FrontEdge, a Lagos-based fintech, has secured $10 million in a loan and equity seed round, with the debt component accounting for more than 70% of the capital.
The fund will contribute to FrontEdge’s aim of promoting the growth of African cross-border trade by providing operating finance and new software solutions to SME exporters and importers.
FrontEdge was founded in 2021 by Moni Alli, a former McKinsey consultant with a background in digital transformations for large banks in Nigeria, South Africa, and Morocco. The fintech company provides a lending-first platform that goes beyond typical banking structures, allowing SMEs to access upfront financing without requiring collateral.
In an interview with TechCrunch, Alli emphasized the antiquated nature of typical banking systems, in which balance sheets are frequently tailored toward huge corporations, leaving SMEs underserved. FrontEdge aims to digitize and customize finance processes for African SME exporters engaged in cross-border trade.
Unlike banks, FrontEdge provides upfront financing based on transaction-based underwriting rather than collateral-based lending. When items are on a real vessel or in a warehouse, the fintech comes in, giving capital with average payment terms of 60-90 days. This speeds up receivables, allowing exporters to conduct more deals.
FrontEdge has progressed beyond its initial lending focus, connecting with databases to gather insights into cross-border trading trends and underwriting offshore credits. The platform simplifies the establishment of offshore accounts in other countries, addressing issues such as capital controls and exorbitant costs in the banking system.
As a vertical bank, the fintech provides financing, cross-border payments, and offshore accounts customized to the special needs of African traders. To supplement its financial services, FrontEdge offers software products such as logistics management, freight insurance, and document management.
FrontEdge, whose partners include JP Morgan and Providus Bank, intends to provide African exporters with capital and capabilities to compete on a global basis. The CEO of the company highlights the necessity of creating an equal playing field for African exporters in comparison to colleagues in South America, Europe, and the United States.
FrontEdge claims a 20% month-on-month rise in SME exporters on its platform since its introduction, with customers apparently increasing their sales. The fintech earns money by financing a variety of transactions, and it prioritizes preventing losses while displaying successful repayments.
FrontEdge intends to use the funds raised to hire more employees, extend its finance product into additional African nations, and develop new products to diversify revenue streams. TLG Capital, the primary investor, believes in FrontEdge’s aim to empower African SMEs and facilitate their participation in global trade.
