Lagos-headquartered credit management startup Bfree has quietly raised $3.1m from undisclosed investors, Launch Base Africa has learned, as the company doubles down on acquiring and restructuring distressed loan portfolios across the continent.
The raise adds to a busy recent capital-raising period for Bfree. In 2024, the startup closed a $2.95 million equity round led by Capria Ventures, with participation from Angaza Capital, GreenHouse Capital, Launch Africa, Modus Africa, Axian CVC, and several angel investors. That same year, UK-based TLG Capital provided a $3 million debt facility focused on what the two parties described as “ethical microlending” — allowing Bfree to acquire non-performing loan portfolios and restructure them under more flexible repayment terms. A separate $3 million debt investment from the Verdant Capital Hybrid Fund, a Johannesburg-based vehicle focused on inclusive finance in emerging markets, has also been disclosed. Taken together, Bfree has raised more than $12 million across debt and equity instruments since its founding in 2020.
Bfree is charting an unconventional course in Africa’s fintech ecosystem. While the last decade saw venture capital pour into digital lending and buy-now-pay-later (BNPL) platforms, the post-loan infrastructure required to recover those assets when they sour has largely lagged. This gap has historically resulted in high default rates for lenders and aggressive, unregulated collection tactics for consumers.
From call centres to code
Co-founded in 2020 by digital lending veterans Julian Flosbach, Chukwudi Enyi, and Moses Nmor, Bfree emerged in response to the controversial recovery tactics — such as public debt-shaming and persistent harassment — that have characterised emerging market collections.
Instead of relying on punitive measures, Bfree uses machine learning to assess non-performing loan (NPL) portfolios. The startup’s platform profiles defaulting borrowers, predicts their capacity to repay, and customises engagement through automated bots and self-service portals. Crucially, the company structures its recovery methods to avoid late fees, debt blacklisting, or excessive financial penalties.
To date, the company reports it has handled over $740m worth of distressed loans, interacting with roughly 6.6 million borrowers across Nigeria, Ghana, and Kenya. Its client base includes more than 30 financial institutions, ranging from digital micro-lenders to regulated commercial banks.
A new asset class for African credit
The fresh $3.1m raise will primarily fuel Bfree’s distressed loan portfolio financing operations. Under this model, Bfree pivots from simply providing software-as-a-service (SaaS) collections to actively acquiring written-off or delinquent loans from lenders and managing the recovery process internally.
Historically, the secondary market for bad debt in Africa has been stymied by poor borrower data, opaque pricing, and legal friction surrounding loan transferability. For traditional lenders, however, offloading these portfolios to a third party offers a route to clean up their balance sheets without engaging in costly litigation or absorbing total asset write-downs.
By combining proprietary repayment prediction algorithms with non-punitive communication, Bfree is attempting to make the acquisition of NPLs a predictable and scalable asset class for third-party investors, including alternative asset managers and hedge funds.
The startup has also been expanding its technical scope. Alongside its standard behavioural scoring engines, the engineering team — which includes CTO Konrad Pawlus and Yohan Theatre — is currently exploring the integration of blockchain and decentralised finance (DeFi) tools to further streamline secondary debt trading.
Bfree’s focus on ethical post-loan infrastructure comes as regulators across Africa increasingly scrutinise the digital lending sector. Central banks and consumer protection agencies in markets like Nigeria and Kenya have recently introduced stricter operational guidelines to curb borrower harassment, forcing lenders to seek compliant recovery alternatives.
In a previous statement addressing the company’s strategy, CEO Julian Flosbach framed the model as a necessary evolution for risk management in African economies, noting a focus on “developing solutions that help distressed borrowers get back on their feet while empowering lenders.”
As macroeconomic pressures continue to squeeze consumer spending across the continent, default rates remain a pressing concern for the financial sector. Startups that can effectively — and legally — salvage non-performing assets are positioning themselves as a critical layer of the region’s maturing credit infrastructure.