Lagos-based ethical credit management startup, BFREE has secured US$800,000 in seed funding for product expansion in a round led by Beta.Ventures, a Nigerian early-stage investment firm, with participation from Launch Africa Ventures and GreenHouse Capital.
The platform, which offers a tech-driven, credit management solution that promotes consumers’ financial health, was launched in 2020 by Chukwudi Enyi, Moses Nmor, and Julian Flosbach.
Having understood that some of the major problems associated with digital lending include high default rates not to mention consumers’ lack of basic financial knowledge, the founders of BFREE have built a loan recovery system that can help lenders and borrowers overcome challenges satisfactorily.
BFREE is a customer-centric platform with a credit management solution that educates and incentivizes consumers that have defaulted on their credit repayments, leading them out of debt by giving them control over their finances.
To achieve its aims, the startup deploys a combination of self-service solutions, communication automation, and human operations, driven by machine learning algorithms that cluster and predict customer behavior. As a result, lenders are able to recover their loans and borrowers get to enjoy an improved and less distressing experience.
Currently, the company claims to be helping about 350,000 customers in Africa to be free of debt.
According to Flosbach, CEO and Co-founder, inefficiency and lack of transparency of collections are among the challenges that are neither unique to digital lenders nor peculiar to Nigeria.
He said, “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.”
Expressing his excitement at the chance to help grow Africa’s first ethical credit management company, Ike Eze of Beta.Ventures said,
“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.”
The Founding partner of GreenHouse Capital, Bunmi Akinyemiju also revealed that his company has first-hand knowledge of the challenges that come with loan collections.
“Within a few months, BFREE has been launching product after product and now already achieves 60 percent of total collections via non-human activities, gradually taking the risk of human liability out of the collections process,” he said.
In his opinion, the founders of the startup have not only identified a weak link in the long-ignored lending value chain but are innovatively addressing it. “Their goal is to make collections more efficient and data-driven, and this is the essence of the role of a tech startup,” he added.
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