SoLo Funds, boasting one million users in the U.S., is entering its first international market: Nigeria, which is Africa's most prosperous economy as measured by GDP. Rodney Williams, co-founder of the community lending platform, pointed to the country's already-existing fintech sector and its expanding middle class. Moreover, the organization anticipates that it will be exploring additional international markets within the next year and a half. SoLo Funds ranked 50th on CNBC's Disruptor 50 list in 2023 – and Williams has the honor of being the only founder (aside from Elon Musk) to have two businesses on that prestigious list.
SoLo Funds – a community lending platform created to offer credit to the underbanked and American consumers long excluded from the financial services sector due to discrimination in the loan process – is undertaking its first international expansion, to Nigeria. Co-founded by Rodney Williams and Travis Holoway (CEO) in 2018, SoLo Funds now has more than one million users, the majority (82%) of whom reside in underserved zip codes in America. The company has provided over $200 million in loans and $400 million in transactions through a fintech solution designed to empower historically economically disadvantaged communities. Williams highlighted Nigeria as the ideal place to start an international growth strategy, noting in an interview with CNBC that it serves as the "test case, template, and first" step. He continued, expressing that Nigeria's robust middle class and vibrant fintech ecosystem provided ideal conditions for the expansion. Williams specifically highlighted Opay and Flutterwave – the latter of which made the 2021 CNBC Disruptor 50 list – as examples of successful local fintech unicorns. SoLo Funds, which was ranked No. 50 on the 2023 CNBC Disruptor 50 list, making Williams one of only two founders (the other being Elon Musk) to have two companies recognized by the list, seeks to provide greater financial autonomy to the middle class by giving them the chance to make ends meet during tight times and benefit from more reliable cash flow.
SoLo Funds has already made connections with Paga, a mobile payment provider, Platform Capital, an African investment firm located in Nigeria, and Endeavor, an entrepreneurial network. Williams noted that the absence of investing options in Nigeria is an advantage for the company. The bank interest rate for savings in Nigeria is lower than the rate of inflation. He stated, "The typical Nigerian consumer who has savings isn't prospering at all. This is true of many developing countries, not just Nigeria. What that implies is that there is a large group of people who are eager to increase their wealth."
Through SoLo Funds, users can lend money, as much as $50-$1000, to other users on the platform. Borrowers determine the particulars of the loan, including whether they want to give the lender a gratuity. The firm reported that almost all customers offer a gratuity to their lenders, giving lenders the chance to obtain a return on their loan. Williams commented, "We feel SoLo Funds is the next phase of microfinance and community finance. We are building a financial resource for the majority, not just wealthy individuals." The company has been the subject of contentious debates, with criticism that SoLo Funds is a form of exploitative short-term lending. Williams responded to these allegations in his speech at the Aspen Ideas Festival, urging his audience to search for information on the matter.
Recently, a dispute with banking regulators in Connecticut was settled, in addition to resolutions in California and Washington, D.C. SoLo Funds has added legal professionals with experience in the banking, finance, and regulatory sectors. Williams believes that policymakers do not think about the needs of "ordinary Americans" when making their decisions.
He expressed his passion for SoLo Funds by saying, "Each day, I witness a single parent being able to put food on the table due to a loan, and I delight in seeing a single mom or dad making a return to pay for their children to go to the movies or to maintain their electricity. This is what drives me, and it’s the same mission I have in Nigeria and any other country we operate in—to provide financial options to even more people."
A lot of startups have pulled back from global expansion, especially since venture capital has declined and the "growth at any cost" strategy of the 2000s has been replaced with a direction towards a faster path to profitability. Williams stated that the risks of extending to a middle class sector abroad are quite similar to the risks encountered in the U.S. He mentioned, “I saw a tweet about how banks don't provide services for the middle class because it's too pricey for them and they deem this population as not creditworthy. It's a risk to craft a product for anyone, even though you could make a product for the top 10% and become a billion-dollar company.”
William stated that he will tackle international risks in the same way he tackled risks in the U.S. — with data, testing, and partnerships with business leaders. The complexities of lending policies on a state-by-state basis within U.S. borders have prepared SoLo Funds to manage the complexities of entering foreign markets. He commented, “Though worldwide expansion sounds like a massive endeavor, we have examined it and concluded that it’s the same as launching new products in the US state-by-state. We are setting our sights on several countries in Latin America and Southeast Asia in the next 12-18 months.”
NBCUniversal News Group, of which CNBC is a part, is the media partner of the Aspen Ideas Festival.
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