• Tuesday, July 16, 2024
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Migo set eyes on Brazil’s underbanked market as investors inject $20m


Migo, a cloud-based platform that facilitates access and use credit in emerging markets, said it is expanding its services to help financially include millions of underbanked adult population in Brazil.

The Nigerian-founded San Francisco based firm, formerly known as Mines.io, is making the expansion move following a $20 million Series B equity round it secured from Valor Capital Group, a Brazil-focused venture capital firm. Existing investors, The Rise Fund (managed by TPG Growth) and Velocity Capital, also joined the funding round along with new investors, Africinvest and Cathay Innovation.

A recent study done by Locomotiva Institute showed the existence of 45 million unbanked people in Brazil. These are people who have not used their bank accounts for more than six months or have opted not to have a bank account. By that study, out of every three Brazilians, one does not have a bank account. However, being underbanked does not necessarily translate to economic inactivity. This group actually moves about R$800 billion annually. Like Nigeria, cash is still the main payment method for 71 percent of Brazilians. Usage of cash is particularly prevalent among the lower-class population, which represent 89 percent of cash users

“Our mission is to drive commerce around the world by injecting into the last-mile retail sector,” Ekechi Nwokah, CEO, Migo said in a statement sent to BusinessDay. “We believe the best way to achieve this goal is to build digital infrastructure to empower local enterprises that already serve millions of consumers and small businesses.”

Unlike other digital lenders, Migo is not an app. It works with companies in the telecommunications sector, merchants and banks to enable them to offer loans to their individual customers through a co-branded cloud-based product. The company also targets underbanked customers who are not covered by credit bureaus and are unable to afford smartphones. It has underwritten over 7 million of these customers to date.

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As part of the financing, Antoine Colaco from Valor Capital has joined the Migo Board of Directors. “Migo combines world-class technology with a deep understanding of the needs of consumers and small businesses in emerging markets. We are excited to partner with them in Brazil and beyond,” Colaco said.

While Migo said it has partnered with some of the largest retail enterprises in Latin America, the company still has its attention on Nigeria where it counts 9Mobile, MTN, Interswitch, Flutterwave, Bank of Industry and Fidelity among its biggest clientele.

“The typical Silicon Valley approach of move-fast-and-break-things doesn’t work well in emerging markets. To create durable solutions, it is important to combine the audacity of cutting-edge technology with humility to the nuances of local markets” says VP of Growth, Adia Sowho.

Migo started out as a research project on high-performance artificial intelligence led by Migo Chief Scientist, Kunle Olukotun, a professor of computer engineering at Stanford University. This project came to life after a chance meeting between Olukotun and Nwokah, a computer scientist working on big data projects at Amazon Web Services. Following their meeting, the pair teamed up to direct the technology toward solving credit in emerging markets. This big data approach is one of the company’s key advantages, as it aggregates massive amounts of data across all of its partners to improve population coverage and credit decisions over time.