Bfree to use new fund to expand across Africa and beyond
By Jeph Ajobaju, Chief Copy Editor
BFree, a credit management fintech startup in Lagos, has secured $1.7 million investment to expand across Africa and other emerging markets, bringing its war chest to $2.5 million besides $800,000 raised last May.
The pre-Series B funding round was led by 4Di Capital, Octerra Capital, VestedWorld, Voltron Capital, Logos Ventures, and several other angel investors.
It will facilitate the vision of BFree to expand beyond Nigeria where it began operation in August 2020 before entering Kenya in July 2021.
The fintech has begun a recruitment drive for 16 new markets including Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan, and Indonesia.
Aim of BFree
BFree co-founder and Chief Executive Officer (CEO) Julian Flosbach said the aim is to develop better, ethical, and tech-inspired debt-collection tools and processes.
He cited as an advantage the first-hand experience of the founders – Chief Operating Officer (COO) Chukwudi Enyi, Chief Product Officer (CPO) Moses Nmor, and himself – who have worked for digital lenders in Nigeria.
Flosbach explained how the firm focuses on ethical debt collection standards working closely with defaulters for tailor-made settlement options to increase repayment rate and customer satisfaction, per reporting by Nairametrics.
“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,” he said.
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Risk-sharing instruments
BFree has secured the services of leading industry professionals such as CTO Konrad Pawlus (formerly of SALESmanago) and Yohan Theatre who previously worked at investment management firm PIMCO.
The duo is to improve Bfree’s new business working to disrupt traditional finance by leveraging blockchain technology for secondary debt markets.
“Lenders in the US or in Europe have the opportunity to sell significant chunks of their debt portfolios to third parties. This means they only carry a portion of the risk of the loans they issue,” Theatre explained.
“In emerging markets, this is typically not the case. Lenders have to carry the entire credit risk on their own. A key driver for this difference lies in higher transaction costs and contractual uncertainties.
“The arrival of DeFi (decentralised finance) is a game-changer: transaction costs can be slashed while contractual certainty is increased by smart contracts.
“These are some of the risk-sharing instruments that we are now actively providing to lenders and borrowers.”
Business format
BFree says it has followed up with 1.1 million defaulters to date and is currently handling around 800,000 customers, majority of them in Nigeria, and anticipating to hit 1.4 million profiles in February this year.
It is working with 30 credit institutions – including digital lenders, micro-finance institutions, and banks – to build the user profiles of defaulters.
The user profiles will run data through an algorithm to predict their behaviour and recommend the best collection method using data provided by lenders.
