Fintechs’ in Africa continue to amaze many despite global economic concerns, this comes as African credit-led startup Finclusion Group announced it has secured an additional$2 million in equity financing even as the company officially rebrands to Fin.
The announcement follows a January publication that the fintech, which uses AI algorithms to provide financial services to African customers via an array of credit-centric products, secured $20 million in debt and equity pre-Series A financing. The subject company had also raised a $20 million debt facility from emerging markets debt provider Lendable in September, bringing its total capital raised in equity and debt to $42 million.
According to a source familiar with this development, citing the company’s statement noted that the fresh financing – led by existing investors ‘Leonard Stiegeler’ will be joining the company’s board along with ‘Sudeep Ramnani’ and ‘Jai Mahtani’ – will be used to add new, full integrated territories to its business, in addition, to develop new offerings, precisely in third-party support of microfinance banks desiring to offer more financial services.
It is understood, African customers are in dire need of credit. However, looking at a long-term perspective of a company offering just loans, it could prove difficult to compete with other lenders in this space that offer deposits and investments, financial services that any lender, backed with years of customers’ credit history, can efficiently cross-sell.
Since 2018, startup Finclusion – rebranded as Fin, taking a cue from other credit-first neobanks, has built consumers-facing credit products in an attempt to close the credit gap in the markets where it operates, including Namibia, Tanzania, South Africa, Eswatini, and Kenya, while diversifying its offerings. In addition, there’s SmartAdvance, where Fin, via employer partnerships, provides solutions for employees’ financial well-being. The company’s wage streaming product provides payroll loans and future wage loans, paving way for employees to access loans off the back of their salary, that’s in turn deducted from their payroll and lend through employer relationships. With pay later offering via merchant network, still in the pipeline, it currently has an insurance product coupled with savings products, cards and buy now.
Based on the company’s rebrand, subsidiaries across its major markets equally got renamed: Fin Kenya (formerly TrustGro), Fin South Africa (with its products now being SmartAdvance by Fin, NiftyCredit by Fin, NiftyCover by Fin, MediFin and e-Fin), Fin Tanzania (formerly Fiia Finance). Noting its intent to consolidate its footprint across Africa, Startup Finclusion is poised to dominate the neobank space across Eastern and Southern Africa.
“Our cross-selling experience was limited when we first launched. So effectively through this integration, everything becomes Fin. Someone will log into his Fin South Africa platform, and effectively get access to all the financial services we offer in the country that they need, which makes it easier to drive repeat engagement and to ensure that customers have full visibility of our offering, but also the financial products they have outstanding”, co-founder and co-CEO ‘Timothy Nuy’ said.
According to the startup’s other founder and chief executive ‘Tonderai Mutesva’, made clear that Fin has improved its number by 30% from last year, with more than 40,000 unique customers. However, it also plans to expand to other markets next year while offering services to microfinance banks that will enhance their value proposition to customers. “The real goal is to rethink what we need to do in 2023, integrate all the brands, and continue just scaling up our loan portfolio as well as bring more of these businesses to break even on an operating profit basis”, said Nuy. “When it comes to capital raising, we’ll conduct a bigger capital raise probably towards the end of 2023”.
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