Finclusion Group, an African credit-led neobank, has raised an extra $2 million in equity funding as it officially rebrands to Fin, according to a statement from the company.
The development comes after the fintech, which employs AI algorithms to provide financial services to African customers through a variety of credit-centric products, raised $20 million in debt and equity pre-Series A investment in January. Fin additionally secured a $20 million financing facility in September 2021 from developing markets debt provider Lendable, bringing its total capital secured in equity and debt to $42 million.
According to the statement, the new equity financing, led by existing investor Leonard Stiegeler, who will also join the company’s board of directors alongside Sudeep Ramnani and Jai Mahtani, will be used to add new, fully integrated territories to its business as well as develop new offerings, particularly in third-party support of microfinance banks looking to offer more financial services.
Why The Investors Invested
The startup has gained more traction. Fin has increased its numbers over the past few months. For instance, according to Tonderai Mutesva, the startup’s other founder and CEO, its loan book has grown by 30% from last year and now has over 40,000 unique customers. Depending on the market and product type, they pay 24 to 42% APR in interest. Although the fintech is working to lower that number to about 3%, default rates on its loans still range from 8% to 20%, according to Mutesva.
A Look At What The Startup Does
Since 2018, Fin has developed consumer-facing credit products to reduce the credit gap in the nations where it operates, including Tanzania, Namibia, South Africa, Eswatini, and Kenya, taking a page from other credit-first neobanks. Additionally diverse are its offers. There is SmartAdvance, where Fin provides solutions for employees’ financial security through employer relationships. With the payroll loans and future wage loans offered by its wage streaming product, employees can borrow money against their paychecks, have it deducted from their payroll, and lend through employer connections. Along with savings products, cards, and buy now, pay later options offered through a merchant network, there is also an insurance product in development.
Fin Kenya (previously TrustGro), Fin Tanzania (previously Fikia Finance), and Fin South Africa are the new names for the company’s subsidiaries in its core markets as a result of this rebranding. According to Fin’s strategy, the consolidation of its footprint across Africa under this identity will highlight its desire to dominate the neobank market in Eastern and Southern Africa, where players like TymeBank, Kwara, Koa, and Fingo have recently emerged.
“Our cross-selling experience was limited when we first launched,” co-founder and co-CEO Timothy Nuy said in the statement. “So effectively through this integration, everything becomes Fin. Someone will log into his Fin South Africa platform, and effectively get access to all the financial services we offer in that country that they need, which makes it easier to drive repeat engagement and to ensure that customers have full visibility of our offering, but also the financial products they have outstanding.”
The business intends to enter new markets the following year and then provide microfinance banks with services that will improve their ability to serve customers, such as better credit or saving tools. Fin’s earlier acquisition of the microfinance technology services provider Awamo served as the foundation for the Fin Connect technology that underpins this offering. The insurtech platform m-Tek from Kenya is one of the ventures Fin says it will continue to support through its venture portfolio.
“The real goal is to rethink what we need to do in 2023, integrate all the brands, and continue just scaling up our loan portfolio as well as bring more of these businesses to break even on an operating profit basis,” said Nuy. “When it comes to capital raising, we’ll conduct a bigger capital raise probably towards the end of 2023.”
Finclusion Group Fin Finclusion Group Fin
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