Global Founders Capital – the new €150m investment fund started by Oliver Samwer, Marc Samwer and Fabian Siegel – is now a major investor in credit scoring company Kreditech, a rival to controversial UK tech darling Wonga.
In a multi-million euro funding round announced today, Global Founders Capital co-invested a “mid-seven digit” sum alongside Kreditech’s existing investors Blumberg Capital, Point Nine Capital and Bigpoint founder Heiko Hubertz. The deal is the fund’s first known investment since its launch in March 2013.
Kreditech, founded in 2012 and headquartered in Hamburg, is a real-time credit scoring and micro-lending company, aimed particularly at emerging markets.
The company’s technology collects and analyses up to 8000 datapoints (based on social online activity, eCommerce purchases, GPS locations – anything that can be found online) and uses it to deliver a near-instant credit rating score. As the website puts it, “imagine you apply in Moscow via smartphone, Facebook or iPad, get an instant decision and can take out the cash six minutes later out of an ATM as a new customer”.
It offers a B2C service – micro-loans – and a B2B “Scoring As A Service” product that makes the same technology available to banks and other lenders.
Competition in the B2C market includes fast-growing UK tech company Wonga, which offers short-term “payday” loans via a similar automatic credit rating process. Critics complain it seduces those short of cash into borrowing at high rates; Wonga argues it rejects a high number of applications and that most borrowers are happy. The company wrote off £76.8m in bad loans in 2011 and still made a pretax profit of £62.4m.
Kreditech seems to be off to a good start – according to its website and press material, it rejects over 85 per cent of applications (which suggests it is reasonably selective), has a default rate of less than 13 per cent and the B2C service is currently profitable.
Global Founders Capital and Kreditech – “aggressive global roll-out”
The deal announced today follows a $4m Series A round for Kreditech in December 2012. The new funds will be used for the “aggressive global roll-out” of the B2C micro-lending platform and for further development of the B2B product.
Right now, the company offers micro-loans in Poland, Spain, the Czech Republic and Russia with more markets on the way. According to the company’s website, the B2B service is currently only available to lenders in Germany.
“As the money itself is not needed currently, we took the equity offer primarily for the strategic value the new investors bring to the table and to optimise our corporate finances for leveraging working capital,” Kreditech CFO Oliver Schimek said in a statement today.
“The cutting edge of our technology is that we don’t require any external credit bureau data in our risk model, but can make very precise identification, fraud detection and scoring decisions based on globally available data sources. This allows us to service the unbanked and expand into markets that cannot be reached with tradtional credit scoring technology,” Kreditech CTO Alexander Graubner-Müller added.
Kreditech currently employs about 30 people in offices in Hamburg, Warsaw, Barcelona, Moscow, Prague and Kharkov.