Tiger Global leads $ 42 million Series B in Nigerian neobank FairMoney – TechCrunch



Neobanks led the charge in venture capital funding for mainstream fintech startups. But while they have collectively dominated the fintech space, they do not operate a monolithic model.

There are five distinct models, and the one adopted by the $ 30 billion giant Nubank is the credit-driven model.. The neobanks exploiting this model start by offering credit via cards or on an application and then offer bank accounts as a gateway to other services.

Nigerian fintech startup FairMoney leverages this model. Today, it is announcing a $ 42 million increase in Series B to diversify its offerings and grow to “become the financial center of its users.”. ”

Tiger Global Management led the round. Existing investors from the company’s previous rounds, DST Partners, Flourish Ventures, Newfund and Speedinvest, participated. The investment comes after FairMoney raised € 10 million from Series A two years ago and € 1.2 million seed money in 2018.

Founded in 2017 by Laurin Hainy, Matthieu Gendreau, and Nicolas Berthozat, FairMoney started as an online lender that provides instant loans and bill payments to clients in Nigeria.

When CEO Hainy spoke to TechCrunch in February, the company was six months away from expanding into India.. One of the highlights of this discussion has been FairMoney’s impressive numbers in 2020. Last year, the company disbursed a total loan volume of $ 93 million to more than 1.3 million users who made more than 6.5 million loan requests..

The company has also made progress on the Indian front, processing over 500,000 loan applications from over 100,000 unique users..

So what has changed since then? On the one hand, Hainy says that FairMoney ticked off one of the goals which was to acquire a microfinance banking license.. The license allows FairMoney to operate as a financial services provider in Nigeria.

“We received our MFB banking license which now allows us to open checking accounts for our users, and we’re doing it on a fairly large scale,” Hainy told TechCrunch.. “We have opened accounts for our recurring and new customers, which I think is a pretty unique business strategy as we don’t need to spend millions of dollars in customer acquisition costs on users like other competitors. I think all it has enabled us to become, in a way, the largest digital bank in Nigeria.

Quite the claim, but behind it are the numbers to back it up. Of the company’s current 3.5 million registered users, 1.3 million are unique bank account holders. The company says it plans to disburse $ 300 million in loans to them this year. How is he going to finance this? By lifting obligations. FairMoney’s loan portfolio is augmented by its activity in the capital markets and has convinced some investment banks to invest a substantial amount in its unlisted bond.

The credit-based neobank offers loans to individuals of ₦ 1,500 (~ $ 3) to 500,000 (~ $ 1,000) ranging from days to six months. Small business loans have become an important service that most digital banks have started to offer in the retail industry in Nigeria, and FairMoney sees an opportunity.. Hainy Says From Now On The Company Will Start Providing Loans To SMEs Registered In Nigeria. In the works is also the issuance of cards. However, unlike credit cards operated by Nubank, FairMoney ships debit cards, the most common in the Nigerian market.

“The ambition is that by the end of the year, the customer will have full banking experience, P2P transfers and loans to debit cards and current accounts.. more to this we are working on a number of Additional savings products, stock trading and crypto-trading products potentially according to the direction of the regulation ”, continued Hainy.

Image credits: FairMoney

Most African companies, after completing a Series B raise, think about expansion, this is a different case for FairMoney. Hainy calls it a ‘talking round’ and says FairMoney wants consolidate its position in Nigeria and India; therefore, it does not envisage any expansion to other markets.

“We think that with India and Nigeria we have tons of work to do and tons of problems to solve. We are doubling the Nigerian opportunity, which develops more banking services and becomes one of the country’s commercial banks. And then India by building up a large loan portfolio there, ”combined the CEO.

African fintech startups have attracted a lot of capital this year and they continue to do so. The continent has seen three nine-digit increases so far, all from fintech companies Flutterwave, TymeBank and Chipper Cash.. There is also one that would be in preparation at OPay.

Nigerian fintechs lead the crop as exciting startups continue to come from the country week after week, accessing capital at an astonishing rate.

It’s not news that while local investors are reducing controls to pre-seed and startup levels, and sometimes Series A, international investors are controlling the continent’s final stages.. TymeBank cited UK and Philippine venture capital firms as investors. For Chipper Cash, these were SVB Capital, Ribbit and Bezos Expeditions, while Avenir Growth Capital and Tiger Global invested in Flutterwave.

In FairMoney, Tiger Global has made a comeback to the continent. As of common knowledge, this is the first time that the American hedge fund has invested in two African startups in a year after supporting Flutterwave in March. “We are excited to partner with FairMoney as they build a better financial center for customers in Nigeria and India, ”Scott Shleifer, partner at Tiger Global, said in a statement.. “We were impressed by team and strong growth to date and we look forward to supporting FairMoney as they continue to grow. “

Hainy calls the investment a big industry signal for the continent. He thinks Tiger Global decided to support FairMoney because the business was able to scale Verry much and shown that she can operate banking and credit services while running a profitable business when most of her counterparts are not.

“I think most people discuss the issue of sustainability. How long can digital banks operate as financial service providers while recording losses? Therefore I think this is another great signal to the market that we have been able to do this profitably, providing an advantage to our shareholders and also showing our clients that they can really bet on us going forward, ”added Hainy ..

And to achieve its goal of becoming a financial hub for its clients’ banking needs, the CEO said the company is embarking on a wave of hiring top talent. “We are recruiting from all over the world, and there are currently 150 open positions that we are trying to fill with strong talent to help us create the financial app for Nigerians.”



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