Bfree, a technology-enabled debt collection startup based in Nigeria, has successfully secured $2.95 million in fresh funding. The company was founded in 2020 to introduce ethical, automated debt recovery processes after its founders observed the negative impacts of aggressive retrieval techniques, such such as excessive calling and debt-shaming, often employed by predatory digital lenders.
The investment round was led by Capria Ventures, a Global South specialist VC firm. Additional participation came from Angaza Capital, GreenHouse Capital, Launch Africa, Modus Africa, Axian CVC, and a number of prominent angel investors. This latest capital infusion brings Bfree’s total funding raised to $6.5 million, which includes an undisclosed $1.1 million bridge round closed last year.
Ethical Approach and Market Pivot
Since its launch, the startup has introduced several scalable debt recovery methods as part of its collections-as-a-service offering. These tools include a self-service platform that allows borrowers to proactively set up customized payment plans, alongside conversational AI tools like chatbots and callbots. These digital methods utilize behavioral and financial data to ensure humane after-sales services for borrowers.
Initially working with digital lenders, Bfree’s customer base has pivoted and now includes major banks in Nigeria, Ghana, and Kenya, which are its key scaling markets. CEO Julian Flosbach, who co-founded the startup with Chukwudi Enyi (COO) and Moses Nmor (CPO), explained that banks now contribute up to 70% of the company’s revenues.
Flosbach noted that due to pressure to increase margins, the firm shifted focus from smaller digital lenders to banks, which offer significantly larger loan portfolios. Bfree currently serves 14 customers, having worked with 45 since its founding. Although 92% of its customer interactions are fully automated, the company maintains a small call center team for complex follow-ups or inbound customer calls. Bfree also launched a loan collection management Software-as-a-Service (SaaS) called Workflow, targeting companies with in-house collection teams who prefer not to outsource. The startup is arguably the only tech-enabled credit recovery company across Africa, where traditional collectors still heavily rely on manual call center follow-ups.
Plans for a Secondary Debt Market in Africa
Bfree currently manages a loan portfolio exceeding $400 million, out of which it has collected 12.5%.
A major strategic initiative for the company is the creation of a secondary debt market in Africa. This market would allow third-party investors, such as hedge funds seeking to diversify their investments, to purchase Non-Performing Loans (NPLs) from banks. Debt buyers profit by collecting these loans, which they purchase at a fraction of the debt’s face value. For banks, selling NPLs helps mitigate risk, manage loan portfolios, and free up capital.
Flosbach detailed how their technology enables this: “We collect so much data of borrowers, especially defaulting borrowers. We were able for the first time to actually develop an algorithm that can value these assets. We can predict how much is a loan that has not been paid back, let’s say for 90 days; how likely is it going to be paid back over the next one year. Then we go to banks and buy these assets and take them off their balance sheets, allowing them to offload the risk.” The company also provides an analytics solution for banks to gain insights into secondary debt markets.
Investor Confidence and Future Strategy
Susana García-Robles, managing partner at Capria Ventures, expressed strong confidence in the investment, noting: “The advent of generative AI provides a pathway for more efficient scaling, enabling the company to expand across the continent at a reduced cost. Bfree is well-positioned to play a crucial role in improving accessibility and mitigating risk in financial services.”
García-Robles believes Bfree is set to pioneer the creation of a secondary market for distressed assets on the continent, citing the company’s “secured significant partnerships with top-tier banks and fintechs, affirming the effectiveness of its product.”
Bfree has adjusted its strategy, slowing down the aggressive, ‘growth-at-all-costs’ expansion plans it had announced two years ago. The focus is now on concentrating efforts on its three key existing markets in Africa, acknowledging the varying market dynamics and the need for tailored products and approaches in each country.
