Bfree, a technology-enabled debt collection startup based in Nigeria, is facing an ethical crisis after its founders witnessed the use and negative impact of aggressive collection methods such as incessant phone calls and debt scams by predatory digital lenders. was established to automate and implement the debt collection process. .
After launching in 2020, the startup has a number of scalable debt collection methods, including a self-service platform where borrowers can set up new payment plans, and conversational AI tools (chatbots and callbots) as part of the collection. Introduced. -Providing services. These tools provide borrowers with humane after-sales service and ensure actions based on behavioral and financial data.
Over the years, the company's customer base has grown to include major banks in Ghana, Kenya, and Nigeria, and continues to do so on the back of $2.95 million in new funding just secured in a round led by Capria Ventures. The plan is to expand the scale. Angaza Capital, GreenHouse Capital, Launch Africa, Modus Africa, Axian CVC and a number of angel investors also participated in the round, bringing the total raised to $6.5 million, including last year's undisclosed $1.1 million bridge round. Also included.
Julian Flosbach (CEO), who co-founded the startup with Chukwudi Enyi (COO) and Moses Nmor (CPO), told TechCrunch that while Bfree started with digital lenders, digital lenders were quick to adopt the company's product. He says they will do it for you, but right now those companies only provide services. The main focus is on banks, as they contribute up to 70% of revenue.
“There's a lot of pressure to increase margins, so we basically had to raise prices or let go of a lot of small customers,” Frosbach said, adding that banks have large loan portfolios compared to other countries. He added that working with banks makes good business sense. Digital lender. The startup currently serves 14 customers, but has worked with 45 customers since its launch.
Bfree says 92% of its customer interactions are fully automated, but it maintains a call center staffed by a small team for when customers call and for follow-ups that require a phone call. That's what it means. It has also launched a debt collection management SaaS called “Workflow,'' targeting companies with in-house collection teams and companies reluctant to outsource.
The startup is perhaps the only technology-enabled credit collection company in all of Africa, where collection agencies continue to rely heavily on traditional means such as call centers to follow up on settlements.
You can freely create a secondary market for loans.
The current loan portfolio exceeds $400 million, of which 12.5% was recovered.
The company also plans to create a secondary debt market that will allow third-party investors such as hedge funds looking to diversify their investments to buy non-performing loans (NLPs) from African banks. Debt buyers buy loans from banks at a fraction of the face value of the debt and make a profit on their collection. Banks sell NLP to minimize risk, manage loan portfolios, and free up funds.
“We collect a tremendous amount of data about our borrowers, especially those who have defaulted. For the first time, we have been able to actually develop an algorithm that can value these assets. For example. We can predict how much the loans that have not been paid in 90 days will be. What are the chances that they will be paid in the next year? Then we can go to the bank and buy these assets and take them off the balance sheet. , allowing us to reduce risk,” Frosbach said.
He added that it also offers analytical solutions that help banks gain insights into the secondary bond market.
Commenting on the investment, Susana García Robles, Managing Partner at Capria Ventures, a Global South-focused VC firm that invests in applied generative AI, said: continent at low cost. Bfree is well-positioned to play a key role in improving accessibility and reducing risk in financial services.
“We foresee the increasing importance of credit management and are confident that Bfree will spearhead the creation of a secondary market for distressed assets on the continent. Bfree has significant partnerships with leading banks and fintechs. This confirms the effectiveness of the product and strengthens our belief in its potential to transform credit collection in Africa,” said Garcia Robles.
As the company diversifies its services and focuses on three major markets in Africa, venture capital flows freely and the company announced an aggressive approach two years ago, when the watchword was “Grow at all costs.” It also slowed down its expansion plans. This is based on recognizing different market dynamics and recognizing that every market requires different approaches and products.