Bfree, a Nigerian credit management fintech, has embarked on global expansion after raising $1.7 million in a pre-Series A round, to tap the opportunities in emerging markets, where digital lending apps have recently sprung up in droves. Funds that participated 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, having realized $800,000 in a seed round. Bfree is now on a massive recruitment drive for the 16 new markets in which it is setting up operations, including Ghana, India, Uganda, Brazil, Colombia, Mexico, Russia, Poland, Pakistan, and Indonesia. Bfree employs the use of ethical debt collection standards and works closely with defaulters for tailor-made settlement options, with the end-goal of increasing the repayment rate and customer satisfaction. Ethical debt collection standards ensure the privacy of customer information during the process, explore flexible repayment options, and do not lead to unnecessary penalties like lateness fees and debt-shaming.
The startup is currently working with 30 credit institutions, including digital lenders, micro-finance institutions and banks. Using customer data provided by the lenders, the startup builds the user profiles of defaulters, and runs their data through an algorithm to predict their behavior and recommend the best collection method. Depending on a customer’s risk profile, Bfree either directs them to a self-service platform, where borrowers set new payment plans using their phone number or follows up on debt balance through automated communication (chatbots, callbots or IVR technology) or direct calls. The startup also regularly conducts financial literacy campaigns. The emerging markets have in recent years experienced a surge in digital lenders providing credit to a population that has remained underserved by formal lenders. The credit offered is often instant and collateral-free, which is unlike loans from formal banking institutions (like banks) where borrowers are at the very least required to hold an account, have regular account activity, and maintain minimum operating balances. Besides, traditional lenders require collateral of some kind to cushion them from losses whenever borrowers fail to repay. Bfree has so far followed up with 1.1 million defaulters to date, and is currently handling around 800,000 customers, most of them in Nigeria.