Tiger Global leads $42M Series B in Nigerian credit-led neobank FairMoney
Tiger Global, one of the world’s most influential venture capital firms, recently led a $42M Series B in Nigerian credit-led neobank FairMoney. This investment has sparked the industry’s curiosity about why such a prominent investor has chosen to back FairMoney.
In this article, we will explore the reasons behind this decision, and what it means for the fintech industry in Africa.
Overview of Tiger Global
Tiger Global is an investment firm founded in 2001 by Chase Coleman III, focusing on the technology, media and telecoms sectors. With offices in principal cities of the US, Asia and India, Tiger Global’s investments span both public and private markets with a particular emphasis on early stage companies and growth capital. They have made over 200 investments across 20+ countries in consumer Internet/e-commerce (including healthcare and digital payments), enterprise software, cybersecurity, infrastructure and financial technology.
The firm follows a long-term investment strategy by building relationships with companies they believe will become industry leaders or trend setters. As they continue to grow their portfolio of investments, they seek out companies with high potential to drive disruptive change across industries. Their most notable investments include Spotify, LinkedIn, Quora and Stripe. With an impressive portfolio of successful investments over the past decade Tiger Global has established itself as one of the most influential investors in the technology sector.
Overview of FairMoney
FairMoney is a financial technology start-up offering various digital solutions to the financial problems of emerging market consumers. Founded in 2016, FairMoney offers personal financing, savings and investments products. In addition, the technology uses machine learning and big data analytics to offer a range of risk management tools.
In June 2019, Tiger Global Management invested $14 million in FairMoney, becoming the company’s biggest institutional investor. Tiger Global has previously invested in successful tech companies such as Flipkart, LinkedIn, Firebase and Classpass. This marked the company’s first venture into fintech in India and signalled that investors are increasingly looking beyond Silicon Valley to innovate in finance.
The purpose of Tiger Global’s investment was twofold: To foster further growth and expansion for FairMoney by providing capital and technical know-how; as well as gain access to new markets through FairMoney’s innovative digital solutions for emerging markets users. By allying with leaders such as Tiger Global, who have extensive experience scaling financial products globally, FairMoney can now focus on building its product suite and accelerating market penetration across the continent.
Reasons for Investment
Tiger Global recently invested $42M in Nigerian credit-led neobank FairMoney. This move was a strategic decision reflecting a changing investment landscape in African startups.
In this article, let us delve deeper into the reasons that motivated Tiger Global to invest in FairMoney and the long-term benefits they can reap from this transaction.
FairMoney’s Innovative Model
FairMoney is a financial technology company based in France, founded in 2018 and focused on creating their own specific set of banking products. The company’s main offering is a digital wallet or virtual banking app, which allows users to track their finances from any device and within any country.
One of the primary reasons that Tiger Global invested in FairMoney is its innovative approach to creating digital banking services for underserved populations. The company has created a series of products designed specifically for people who do not have access to traditional physical banking institutions.
They have designed their services so that anyone with an internet connection can join their network and benefit from various features such as budgeting capabilities, loans and international transfer offerings. Additionally, they offer no-cost transfers between wallets within different countries, making them one of the few companies that can provide cross-border payments without an expensive transaction fee.
The innovative structure of FairMoney’s model allows it to capitalise on the vast potential of providing unbanked populations access to digital financial resources – something that many banks are hesitant to pursue. This is why Tiger Global saw great potential in investing in the company – it will play a key role in helping those who need access to digital financial resources gain some control over their finances and open up untapped markets significant enough for a deep-pocketed investor like Tiger Global.
Potential for Growth in Nigerian Market
The Nigerian market presents a massive potential for growth for FairMoney and other fintech startups. The Nigerian population has an estimated 201 million people and a GDP of around $368 billion, making it the largest economy in Africa. Despite its large population, Nigeria’s financial system is underbanked with only a small portion of the people having access to banking services. The opportunity to increase banking access and provide financial services to millions of Nigerians is immense.
