Lendme in landmark $1.8M deal

A while ago we wrote about Lendme.co.zw and now they have announced an exciting deal worth US$1.8 million. This was revealed by Lendme’s founder Michael Charangwa, who explained that Lendme (UK) have signed the $1.8 million deal with Buildvest (Pvt) Ltd a Zimbabwean registered micro-lender. The development means that Lendme will now have added capacity to push through its two standard bearer products LendmeAirtime and LendmeMula.

The deal means that the Lendme Service in Zimbabwe will now be operated by Buildvest under license from Lendme (UK). Through this transaction Lendme Zimbabwe acquires additional capacity to offer their service to a larger base of customers. Buildvest is run by Brendon Quinn and Kevin Wild whose experience in financial services encompasses stints in South Africa, Australia and Zimbabwe.

Wild says the deal makes sense for them because, “we believe the general population in Zimbabwe has a mobile phone and as you know finances pretty tight in Zim, so we want to provide as many people as possible with credit facilities.” Kevin pointed out that Zimbabwean banks are not actively providing credit and the demand in the market is not being adequately catered for. In this regard Lendme Zimbabwe will be ideally positioned to service this demand.

The two parties bring a complimentary skill set to the table with Buildvest strengths as a financial services company and Lendme’s expertise as a technology company. Although Charangwa declined on the nature of Lendme Zimbabwe’s shareholding and profit share, the magnitude of the transaction is a clear endorsement of the Lendme’s business model.

With the consummation of the deal Buildvest acquire the Country Operator License of the Lendme brand which also translates to them handling all administration, marketing and general operations of the service within Zimbabwe. Up until now Lendme’s marketing has mainly been by word of mouth but Wild indicated that they will step it up a bit through social media and some press ads.

At the moment Lendme has 8,500 registered users for LendmeAirtime and this is envisaged to grow to 300,000 within next 6mths. LendmeMula is projected to increase to have around 15,000 users borrowing between $50-$250 within the next 3mths. As of the day of the announcement (14 June 2012) Lendme has activated 7,000 LendmeAirtime accounts and have started receiving applications for LendmeMula.

Lendme is leveraging the power of the Internet and algorithm’s which create a credit rating or a Trust Rating as the company calls it for each user. Charangwa explained that the companies processes are geared to scale up and handle to anticipated surge in users, “the system is build to handle way more than we envisage. 99% of all the processes within the system are computed by complex algorithms that make decisions on Approvals, Credit Limits (and) even communication.” Depending on the markets response Lendme might employ additional people to respond to email and provide customer support.

Although Telecel has launched a similar product to LendmeAirtime, Charangwa points out that they are not really a competitor as, “they only offer up to $1, which is a few minutes talk time. This does very little to address the need for a substantial buffer which consumers need, when their airtime runs out.” The MNO’s are seen as partners rather than competitors. With the LendmeMula product there is some competition from Banks and other micro-lending institutions but both parties are confident they have a superior product and service.

This is demonstrated by the fact that Lendme’s our system is accessible online and on mobile and withina month they intend to launch a USSD feature. Convenience is credit that is available on a 24/7 basis. As Charangwa puts it, “if you already have an approved account you can borrow $100 at 12PM in the evening and have it in you Ecocash account within a minute.”

The success of Lendme’s Zimbabwe operation has inspired Charangwa to explore opportunities in other African countries namely Nigeria and South Africa.