Former Fairmoney investors have risen to the occasion. DST, Flourish Ventures, Newfund, and Speedinvest have returned to support the four-year-old firm in its $42 million Series B round, following an $11.8 million Series A investment in 2019. Tiger Global Management, which recently participated in Flutterwave’s $170 million Series C funding, also contributed to the investment.
“We are delighted to partner with FairMoney as they build a better financial center for clients in Nigeria and India. We have been impressed with the team and the strong growth to date, and we look forward to supporting FairMoney as they continue to grow, ”said Scott Shleifer, Partner at Tiger Global.
With its new funds, FairMoney plans to expand its services to further strengthen its position as a digital challenger bank for emerging markets. It will hire the world’s best talent and accelerate customer acquisition in current and new markets. FinTech will also focus on developing a suite of innovative digital banking services, including the provision of current account services.
Why The Investor Invested
According to the World Bank, more than 2 billion people globally have limited access to financial services and working capital. Access to loans for this segment is extremely limited given that they do not have a credit score. FairMoney’s approach to underwriting credit is based on a proprietary algorithm that applies machine learning techniques to smartphone data. The average loans are 30 Euros and customers can grow their loan limits up to 400 Euros over time by showing good repayment habits.
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For decades, incumbent banks have only lent to large enterprise clients and left a big part of the population underserved. New technologies have created the opportunity to include these consumers into the formal financial system for the first time. Use cases for the FairMoney loan product are diverse–more than 60 percent of customers use the loans as working capital to run small- and micro-businesses. The automatic underwriting process enables FairMoney to score clients and disburse funds within 5 minutes.
“After backing digital banks in the US, UK, Latin America and South Asia, we are excited to support one of the first companies to bring this model to Africa. We believe that customers will ask a lot more of their banks–to be relevant, banks will have to move from service providers to become financial mentors for their customers,” said Ameya Upadhyay, principal at Flourish and FairMoney’s board member said at the last fundraising. “That’s where we see a massive global opportunity for FairMoney, which combines a top-notch banking infrastructure with a culture of obsessive customer focus.”
What FairMoney Does
FairMoney was founded in 2017 by CEO Laurin Hainy, former CEO of Venture Builder and VC fund Le Studio VC, alongside CTO Matthieu Gendreau, ex-lead developer of PriceMatch and CPO Nicolas Berthozat.
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FairMoney started as a mobile app that uses alternative smartphone data to underwrite microcredit in Nigeria. Today, more than 1.3 million of the startups total 3.5m customers use FairMoney. The use the platform to finance their small business needs.
“We have received our MFB banking license which now enables us to open current accounts for our users, and we’re doing that on quite a big scale,” Hainy said. “We opened accounts for our repeated and new customers, which I think is quite a unique company strategy because we don’t need to burn millions of dollars of customer acquisition cost on users like other competitors. I think all of that has enabled us to become sort of the largest digital bank in Nigeria.”
FairMoney Series B FairMoney Series B
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer