Africa has had startups come out of the continent. From finance to health, e-commerce, social commerce, B2B, etc., these startups have continued to bring Africa to the forefront. In 2021, startups in Nigeria raised $4 billion in funding from investors. This year, African startups have begun to receive funding from investors already and the year promises to be filled with even bigger achievements for African startups.
Talking about funding and startups, Nigeria’s credit management fintech startup Bfree, has raised $1.7 million in a pre-Series A round and is planning a global expansion into emerging markets.
The pre-Series A funding round saw the participation of Logos Ventures, Voltron Capital, VestedWorld, Octerra Capital, 4 Di Capital, as well as angel investors. The funding round brings the total funds raised by the startup to $2.5 million. In May 2021, the Lagos-based startup raised $800,000 in a seed round.
Bfree is a credit management startup founded by trio Chukwudi Enyi, Moses Nmor and Julian Floshbach. The startup was birthed out of the trio’s desire to develop better, ethical and tech-driven debt-collection tools and processes. The trio had experience working with digital lenders in Nigeria and knew the challenges faced by the industry. The startup started operations in Nigeria in August 2020 and eventually expanded to Kenya in July 2021.
The startup is heavily recruiting as it is entering sixteen new markets following the funding round. The new markets the startup is entering include Ghana, India, Brazil, Colombia, Mexico, Russia, Poland, Pakistan, Indonesia and Uganda.
“We are going into markets with large populations, credit deepening and an underdeveloped regulatory environment, where a behavioural collection approach is likely to work,” Bfree co-founder and CEO, Julian Flosbach said.
He also added that “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 the CEO, unlike many other digital lenders prevalent in Nigeria, Bfree employs only ethical debt-collection standards. The startup also designs customer-focused settlement options for defaulters. According to him, the goal is to recover debt and ensure that customers remain satisfied. Bfree’s ethical standards ensure that customers’ data are protected, unlike many digital lenders that publicize the data of their customers (called debt-shaming) when they are unable to make payments at an agreed time.
Bfree says that it is working with 30 credit institutions that envelope commercial banks, micro-finance institutions and digital lenders. What Bfree does is that it uses an algorithm from data collected from the aforementioned bodies and predicts the behaviour of defaulters before coming up with a recommendation of what the best method to recover those loans will be.
Thanks to technology, there is a surge in digital lenders providing collateral-free loans to a large population of unbanked and underbanked people. These lenders, however, are exposed to the risk of not people not repaying their loans and out of this “frustration”, many of them turn to unscrupulous ways to recover these loans. The trend is debt-shaming which involved exposing a customer’s contract to their contacts, families and friends.
Bfree claims to have followed up with a total of 1.1 million defaulters and is currently handling about 800,000 cases and expects to be handling 1.4 million cases by the end of February.