FairMoney, a Paris-based fintech startup, has closed a $10 million-euro Series A round of investment to use alternative smartphone data to underwrite microcredit in Nigeria.
Launched in 2017 by CEO Laurin Hainy, former CEO of Venture Builder and VC fund Le Studio VC, alongside CTO Matthieu Gendreau, ex-lead developer of PriceMatch and CPO Nicolas Berthozat, FairMoney began with mobile lending but is expanding its service offerings to build a full-fledged digital bank for emerging markets.
Its competition in Nigeria includes Lidya which has also raised funding from Flourish and the recently backed digital-only bank Kuda.
Led by Flourish, a venture of The Omidyar Group, the partners of DST Global, and existing seed investors Newfund, Speedinvest, and Le Studio VC, the firm will use today’s funding to scale its engineering team in order to develop a fully-fledged mobile banking offering in Nigeria and beyond.
FairMoney has raised 15 million Euros to date from renowned investors such as Flourish, Speedinvest, and the Partners of DST Global, among others.
“Our vision is to build a holistic financial platform for underserved customers in emerging markets. We want to do that by offering an easy-to-use product to our customers and become a financial one-stop-shop for them,” said Laurin Hainy, CEO of FairMoney. “We started with credit for small business owners and individuals, and we are expanding our services rapidly. Think digital bank for emerging market consumers.”
FairMoney claims to have more than 200,000 customers to date, with a majority using the platform to finance their small business needs. The firm has also introduced the in-app payment function to its users, which allows them to top up their phone subscriptions, buy mobile data, pay electricity or internet bills, among others, already facilitating more than 400 payments daily.
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FairMoney is set to launch a digital wallet and saving account soon.
“After backing digital banks in the US, UK, Latin America and South Asia, we are excited to support one of the first companies to bring this model to Africa. We believe that customers will ask a lot more of their banks–to be relevant, banks will have to move from service providers to become financial mentors for their customers,” said Ameya Upadhyay, principal at Flourish and FairMoney’s new board member. “That’s where we see a massive global opportunity for FairMoney, which combines a top-notch banking infrastructure with a culture of obsessive customer focus.”
For decades, incumbent banks have only lent to large enterprise clients and left a big part of the population underserved. New technologies have created the opportunity to include these consumers into the formal financial system for the first time. Use cases for the FairMoney loan product are diverse–more than 60 percent of customers use the loans as working capital to run small- and micro-businesses. The automatic underwriting process enables FairMoney to score clients and disburse funds within 5 minutes.
According to the World Bank, more than 2 billion people globally have limited access to financial services and working capital. Access to loans for this segment is extremely limited given that they do not have a credit score. FairMoney’s approach to underwriting credit is based on a proprietary algorithm that applies machine learning techniques to smartphone data. The average loans are 30 Euros and customers can grow their loan limits up to 400 Euros over time by showing good repayment habits.
