Kenya-based fintech company 4G Capital, which provides unsecured credit to micro-enterprises, has raised $18.5 million in Series C funding from global private equity firm Light rock.
The equity funding comes as the fintech plans to roll out a series of new products and services including new loans that will increase the credit limit from $1,000, and allow longer repayment periods from the current maximum of one month. All this is in its plan to expand its clientele base and grow its profits.
The products are currently under development, however, the plan is to also lend to bigger businesses in the agri-value chain, as the company expands its reach from micro-sellers, who have been their target market since launch in 2013.
The CEO and founder of 4G Capital Wayne Hennessy-Barrett told TechCrunch that, additionally, they’ll launch an app later this year that will enable their clients to sell on digital marketplaces and to be connected to other digital providers like delivery services.
“We will be building new loan products this year, with longer durations and larger amounts, and lend to bigger businesses in the agri-value chain…
We are also planning to launch an app that will allow our clients to run their businesses better, have access to our goods and services, and connect them with other providers like FMCG (fast-moving consumer goods) distributors. The future of 4G, is a really enriched value proposition for our clients driven by data and AI,” said Barrett.
Already, 4G Capital is conducting trials of its latest retail finance product dubbed Kuza, which allows clients to access goods from FMCG producers and distributors on credit.
Barrett launched 4G Capital in 2013 after a short stint as a loans manager based in Kenya for a lending corporation, an opportunity that saw him travel across Africa and gain insights into the continent’s lending space.
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“I spent a lot of time in informal markets and across the board, informing my knowledge of what to look for — the energy, the potential, and the vibrancy of the informal merchants in Kenya; what they needed was somebody to back them,” said the British Army veteran.
It is this experience that inspired him to go into the lending space with a target on the micro-traders, who are often locked out by formal lending and banking institutions. Drawing from his experience in consultancy and as a loans manager, he sought to do things differently
4G Capital established physical branches in its push to know its customers better instead of just being accessible over the phone alone.
“ I could see how a lot of banks and financial institutions had closed the community branches, off-offshored call centers to emerging markets where labor costs were lower. But banks didn’t know their customers anymore and, therefore, weren’t able to make good lending decisions,” said Barrett.
“I always felt it was important, particularly dealing with people who can be quite vulnerable, to have a personal interaction touchpoint, which is then augmented by technology.”
Barrett said physical locations make it possible for 4G Capital to authenticate that they are dealing with real businesses, besides helping them to deliver business training to their clients.
“It makes us much more resilient in terms of fraud prevention, of money laundering, financing of terrorism and things like that, which, unfortunately, if you’re lending blind, then you don’t necessarily know who’s on the other end,” he said.
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“We know our clients better than anybody else because we are alongside them in the markets. Nonetheless, we’re not running brick-and-mortar conventional micro-finance operations – we have very lightweight teams of three to five people who are incredibly efficient in terms of their productivity.” Source: Techcrunch