Laurin Hainy - Afrikan Heroes

Again, Former Investors Lead $42m Series B Funding Round In Nigerian Fintech FairMoney

July 3, 2021

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.

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.

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

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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

FairMoney, Nigerian-Based fintech Expands Operations to India

February 21, 2021

Judging by the number of subscribers it has amassed since establishment and the rate of growth, Nigerian based fintech, FairMoney is geared towards replicating its Nigerian achievements in India. The company is buoyed against the backdrop of the fact that with more than 1.7 billion underbanked people globally, the majority of which are from emerging markets, no better place to be after Nigeria than India with its huge markets. FairMoney, which describes itself as “the mobile banking revolution for emerging markets was founded by Laurin Hainy, Matthieu Gendreau and Nicolas Berthozat, and is a licensed online lender that provides instant loans and bill payments to underserved consumers in emerging markets.

FairMoney which set up shop in India last year, just three years after launching its mobile lending service in Nigeria, wants to recreate the exponential growth in Nigeria in terms of loans disbursement. Last year, it disbursed a total loan volume of $93 million, representing a 128% increase from 2019 and a staggering 3,189% growth rate from its first year of operation in 2018. As it stands, the company is projecting a $300 million loan disbursement volume by the end of 2021.

“I think we’ve been able to disburse 25-30% more than some of our competitors and I think we’re a market leader,” Hainy, the company’s CEO, said. However, compared with traditional banks, it was the seventh-largest digital financial services provider in that area

The fintech had in its first year of operation registered a little over 100,000 users. Now, it claims to have 1.3 million unique users who have made more than 6.5 million loan applications. FairMoney offers loans from ₦1,500 ($3.30) to ₦500,000 ($1,110.00), with its longest loan facility standing at 12 months. Annual percentage rates fall within 30% to 260% — the high APR, Hainy says, is due to higher default rates in Nigeria. That said, FairMoney also claims to have an NPL ratio lower than 10%.

Hainy says that data-driven insights were behind the choice to expand to India. The Indian market is quite similar to Nigeria’s. In the Asian country, only 36% of adults have access to credit, leaving an untapped market of about 141 million people microfinance banks do not serve. But unlike Nigeria, India has better unit economics for the lending business and a friendlier regulatory environment.

“If our ambition is to build the leading mobile bank for emerging markets, we need to start with very large markets,” Hainy said. “We tested our products in 10 different markets checking out for things like what the yield economics is like, NPLs, cost of risk, customer acquisition cost, cost of infrastructure and India stood out to us.”

Following its expansion six months ago, FairMoney claims to have processed more than half a million loan applications from over 100,000 unique users. This number trickles down to 5,000-6,000 loan applications per day, with APR standing at 12-36%. Hainy says the company has achieved this with zero ad spend or marketing. Because of the daunting logistics behind international expansions, it’s challenging for an African-based startup to expand outside the shores of the continent. Although a rarity, there are a couple of startups to have undertaken such a task. Last year, Nigerian fintech Paga with 15 million users and a network of over 24,000 agents acquired Ethiopian software company Apposit to fast-track its expansion into Ethiopia and Mexico.

FairMoney is on a similar path, as well. And with over 100 staff spread across Nigeria, France and Latvia, the company hopes to build an engineering and marketing team in India.

Last month, it hired the services of Rohan Khara to become its chief product officer (CPO) and facilitate the expansion. Khara is the former head of product for financial services for Indonesian super app Gojek and held senior roles at Microsoft, Quikr and MobiKwik. Hainy says with Khara’s wealth of experience building consumer products in large emerging markets — India and Indonesia — FairMoney is poised for massive growth in Nigeria and India.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry