Nadya Eka Lestari
TechInAfrica — Following the growth of its lending venture in West Africa, a credit startup Migo is expanding to Brazil on a $20-million funding led by Valor Capital Group on Series B round.
Previously branded as Mines.io, this San Fransisco-based startup provides AI-driven products to large companies so they can extend credit to the underbanked consumers feasibly.
This makes lending services to low-income populations in emerging markets profitable—where previously they were not—for large companies.
Migo founded in 2013 and launched in Nigeria where the company now supports fintech unicorn, Interswitch and Africa’s biggest telecom, MTN as one of its clients.
According to company stats, Migo has emanated more than 3 million loans to more than 1 million customers in Nigeria since 2017 while offering its branded products through partner channels.
“The global social inequality challenge is driven by a lack of access to credit. If you look at the middle class in developed countries, it is largely built on access to credit,” Migo founder and CEO Ekechi Nwokah said.
He also added, “What we are trying to do is to make prosperity available to all by reinventing the way people access and use credit.”
Migo does this through its cloud-based, data-driven platform to help banks, companies, and telecoms make credit decisions around populations they may have bypassed before.
Nwokah explained that these entities integrate Migo’s API into their apps to offer these neglected market segments digital accounts and lines of credit.
“Many people are trying to do this with small micro-loans. That’s the first place you understand risk, but we’re developing into point of sale solutions,” he said.
According to Nwokah, Migo’s client consumers can access their credit lines and make payments by entering a merchant phone number via USSD on their phone and then clicking on “Pay with Migo”. Migo can also be set up for use with QR codes.
Nwokah believes structural factors in frontier and emerging markets make it difficult for large institutions to serve people without traditional credit profiles.
On establishing the infrastructure, technology, and staff to serve these market segments, he said, “What makes it hard for the banks is it’s just too expensive.”
Nwokah notes similarities in unbanked and underbanked populations across the world, including Brazil and African countries such as Nigeria.
“Statistically, the number of people without credit in Nigeria is about 90 million people and its about 100 million adults that don’t have access to credit in Brazil. The countries are roughly the same size and the problem is roughly the same,” he said.
On clients in Brazil, Nwokah claimed that Migo has a number of deals in the pipeline and has signed a deal with a prominent name partner in the South American country of 210 million. However, he could not disclose which one yet.
Regarding the revenue, Migo generates it through interest and fees on its products. With lead investor Valor Capital Group, Velocity Capital, and The Rise Fund joined the startup’s $20 million Series B funding round.
Progressively, Africa — which has a large share of the world’s unbanked — and Nigeria — which houses continent’s largest economy and population — have become proving grounds for startups who want to create scalable emerging market finance solutions.
“We could actually take this to the U.S. We’ve had discussions with several partners about bringing the technology to the U.S. and Europe,” said Nwokah. Nevertheless, he said that Migo is more likely to expand to Asia in the near-term.
Source: techcrunch.com
