Fido, a Ghana-based fintech that has been extending credit to thousands of customers via mobile phones since 2015, has now raised a $30 million equity investment and some undisclosed debt funding in a Series A round led by Israel-based private equity fund Fortissimo Capital, with participation from Yard Ventures, a VC fund founded by Harvard alumni.
This takes the total equity investment raised to $38 million to date.
“What we are seeing in the market today is a segment of customers, who are mostly small entrepreneurs, that don’t really have access to traditional banking systems … and we see an opportunity to offer these customers, who are outside banking systems, savings products that are fully-digital and very easy to use,” Fido CEO, Alon Eitan said.
“Customers will be able to deposit from mobile money, cards and even cash, and we receive attractive returns on those savings. Our payments product will be layered on top of existing payment rails, as we want to create interoperability between all the different payment rails that are popping up in different countries today,” Eitan added.
Fido will use the funds to add savings and payment products to its portfolio later this year, as well as enter Uganda, its second market, as it plans to expand throughout the continent. The fintech is also planning to create a second research and development facility in Ghana’s capital, Accra, to supplement its Israel office and enable it automate most of its processes in order to ensure long-term viability.
Why The Investors Invested
Since its inception, the firm has gained significant traction. Eitan stated that the fintech has made over $1.5 million in loans to 350,000 Ghanaian customers. This figure is expected to rise as it expands into other African markets, beginning with Uganda.
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“Uganda in many ways resembles Ghana, and we understand the regulation very well. We think it’s a very big market, both in terms of population size, but also in terms of the penetration of mobile. So, there are about nine million mobile accounts in Uganda and so it’s very important for us to go to a market that is already mature because it helps us deliver our services instantly, which is what we really want to do,” he said.
Fortissimo Capital partner, Yochai Hacohen, said in a statement:
“We are truly impressed by the team’s [Fido’s] ability to underwrite people instantly while delivering sustainable economics. This differentiates them from the other players in the space. Fido brings a genuinely differentiated offering that solves an enormous challenge by using disruptive technologies. Now world-class fintech technology is available to all, for mutual growth and shared prosperity.”
A Look At What The Company Does
Fido, founded by Nadav Topolski, Tomer Edry, and Nir Zepkowitz, provides consumers and small businesses with mobile loans of up to $250. The loans are repayable in single or multiple instalments over a six-month period.
Customers may easily set up a Fido account, according to Eitan, because digital registration takes only approximately 10 minutes.
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Customers must upload headshots and copies of their identity cards to register, which are then authenticated by Fido’s image recognition algorithm and reviewed against existing databases. According to Eitan, this multi-step authentication reduces fraud.
He also stated that the fintech uses credit-scoring systems to assess how much money it may offer to borrowers.
“We have been able to solve default rates with very clever machine learning models. And modestly, I could say that our results are second to none in the continent. We have low single digit default rates, which is, I think, unheard of in our space. And we’re able to do that because we’re relentlessly focused on delivering new machine learning models in space. We’re currently operating more than three models just on the risk side, and we’re going to soon release a fourth one. We also have models around fraud too,” he said.
Fido is backed by a team of 65 personnel, including digital debt collectors who, according to Eitan, use ethical methods to follow up on late repayments.
Fido credit Ghana Fido credit Ghana
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh