Bfree, a Nigerian credit management fintech, has raised $1.7 million in a pre-Series an investment to expand globally and take advantage of the prospects in emerging economies, where digital lending apps have recently sprung up in droves.
After many years of being key players in the global Fintech sector, BFREE’s founders became deeply unsatisfied with the available credit collection options which mostly thrived on humiliating customers. They decided to change the narrative to a more customer-centric approach that leverages ethics and technology in leading customers sustainably out of debt and onto the path of financial freedom.
Octerra Capital, 4Di Money, Voltron Capital, Logos, VestedWorld, Ventures, and several other angel investors joined in the new round, bringing the total capital received by the Lagos-based business 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.
Bfree co-founder and CEO Julian Flosbach told TechCrunch,
“We’re moving into economies with enormous populations, credit deepening, and an immature regulatory framework, where a behavioral collecting technique is likely to work.”
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.
“We recognized a little bit of a breach in the value proposition of lenders – they are competent at giving out loans, but the credit market’s aftersales services didn’t function since collections operations were inefficient and not user friendly,” Flosbach explained.
Bfree, according to Flosbach, uses ethical debt collection standards and collaborates closely with defaulters to develop tailored settlement choices, with the ultimate goal of enhancing 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 (as is the practice with many digital lenders at the moment).
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.
Digital lenders provide much-needed credit to people who have been turned down by traditional lenders, but they have a high default rate (in mid-2020, Kenya’s default rate on digital loans was 23 percent), forcing them to hire collection agencies, which, among other things, use debt-shaming tactics like calling borrowers’ friends and relatives.
Bfree has contacted 1.1 million defaulters so far, and it currently serves roughly 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 gained the services of prominent industry specialists, 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.