Bfree, a Nigerian credit management fintech, has raised $1.7 million in a pre-Series A round to expand globally and take advantage of the opportunities in emerging markets, where digital lending apps have recently sprung up in droves.
4Di Capital, Octerra Capital, VestedWorld, Voltron Capital, Logos Ventures, and several other angel investors joined in the new round, bringing the total capital raised by the Lagos-based startup to $2.5 million after raising $800,000 in a seed round last May.
Bfree is currently conducting a large recruiting drive in Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan, and Indonesia, among the 16 new markets in which it is establishing offices.
This is as the company expands beyond Nigeria, where it began operations in August 2020 before moving to Kenya in July of last year.
Following their firsthand experience working for digital lenders in Nigeria, Chukwudi Enyi (COO), Moses Nmor (CPO), and Flosbach (CEO) launched Bfree to offer better, ethical, and tech-inspired debt-collection tools and methods.
Bfree uses ethical debt collecting practices and collaborates closely with defaulters to provide tailored settlement solutions, all with the purpose of improving repayment rates and customer satisfaction.
Ethical debt collection practices protect customers’ personal information during the collection process, provide for flexible repayment choices, and avoid excessive penalties such as late fees and debt shaming.
Digital lenders, microfinance institutions, and banks are among the 30 credit institutions with which the business is now collaborating. The startup creates defaulter user profiles using data provided by lenders and analyzes their data via an algorithm to forecast their behavior and offer the best collecting approach.
Bfree either refers customers to a self-service platform, where they may set up new payment plans using their phone number, or follows up on debt balances via automated communication (chatbots, callbots, or IVR technology) or direct calls, depending on their risk profile. The company also holds financial literacy campaigns on a regular basis.
In recent years, digital lenders have sprung up in emerging economies, giving loans to a demographic that has hitherto been underserved by traditional lenders. Unlike loans from official financial organizations (such as banks), where borrowers must at the very least have an account, have regular account activity, and maintain minimum operating balances, the credit supplied is frequently quick and collateral-free. Traditional lenders, on the other hand, require some form of collateral to protect them from losses if borrowers default on their payments.
Bfree has contacted 1.1 million defaulters so far, and it currently serves around 800,000 consumers, the majority of whom are from Nigeria. By the end of next month, Flosbach expects the startup to have processed 1.4 million profiles.
Bfree has secured the services of leading industry professionals, including CTO Konrad Pawlus, formerly of SALESmanago, and Yohan Theatre, formerly of investment management giant PIMCO, in preparation for its next stage of expansion. As the chief of data decision-making and financial engineering, Theatre takes over. The two will be part of the team that will lead the startup’s new business as it attempts to disrupt traditional finance by utilizing blockchain technology in secondary debt markets.