Nigerian fintech BFREE raises a seed round to tackle rising consumer debt in Africa

Nigerian fintech BFREE focuses on improving consumers’ financial health through its tech-enabled, credit management solution that makes collection processes more scalable, efficient, and user-friendly.

BFREE’s solution aims to incentivize consumers that have fallen behind on their credit repayments to sustainably clear their balances by deploying a combination of self-servicing solutions, communication automation, and human operations, supported by machine learning algorithms that cluster and predict customer behaviour.

This results in higher recovery rates for lenders and a better customer experience for borrowers. The seed round was led by Nigeria-based Beta.Ventures alongside Launch Africa Ventures and GreenHouse Capital.

“All of us co-founders used to work in large digital lending fintechs in Nigeria, and collections were always a struggle. On the one hand, you have traditional collections companies that are not very scalable and have little transparency and accountability in their processes.

And on the other hand, you have classic call centers that are a bit more scalable, but not very effective and still have loopholes for misconduct. So we looked at the collection process to come up with a way to reinvent it from scratch to fix these challenges.” said COO Chukwudi Enyi.

“No legitimate customer takes out a loan with the intention of not repaying it; however, life does not always play out this way. When you look at the core reasons why customers cannot service their outstanding balances, you will quickly notice that loss of income and direct or indirect health emergencies are among the top reasons for default. We assist these customers in their personal budgeting processes and then allow them to enter a customized repayment plan that fits their disposable income.” said CPO Moses Nmor.

CEO Julian Flosbach when asked about the Company’s strategy and ambition, said: “Inefficiency and lack of transparency of collections are not unique challenges to digital lenders and also not peculiar to Nigeria. We see significant use cases among other customer verticals with digital products such as commercial and microfinance banks, embedded finance solutions, like buy-now-pay-later, credit cards, and even tax payments at some point.

Basically, everywhere where value is owed, our solutions can be deployed. Here, we also don’t just build a solution for Nigeria, but a solution that can be potentially used in every emerging market with a challenging infrastructure for collections.”

Ike Eze, of Beta Ventures, said of the investment, “We are really excited to help grow the first ethical credit management company on the continent. Efficient and user-friendly credit collection is an essential part of the credit value chain.

BFREE is essential for the existing credit market, and it opens the door for significant credit deepening in Africa and any other emerging market.” He further added, “The team is highly experienced in lending and is now solving a problem that they once faced themselves, which is something that we like a lot in founders.” BetaVentures is a leading early-stage investor, focused on high-potential teams of entrepreneurs that build significant companies with scaling potential.

Bunmi Akinyemiju, Founding Partner of GreenHouse Capital said, “Being a specialized fin-tech fund, we know the challenges around collections first hand. Within a few months, BFREE has been launching product after product and now already achieves 60% of total collections via non-human activities, gradually taking the risk of human liability out of the collections process. They are innovating at a point in the lending value chain that has been broken and long ignored. Their goal is to make collections more efficient and data-driven, and this is the essence of the role of a tech startup.”

Baljinder Sharma of Launch Africa added, “As a leading pan-African specialist early-stage VC fund focused on venture-building through our global network of over 100 strategic C-suite advisors, mentors and investors, we knew we could add significant value to BFREE in their geographic expansion plans. BFREE is setting its eyes on East Africa next, where we see huge opportunities for their solution and a region where we can help it expand.”

“We are really excited to have incredibly supportive investors. We are now using this support to scale our product and development team and to pilot the Kenyan market,” said Chukwudiebele Enyi, COO of BFREE.

CPO Moses Nmor further added, “We focus all of our product development to assist customers in a state of financial emergency. This is really what motivates us as a team. In the end, there are millions of consumers in personal debt in Africa and no one is really focussing on helping them get back on their feet. With BFREE, we are changing that.”

BFREE was founded in the summer of 2020 by Chukwudi Enyi, Moses Nmor, and Julian Flosbach and manages more than 300,000 customers for the majority of leading lenders in Nigeria.