Nigerian lending platform Social Lender allows users to access small amounts of credit based on their social media reputation, bypassing traditional means of getting a loan.
The aim is to license the technology to banks and financial institutions, which then incorporate it into their own brands. As of now it has only been licensed to Nigeria’s Sterling Bank.
By way of its own proprietary algorithm, it assigns a social reputation score (SRS) to each client – which determines creditworthiness and whether they are eligible for a loan or not. The SRS is based on a client’s information available on social media platforms. Users can also submit additional ‘social collateral’ to up their SRS.
Co-founders Bade Adesemowo and Faith Adesemowo provided How we made it in Africa with a brief overview of their business operations.
1. How did you finance your start-up?
We bootstrapped to start and, months later, made our first sale to Sterling Bank Nigeria by way of licensing the solution. [We also received funding from] Barclays Bank (ABSA) and the Techstars Accelerator.
2. If you were given US$1m to invest in your company now, where would it go?
We are looking to scale very rapidly in Nigeria, South Africa and across the rest of Africa. The funding would go to adding more data points to the system, hiring more developers and improving the platform.
3. What risks does your business face?
Unsecured lending typically sees about 10-15% default rate and so managing this risk is a major challenge.
4. So far, what has proven to be the most successful form of marketing?
Online marketing via social media and various online portals.
5. Describe your most exciting entrepreneurial moment.
Signing the commercial contract with our first partner bank.
6. What has been your biggest mistake?
Allowing only the licensed financial institutions to run and manage the marketing communication of Social Lender.