The Changing Face of Fintech

The mobile app "awamo" stimulates sustainable development.

von Julia Wegner, March 7, 2017

We spoke with Roland Claussen, Benedikt Kramer and Philipp Neub, the founders of “awamo”,  a social enterprise that has created a mobile, cloud-based solution for microfinance lenders in emerging markets to simplify the credit management process.

The business aims to make microfinance more accessible to a wider audience in order to empower millions of people to create their own microbusinesses, thus stimulating sustainable, regional economic and social development.

In the interview, awamo reveals what it takes to secure 500.000 Euros in the first round funding, and how to best measure your social impact while doing so. 

Originally published Sept 2015. 

What is the main problem awamo wants to tackle and what is your personal motivation?

We want to give everyone access to finance by increasing transparency and efficiency in the microfinance sector. The processes in place are paper based and prone to errors which leads to access restrictions, high default rates and resulting annual interest rates of 60% and more. Our personal motivation when starting awamo was to develop a huge market opportunity while creating real social impact at the same time. This is what ‘social entrepreneurship’ means to us.

How does awamo add to the service of all the existing microfinance operators?

awamo: The microfinance operators are our customers. Our solution helps making their life easier and their business more sustainable. We provide them with a mobile, easy to use and affordable IT solution with biometric identification of their clients. We help them to better assess the risk of individual borrowers and to measure both their social and financial performance. This eliminates many of the current obstacles in the business allowing microfinance operators increase profit margins and lower interest rates at the same time.



How do you measure your social impact?

awamo uses widely accepted indicators which are following the definitions of IRIS, which to date is an internationally widely accepted ’gold standard’ of social impact measurement. We monitor different social performance indicators allowing our customers to adjust their management accordingly. It is one of the goals of awamo to achieve measurable improvements in social impact performance of the microfinance operators using our solution within three years. This timeframe is necessary as one of the main drivers of social impact, the availability of individual credit information, will increase with market distribution of awamo’s solution.

You recently closed your first round of funding with 500,000 Euros – quite a sum. What would be your main advice for budding social entrepreneurs to get their funding?

"First of all founders should define their business model, research the market and carefully plan their product, business development and expenses." Researching the market includes getting feedback from prospective customers – and in the case of social businesses also the intended beneficiaries. Ensure you have a solid business model that allows you to pay your bills as otherwise you will not have the chance to create a sustainable business at all. Next, you should start talking to potential investors much earlier than you want them to invest. Ask them and other industry experts to challenge your business plan as often and intensely as possible to get constructive feedback early on. The more you are challenged, the more precise and reliable the business plan will become.

What have been the three biggest hurdles in your start-up process so far? And how did you solve them?

  1. Besides frequent reports on Africa mainly portraying negative associations there have been very positive developments over the last decade which are rarely spoken about. We often have to convince people to see these opportunities at hand. It helps that amongst the founders we have over a decade of experience in operating in a number of African countries and a strong network on the ground.
  2. Sourcing funds while still pre-revenue has been a challenge. Strict bootstrapping helped us carrying on for much longer than we had initially expected we could. A successful pilot project, documented commitment from prospective customers, open communication with prospective investors about the challenges ahead, a complementary team, a well thought-through business model, valuable partnerships both in East Africa and Germany, and a couple of renowned awards have all played a role in convincing investors and grantors.
  3. Also, you cannot be an expert for everything– and you cannot hire an expert for everything on a lean budget. It has helped us tremendously that we could convince senior experts in their respective fields to join our advisory board. Besides individuals we could also win support by a number of reputable companies and organizations in Africa, Europe, and the US who provide access to their know-how and grant access to their networks.

Overall, these three things – having real life experience ourselves, strictly following a lean approach and building a network around awamo – have helped us succeed.