Headquartered in Lagos, the company works with banks, fintechs and other lenders to acquire and manage non-performing retail and SME loans. 

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. 

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. 

“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. 

“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. 

“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.

Founded by innovative entrepreneurs with deep roots in Africa’s financial industry, Bfree is set to enhance credit management, placing ethics and technology at the fore of its operations.

The genesis of Bfree traces back to the founders’ dissatisfaction with prevailing credit collection practices across Africa.

Witnessing the adverse effects of aggressive debt retrieval techniques employed by predatory digital lenders, the company resolved to challenge the status quo. 

Bfree is working to ensure dignity and respect in all borrower-lender interactions. The company has been successful in implementing strategies that ensure fair and just debt recovery processes, helping borrowers to be treated with compassion and understanding, while still working to recover debts that are owed. 

Its focus on ethical debt recovery has gained the trust and respect of many borrowers who have found themselves in debt and in need of assistance.

Led by CEO Julian Flosbach, alongside co-founders Chukwudi Enyi and Moses Nmor, Bfree embodies a vision of financial empowerment and integrity. The current fund raised included diverse investors such as Capria Ventures, Angaza Capital, GreenHouse Capital, and others. 

Bfree’s innovative approach to debt recovery centres around empowering borrowers while ensuring the sustainability of lending institutions. 

Through scalable debt recovery methods, including self-service platforms and conversational AI tools, Bfree prioritizes humane interactions and borrower autonomy. The company leverages technology and ethics, to bolster the credit management sector.

With its recent funding, Bfree will expand its footprint across key African markets, attracting major banks and financial institutions in Ghana, Kenya, and Nigeria. 

While initially targeting digital lenders, Bfree strategically shifts its focus towards banks, recognizing their significant contribution to revenue generation. 

Beyond debt recovery, Bfree envisions a secondary debt market that facilitates the purchase of non-performing loans from African banks.

The company is utilizing predictive algorithms and analytics solutions to help banks scale through secondary markets with precision and efficiency, mitigating risk and unlocking new avenues for growth.