markets it’s setting up operations in, these include Ghana, Uganda, India, Colombia, Brazil, Mexico, Poland, Russia, Pakistan, and Indonesia. This will be the trend as it grows beyond Nigeria, its core market where it started its operation in August 2020 before expanding to Kenya in July 2021.
“We are going into markets with large populations, credit deepening, and an underdeveloped regulatory environment, where a behavioral collection approach is likely to work”, according to Bfree co-founder and CEO ‘Julian Flosbach’, a source familiar with the matter has confirmed.
Meanwhile, it should be borne in mind that the subject startup was founded by ‘Chukwudi Enyi’ (COO), ‘Moses Nmor’ (CPO), and ‘Julian Flosbach’ (CEO), who was looking to develop better, ethical, and tech-inspired debt-collection tools coupled with processes based on their experience while working with digital lenders in Nigeria.
Bfree CEO ‘Julian Flosbach’ 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”.
According to information gathered over the company’s mode of operation, the source has it that Bfree employs the use of ethical debt collection standards and works closely with defaulters with the aid of tailor-made settlement options, geared towards the end-goal of increasing the repayment rate and customer satisfaction.
This mode of operation ensures the privacy of customer information during the process, explores flexible repayment options that exclude unnecessary penalties that are currently practiced by many digital lenders, such as lateness fees and debt-shaming.
The subject fintech Bfree is in the meantime working with 30 credit institutions that include digital lenders, micro-finance institutions, and banks. With the aid of customer data provided by the lenders, Bfree builds the user profiles of defaulters, in turn, runs their data via an algorithm to predict their behavior and recommend the best mode of approach for collection.
In the meantime, the startup has so far followed up with 1.1 million defaulters to date and is currently handling about 800,000 customers, with the majority of them in Nigeria. In view of this, the company’s CEO Flosbach anticipates that the Bfree will be handling 1.4 million profiles by the end of February.
Going forward, with regards to the next stage of growth, the startup has secured the services of leading industry professionals, such as CTO ‘Konrad Pawlus’ formally of SALESmanago and ‘Yohan Theatre’ who had previously worked with investment management firm PIMCO. In view of this, the later – Theatre will take over as the head of data decision-making and financial engineering. Both are believed to be part of the team that will steer the company’s new business as it works 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 their 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”, he added.
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