Nigerian ethical credit-recovery fintech Bfree secures $1.7M, expands to Asia, Europe, South America and across Africa

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buffy, a Nigerian credit management fintech embarking on a global expansion after raising $1.7 million in a pre-Series A round to tap opportunities in emerging markets, where digital lending apps have recently emerged in large numbers.

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Funds participating in the latest round included 4Di Capital, Octerra Capital, VestedWorld, Voltron Capital, Logos Ventures, and several other angel investors, bringing the total capital raised by the Lagos-based startup to $2.5 million, a seed round. $800,000 in realized. last May.

Bfree is now on a massive recruitment drive for 16 new markets including Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan and Indonesia. It extends beyond Nigeria, where it began operations in August 2020, before entering Kenya in July last year.

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“We are moving into markets with a large population, credit intensive and an underdeveloped regulatory environment, where a viable collections approach is likely to work,” Julian Flosbach, co-founder and CEO of BeeFree, told Nerdshala.

Bfree was founded by chukudi dude (COO), Moses Namoro (CPO) and flossback (CEO), after his first experience working for digital lenders in Nigeria looking to develop better, ethical and tech-driven debt collection tools and processes.

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“We noticed there was a slight infringement in the value proposition of lenders — they’re good at lending, but the after-sales services of the credit market didn’t work because collection processes were inefficient and not user-friendly,” Flosbach said.

Flossback told Nerdshala that BeeFree employs the use of ethical debt collection standards and works closely with defaulters to tailor settlement options with the ultimate goal of increasing repayment rates and customer satisfaction.

Ethical debt collection standards ensure the confidentiality of customer information during the process, explore flexible repayment options and do not incur unnecessary penalties such as late fees and loan-shaming (as is the practice with many digital lenders at the moment) ).

Bfree was founded by Julian Flosbach (CEO), Chuckwoodie Annie (COO) and Moses Enmore (CPO), driven by the need to introduce ethical debt collection tools and processes to emerging markets. image credit: buffy

The startup is currently working with 30 credit institutions including digital lenders, micro-finance institutions and banks. Using customer data provided by lenders, the startup creates user profiles of defaulters, and runs their data through an algorithm to predict their behavior and recommend the best collection method.

Depending on the risk profile of the customer, Bfree either directs them to a self-service platform, where borrowers set up new payment plans using their phone number, automated communication (chat box, callbot or IVR technology) or direct Follow up on loan balances via call. , The startup also regularly conducts financial literacy campaigns.

Emerging markets have experienced a surge in recent years in digital lenders, which provide loans to populations left unqualified by formal lenders. Loans granted are often immediate and collateral-free, in contrast to loans from formal banking institutions (such as banks), where borrowers have little need to maintain an account, perform regular account activity, and maintain a minimum operating balance. In addition, traditional lenders require some form of collateral to protect them from losses whenever the borrower fails to repay.

Digital lenders get much-needed loans to people who have been laid off by formal banking institutions, but they experience a high default rate (in mid-2020, Kenya’s digital loan default was 23%), which has forced them to outsource the services of collection agencies, which, among other techniques, use debt-shaming tactics such as calling friends and relatives of borrowers.

Bfree has a following of 1.2 million defaulters so far, and is currently handling around 800,000 customers, most of whom are in Nigeria. Flossback estimates the startup will handle 1.4 million profiles by the end of next month.

In preparation for its next phase of growth, BeeFree has enlisted the services of leading industry professionals, including Konrad Pavlas, CTO of Salesmango, and Yohan Theater, who previously worked at investment management firm Pimco. Theater Data takes over as the head of decision-making and financial engineering. The pair will be part of the team that will drive the startup’s new business as it works to disrupt traditional finance by leveraging blockchain technology for secondary lending markets.

“Lenders in the US or Europe have the opportunity to sell a significant portion of their loan portfolios to third parties. This means that they only bear a portion of the risk of the loans issued by them. In emerging markets, this is usually not the case. Lenders have to bear the entire credit risk on their own. A major driver for this gap lies in higher transaction costs and contractual uncertainties,” said Theatre.

“The advent of DeFi (decentralized finance) is a game-changer: transaction costs can be reduced while contract certainty can be increased by smart contracts. These are just some of the risk-sharing tools that we are now actively pursuing. to lenders and borrowers,” he said.

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