Investing in Fonbnk
The following excerpt is from Allied’s original deal memo to investors. To review investment opportunities in full, please consider joining the syndicate at Allied.vc/join
When visiting emerging regions, whether in Africa, LATAM or APAC, there are two things you can almost always find no matter how remote the location:
A bottle of Coke, and;
A prepaid mobile SIM card.
With over 8 billion SIM cards globally–more than bank accounts, credit cards and ATMs, combined–SIM cards are the most accessible and widely available financial distribution platform in the world.
Moreover, while countless companies have tried to “bank the unbanked,” this strategy of distributing ATMs, bank accounts, debit and credit cards simply does not work in much of the developing world. Challenges such as a lack of financial infrastructure, regulation & financial inclusion, power outages, and mistrust within the financial industry are some of the many ongoing issues facing emerging markets.
Enter Fonbnk
Fonbnk (pronounced ‘Phone Bank’) quickly & easily converts prepaid mobile credits into digital currency without the need for traditional financial infrastructure or banking products.
More specifically, Fonbnk enables borderless banking by giving anyone with a SIM card instant access to a free mobile wallet, converting prepaid mobile credits into digital currency, including Bitcoin, Ethereum and USDC (among others).
Users can transfer funds via the blockchain, pay for items with digital currency, save, invest, or even load funds onto a prepaid Visa debit card for traditional fiat payments wherever Visa is accepted.
Having completed the Techstars Western Union fintech accelerator program and signing strategic partnerships with Visa and Circle, Fonbnk already operates in more than a dozen countries.
Why we are thrilled to support Chris and the team at Fonbnk
When it comes to consumer-facing products, we absolutely love companies that aim to empower and democratize access to large, antiquated industries.
As it pertains to global finance and wealth creation, companies like Wealthfront, Robinhood and Coinbase (among others) have shown the immense value of removing traditional gatekeepers and empowering consumers to take control of their finances.
We believe this trend of democratized access, financial inclusion and radical transparency is here to stay and will only continue to grow.
Furthermore, while much of the innovation within fintech has been concentrated in first-world markets, there remains an immense opportunity within emerging markets among the billions of people unable to access financial services.
However, while emerging markets represent a massive TAM opportunity, a long list of companies have failed over the years to bring traditional financial infrastructure to emerging regions. As previously highlighted, it’s simply not feasible in many of these markets.
Therefore, we believe the solutions most likely to succeed are those which intently study their target customer’s behavior before leveraging this deep understanding to facilitate development toward the path of least resistance.
As it pertains to Fonbnk, they recognized the key piece of technology almost everyone owns–mobile phones & SIM cards–and made it their mission to innovate and creatively leverage this existing infrastructure.
Now, Fonbnk has created the world’s first decentralized finance app that converts prepaid mobile credits into money, unlocking a rapidly expanding and multi-billion dollar target market while democratizing financial access for anyone with a SIM card.
Additionally, thanks to its innovative solution, Fonbnk is uniquely positioned to benefit from a first-mover advantage as they continue scaling into more than a dozen countries.
Lastly and most impressively, the company is led by a proven team with significant domain expertise. For instance, founder Christian (Chris) Duffus (formerly Goldman Sachs) is a three-time exited fintech founder with his latest fintech company getting acquired by SoFi in 2019.
Alongside Chris are technical co-founders Sergey Shevchuk and Sam McMurray, each with a decade of full-stack and blockchain experience at various large-scale organizations, including DXC and Deutsche Bank.
For these reasons, we couldn’t be more excited to support Fonbnk on their mission to enable borderless banking for more than 1.7B people globally.
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