BFREE has closed a new growth investment round that will allow the company to buy more distressed loan portfolios, strengthen partnerships with lenders and expand into more African markets.
Headquartered in Lagos, the company works with banks, fintechs and other lenders to acquire and manage non-performing retail and SME loans.Â
The latest round drew support from several African private equity and venture capital firms, including AfricInvest through its Financial Inclusion Vehicle fund, as well as Algebra Ventures, which made its first investment in a Nigeria-headquartered business through the deal.
Existing investors, including Capria Ventures, VestedWorld, Axian CVC, Angaza Capital, 4Di Capital and DotExe Ventures, also returned for the round.
BFREE said the new investment will help it pursue larger acquisitions of bad debt portfolios while strengthening long-term agreements with financial institutions that regularly offload non-performing accounts.
Having raised $3 million in funding in 2024, the company started as a technology-driven debt collection business before shifting into direct acquisitions of distressed unsecured loans, ranging from nano credit to SME facilities.Â
Since launch, BFREE has completed more than 35 transactions and now manages over 11 million borrower accounts across several African countries.
Chief Executive Officer Julian Flosbach said the company now plans to operate at a larger scale.
“The market opportunity is significantly larger than the infrastructure historically available to address it. This round puts us in a position to pursue substantially larger portfolio acquisitions, engage a broader range of institutional partners, and do so with the speed and certainty of execution that serious counterparties demand,” he said.
Rather than handling one-off recoveries, BFREE works through forward flow arrangements. Under those deals, lenders agree to sell newly non-performing loans to the company on a recurring basis.
BFREE said its collection model avoids intimidation and public shaming, practices that have long attracted objection in parts of Africa’s digital lending sector. Instead, it focuses on repayment structures that borrowers can realistically manage.
Patrick Herrmann, partner at AfricInvest, said the company is filling an important gap in Africa’s fast-growing digital credit market.
“BFREE’s approach to credit management, based on a unique set of proprietary data and a technology-enabled collection platform, closes an essential gap in the digital lending value chain.Â
“High-velocity digital lending has become a core product across markets, with financial institutions, banks and fintechs alike requiring effective ways to manage small-ticket non-performing loans.Â
“BFREE’s execution-driven team has brought the platform to an inflexion point, which will enable them to purchase larger portfolios and become a prime partner for banks and fintechs across African markets,” he said.
For Omar Khashaba, general partner at Algebra Ventures, the investment shows encouraging interest in Africa’s distressed debt market, where lenders still struggle to resolve billions of dollars in unpaid retail and SME loans every year.
“Billions of dollars in African retail and SME credit go unresolved every year because the institutional infrastructure to clear them simply does not exist. Healthy credit markets need a disciplined buyer for distressed debt.Â
“The founders Julian, Moses and Chukwudi have built a platform that combines rigorous portfolio pricing, risk management, and deep data infrastructure to clear distressed retail and SME debt at scale. We are backing BFREE together with AfricInvest to scale them across Africa and beyond,” he said.
BFREE did not disclose the size of the investment round. However, the company said the capital will support expansion in both existing and new African markets where demand for distressed debt solutions continues to grow.