In addition to this untapped market opportunity, Nigeria has relatively favourable regulations that make it easier for fintech startups to operate there. The African nation is also one of the few countries that have signed up for ‘open banking’ legislation, enabling greater collaboration between financial institutions across different regions and countries. This makes it easy for banks to share customer data securely between each other, allowing them to provide more comprehensive services to their customers.
All these factors likely drove Tiger Global’s investment into FairMoney; the potential growth in Nigeria’s underbanked market combined with supportive regulation from government agencies and open banking initiatives makes FairMoney an attractive investment opportunity for investors like Tiger Global as they look at long-term returns on their investments in Africa’s emerging markets.
Opportunity to Diversify Portfolio
Tiger Global Management is one of the most successful venture capital firms, having backed multiple breakout startups since its formation in 2001. Tiger Global seeks to diversify its portfolio and reduce risk by investing in companies operating in different industries and countries as part of its investment strategy. This can be seen in their recent investment in FairMoney, a consumer-facing financial services platform for emerging markets. By investing in FairMoney, Tiger Global is gaining access to the unbanked population in developing countries such as India. It can diversify its portfolio away from technology and e-commerce investments.
Furthermore, with India’s digital banking sector projected to grow significantly over the next few years due to government initiatives such as Digital India and cashless societies implemented by state governments, Tiger Global is well-positioned to benefit from the future growth of these companies. Additionally, investing in FairMoney provides long-term capital return potential as it will serve customers over an extended period.
Another advantage of this deal is that it allows Tiger Global to increase its presence within newer markets like India so they can have a better perspective on their businesses by being close geographically with these companies. Investing early on into this space before it has experienced substantial growth provides additional benefits compared to larger players entering into established markets where competition for market share will likely be much higher than currently.
Impact of Investment
Tiger Global’s investment in Nigerian credit-led neobank FairMoney is a major move in the financial industry. It marks a significant milestone in the growth of FairMoney and the development of the fintech industry in Nigeria. This investment will profoundly impact the financial ecosystem and have far-reaching consequences.
Let’s explore the impact that Tiger Global’s investment will have.
Expansion of FairMoney’s Services
FairMoney is a fintech organisation which focuses on providing financial services to the underbanked population in India. In December 2018, Tiger Global Management, one of the world’s leading venture capital firms, invested in FairMoney leading to an expansion of the company’s services.
A key reason for the investment was FairMoney’s potential in revolutionising the banking landscape in India. As reported by TechCrunch, the startup had already gathered over one million users and was serving more than 150,000 individual loan borrowers during six months this year. With this investment, FairMoney expected to benefit from Tiger Global’s expertise and professional network to further scale up their operations.
Capital infusion has allowed FairMoney to strengthen its credit scoring model and significantly improve its Risk Management System. This has opened up opportunities for them to leverage their pre-existing customer base and further expand into newer markets. Moreover, they have also been able to develop new product offerings such as personal loans and instalment payments. These new products were believed to give their customers better cash flow management capabilities than traditional banking systems.
Through these developments, FairMoney stands poised for tremendous growth as it looks towards a greater goal – financial inclusion for everyone!
Increase in FairMoney’s Customer Base
FairMoney, a fintech company in India, recently announced it secured a $50 million Series B round led by Tiger Global. This new investment is expected to help FairMoney take advantage of the increased number of people transitioning to digital finance.
The investment comes at an opportune time for FairMoney, as the pandemic has outsized how financial products are bought and sold. Since March 2020, the Indian fintech space has seen millions more open bank accounts and use digital payments for everyday transactions and investments.
FairMoney’s new capital will expand its customer base and services including micro-savings tools, credit-building products, loan disbursement services, and wallet-based payment options like entering Aadhaar details or scanning QR codes to pay bills online via UPI (Unified Payment Interface). Tiger Global’s investment follows similar previous investments from Y Combinator Continuity Fund and Group NBT.
With additional funding from investors like Good Capital, the recent funding brings FairMoney’s total raised capital to $65 million. In addition to helping increase its customer base through further product innovation, this new capital could also speed up Fair Money’s international expansion plan into select African countries in 2021 as part of its mission to financially empower tens of millions of unbanked individuals who will have easy access to fair financial services.