SoLo Funds, loan fintech for unbanked consumers, expanding to Nigeria

SoLo Funds, a community-based lending platform created to offer credit to underbanked consumers and Americans long excluded from the financial services sector due to discrimination prevailing in the loan process, is expanding for the first time abroad, into Nigeria.

Founded by Rodney Williams and Travis Holloway (CEO) in 2018, SoLo Funds has grown to over 1 million users, the vast majority (82%) of whom are from underserved zip codes in America. The company has issued more than $200 million in loans and a total of $400 million in transaction volume through its fintech offering that addresses the needs of communities that have historically been economically disadvantaged.

Williams said expanding into Nigeria is a first step on the path to further international growth.

“It’s the test case. It’s the model. It’s the first,” Williams said in an interview with CNBC after unveiling Nigeria’s plans during a panel at the Aspen Ideas festival earlier this week. “We don’t stop with Nigeria – we view Nigeria as a gateway to the continent,” he said.

Nigeria has both largest economy In Africa, the fastest growing middle class. An important factor in the decision for SoLo was the nation’s economic situation, which sees its product as an important tool for empowering the middle class, giving them a chance to make ends meet in times of financial hardship and make a return when they have little more than reliable cash flow.

The current fintech ecosystem in Nigeria was also an added advantage. “In order to do what we’re doing, we have to partner,” Williams said. “We have to leverage many partners to deliver our solution and these partners need to be in the market and be successful in the market. And in Nigeria, we’ve seen many examples of this.”

Opay and Flutterwave, which were both named to the 2021 CNBC Disruptor 50 list, are two examples of several fintech unicorns that have found massive success in the country.

SoLo Funds was ranked #50 on the 2023 CNBC Disruptor 50 list.

Williams is one of only two founders (the other being Elon Musk) to have two companies on the annual list. Williams, who comes from an executive background at Procter & Gamble, first founded Lisnr, whose investors include Visa, Intel and Synchrony Financial, and has deals in eight countries for secure digital data transmission technology.

In Nigeria, SoLo Funds has already contacted Paymobile payment company, capital platforman African investment company based in Nigeria, and questEntrepreneurship Community Network.

Part of the market opportunity for the company is the lack of investment opportunities that currently exist in Nigeria, Williams said. Bank rate offers for savings in Nigeria are well below the level of inflation.

“The average Nigerian consumer who has savings is not growing in any capacity. And that is a feature of many developing countries, not just Nigeria. What that ultimately means is that it has a very attractive group of citizens who want to grow their money,” Williams said.

SoLo Funds users have the opportunity to lend small amounts of money, ranging from $50 to $1,000, to their peers on the platform. Borrowers set the terms of their loan, including whether they want to tip the lender. With these tips, lenders can make a return. Almost 99% of users choose to tip lenders, according to the company.

“We think of SoLo as the evolution of microfinance and community finance,” said Williams. “We’re building a financial product for the masses, not just people with money.”

This mission has not come without controversy, and allegations that SoLo Funds is creating a new form of vulgar short-term lending. Williams referred to the controversy the company left behind himself during the Aspen talk, telling the audience to “go google search.”

A case brought by banking regulators in Connecticut was recently settled. After resolving cases in California and Washington, DC SoLo Funds has added several attorneys to its staff with expertise in the banking, fintech, and regulatory sectors. During the controversy, Williams argued that policymakers fail to consider the needs of “ordinary Americans” when making their decisions.

“Every day I wake up,” he said, “and I can see a single mother or father putting food on the table. And I can also see a single father or mother returning. And that return can be paid to take their children out to the movies this weekend, as much as it can be paid to keep And what excites me in Nigeria, and anywhere else in the world going, is that we’re going to do it for more people in more places than I ever thought we could.”

Many startups that have expanded internationally have had to back off, especially as venture funding has dried up and the decade-old start-up-grow-at-all-cost strategy has been replaced by an emphasis on a faster path to profits.

Williams says the risks of expanding into the middle-class market on an international scale are very similar to those in America.

“I was just looking at a post on Twitter, and it said banks don’t serve (the middle class) because they said it’s too expensive to service. And they said that consumer doesn’t deserve credit and that’s why banks don’t make products for them. Well, that’s the pitfalls of building a product for the mass market.” “. “We face the same outcome or the same challenge of why do we make products for everyone, when, you know, you can build products for the top 10% and be a multi-billion dollar company?” he added.

Williams said he plans to tackle international risks the same way he has approached risks in the United States — with data, testing, and partnerships with ecosystem leaders. The complexity of regulating lending in the US on a country-by-country basis has prepared SoLo funds for an equally complex international launch. “Although international expansion sounds like a huge undertaking, when we analyzed it, it’s very similar to introducing new products in the US on a country-by-country basis,” he said.

The company has plans for additional international markets over the next 12-18 months across multiple continents, starting with key countries.

“We’ve located that country in Latin America as well. We’ve also located that country in Southeast Asia,” Williams said.

NBCUniversal News Group, of which CNBC is a part, is the media partner for the Aspen Ideas Festival.