He is only 28 years old but already knows perfectly how to convince investors. For his fifth fundraiser, finalized on September 16, the German-Nigerian Laurin Nabuko Hainy notably managed to seduce the Flourish Ventures investment fund of the creator of eBay, Pierre Omidyar. With this new boost of 10 million euros, the founder of FairMoney, a start-up based in Paris which offers online microloans to Nigerians, wants to conquer new countries such as Ghana or Egypt and attract more clients.
In just two years of existence, FairMoney – whose technological added value lies in artificial intelligence capable of calculating an individual’s solvency from multiple online data – has therefore raised a total of 14 million euros from incubators and private investors. To grant her microloans herself, she refinances herself with Lendable, a British company that also specializes in microloans.
The success of FairMoney illustrates an observation observed for two years now by the investor Partech: young technological shoots specializing in finance are winning the bet with investors. In 2018, they captured just over 50% of the $1.16 billion raised during the year.
Supported by investors, fintechs are taking advantage of favorable economic conditions on a continent where 60% of the population does not have access to traditional financial services, but where the telephone penetration rate has exceeded 40% for two years – this which allows you to reach new users. As a result, the services that stand out, such as FairMoney and Kuda in Nigeria, are those that are inspired by informal finance and operate in the same field as microfinance institutions.
The trio of countries that are doing well
To choose between the different start-ups that position themselves in this niche, investors such as GreenTech Capital mainly analyze the profile of the founders, the size of the target market and the consistency of their offer with consumer usage. As so often in the entrepreneurial environment, it is English-speaking Africa and the Kenya-Nigeria-South Africa trio that is doing well thanks to its vast domestic markets.
“In the Uemoa space, banks are subject to strict prudential standards in terms of risk, so they do not finance young projects. For their part, private investors only support companies that have already produced a few balance sheets, ”analyzes Moussa Davou, director of operations and information systems at the Regional Stock Exchange (BRVM). Too accustomed to online scams, users would still be very wary of this kind of service.
The Senegalese E-Tontine is one of the rare French-speaking start-ups to succeed on the market. Created in 2015, it digitizes, thanks to mobile payment, the practice of tontines, a form of contribution within a group whose total amount is available in turn for each of its members. In 2018, the start-up founded by Fatou Kiné Diop recorded a turnover of 50 million CFA francs (around 76,000 euros) and is now expanding to Mali and Mauritania.