Bfree, a tech-enabled debt collection startup based in Nigeria, aims to revolutionize the industry by automating and introducing ethical debt recovery processes. Founders Julian Flosbach (CEO), Chukwudi Enyi (COO), and Moses Nmor (CPO) were inspired to create the company after witnessing the harmful effects of aggressive retrieval techniques used by predatory digital lenders.
In 2020, Bfree officially launched and immediately began implementing scalable debt recovery methods. One of their offerings is a self-service platform that enables borrowers to establish new payment plans. In addition, they utilize conversational AI tools including chatbots and callbots as part of their collections-as-a-service model. These innovative tools not only ensure humane after-sales services for borrowers, but also utilize behavioral and financial data to guide their actions.
Since its inception, Bfree has expanded its customer-base to include major banks in Ghana, Kenya, and Nigeria. With the recent $2.95 million funding round led by Capria Ventures, which included investments from Angaza Capital, GreenHouse Capital, Launch Africa, Modus Africa, Axian CVC, and several angel investors, Bfree plans to continue scaling their operations in these markets. This brings their total funding raised to $6.5 million, including last year’s undisclosed $1.1 million bridge round.
Flosbach explained to TechCrunch that while Bfree initially focused on digital lenders, they currently only work with a select few. Instead, their main focus is on partnering with banks, which account for up to 70% of their revenues. “Because of the immense pressure to increase our margins, we essentially had to either increase pricing or let go of a lot of smaller customers,” said Flosbach. Working with banks makes the most business sense for Bfree due to their larger loan portfolios compared to digital lenders. So far, Bfree has served 14 customers and has worked with 45 since its launch.
As a tech-enabled credit recovery company, Bfree stands out in a market where traditional methods such as call centers are still heavily relied upon. Currently, 92% of their interactions with customers are fully automated. However, they also maintain a small call center team for customer calls and follow-ups that require phone communication. Recently, they also introduced a loan collection management SaaS called Workflow, which caters to companies with in-house collection teams or those hesitant to outsource their debt collections.
In addition to their current loan portfolio of over $400 million, Bfree has successfully collected 12.5% of that amount. Looking to the future, Bfree has plans to create a secondary debt market in Africa. This will allow third-party investors, such as hedge funds looking to diversify their investments, to purchase non-performing loans (NLPs) from African banks. By purchasing these loans at a fraction of their original value and profiting from their collection, debt buyers not only mitigate the risk for banks but also help free up funds and manage loan portfolios.
“We collect so much data from borrowers, especially those who default. Utilizing this data, we have developed an algorithm that can accurately value these assets. We are able to predict how likely a loan that has not been paid back in 90 days will be paid back within the next year. This allows us to approach banks and buy these assets, taking the risk off their balance sheets,” shared Flosbach.
Furthermore, Bfree offers an analytics solution for banks to gain insights into the secondary debt market. This, combined with their innovative technology and strong partnerships with top-tier banks and fintechs, has caught the attention of investors. Susana García-Robles, managing partner at Capria Ventures, believes that Bfree is well-positioned to play a crucial role in improving accessibility and mitigating risk in financial services. “We foresee the growing prominence of credit management and are confident that Bfree will spearhead the creation of a secondary market on the continent for distressed assets,” said García-Robles.
As Bfree continues to expand its offerings, the company has shifted its growth strategy to focus on its three key markets in Africa. This comes after the realization that each market has different dynamics and requires customized approaches and products. While other startups may have pursued aggressive expansion at all costs, Bfree is committed to sustainable growth and making a lasting impact in the African debt collection industry.
