CrowdForce raises $3.6 million to increase access to cash for underserved communities in Nigeria – TechCrunch

Nigeria has an average of 4.8 bank branches and 19 ATMs per 100,000 adults, compared to a global average of 13 bank branches and 40 ATMs.. Reports also indicate that less than a third of Nigerian adults have access to a bank branch or ATM within one kilometer of their place of residence..

This challenge of access to financial services, especially for the unbanked and underbanked, has given rise to agency banking. This branchless banking model extends financial services to the last mile through a network of agents. It’s a booming business for banks, big fintechs like OPay and TeamApt, and even smaller ones like Abuja-based CrowdForce, which today announced it has raised a $3 pre-Series A investment. .6 million.

Aruwa Capital Management led the equity and debt round, with participation from HAVAÍC and AAIC. The company said it will use some of the capital to expand its team, geographic operations and marketing to triple its active agent network to 7,000 people this year.

The company Was launched in 2015 by Oluwatomi Ayorinde and Damilola Ayorinde as MobileForms, a network of data collection agents. The concept was to capture and build reliable offline data (where 90% of the country’s economic activities to reside) and provide information on rural and semi-urban areas that are difficult to access for businesses, NGOs and development organisations.

In 2018, the company got its first big break working on TraderMoni, a small loan program for micro-traders launched by the Nigerian government. The idea was to grant these traders repayable loans to help them in their activities and lift them out of the poverty line.. yetthe challenge was that no database existed to run this program.

Thus MobileForms, with its 20,000 agents, carried out a KYC on 4.5 million eligible merchants and recorded for the TraderMoni program. But another challenge was getting money to these traders. Most of them were unbanked, so sending money to bank accounts was not feasible, and, for those who had accounts, the banks were far from their locations.

The company sensed an opportunity and decided to rebrand itself as CrowdForce, a financial services delivery network that can turn any merchant into a mobile banking branch.

“We thought if we could build this with success well, several other fintechs can overlap to provide their services to mass markets and that will still be in line with our goal to build our distribution,” said CEO Oluwatomi Ayorinde. “When you look at most successful businesses in Nigeria, they all had to create some kind of offline distribution.”

LR: Tomi Ayorinde (CEO) and Dami Ayorinde (COO)

YC-backed CrowdForce is still running its MobileForms products. But it was PayForce, its second product, that the company placed in charge. payment strength is a Merchants of point-of-sale-enabled systems – who also act as agents – use to provide ATM services, transfers and bill payments to consumers in areas where banks are traditionally absent and with a strong demand for cash. For agents, PayForce helps manage their cash flow without issue and allows them to earn additional income by acting as an agent.

But at some point, the liquidity of these agents is affected when they are short of money. Liquidity becomes a problem when it occurs often because there is a tendency to lose the trust of customers.

So generally how more 200,000 agents across Nigeria refinance their working capital by taking long walks to banks or from the fintechs they work for like TeamApt. There are new methods, such as the one offered by Moni, another YC-backed float-as-a-service startup, where agents are offered low-interest loans through a referral and verification system.

But CrowdForce uses a different approach. The company is partnering with larger brick-and-mortar businesses such as gas stations and turning them into mobile bank branches that offer floating services while storing their money on a PayForce digital wallet.

“These stations [gas stations] collecting money on their gasoline sales daily. But now we can leverage that cash, turn it into mobile ATMs that can then provide cash either to customers or to other mini bank branches,” the CEO said. “So if you’re running a network of agents and you’re running out of money, you don’t necessarily only need a bank branch. You can search nearby gas station and replenish your cash.”

in addition at gas stations, CrowdForce distributes its point-of-sale terminals to other businesses such as pharmacies and reseller networks. The company said it has partnered with 19,000 gas stations, 20,000 resellers and 6,000 pharmacies to expand its distribution network.. With this model, CrowdForce claims to have the highest liquidity among Nigerian banking agent networks, raising over ₦1.7 trillion through its partners.

The Nigerian agency banking company charges a 0.6% commission per transaction made by its partners across the board. CrowdForce says it has been cash positive since 2020 while growing 25% month-on-month to serve 1.9 million unique customers across 25 Nigerian states to date.

Ayorinde said CrowdForce will use the funding to distribute more point-of-sale terminals to its partners over the next 12 to 18 months, as the company, in a statement, said it aims to bring financial services to less one kilometer, or less than 15 minutes, from all Nigeriens.

“We see significant value in the product [CrowdForce] because it solves a real problem by providing access to essential financial services in rural areas that have been overlooked by traditional financial institutions,” Aruwa Capital Founder and Managing Partner Adesuwa Okunbo Rhodes said in a statement. “Crowd Force is actively deepening financial inclusion through its products and services, and has unique competitive advantages through its proprietary technology and extensive agent distribution network across the country.

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