Neem Exponential, a platform for embedded financial services in Pakistan, has raised $2.5 million in initial money to develop and deploy Banking as a Service (BaaS) and loan services with an emphasis on financial wellbeing.
Investors in domestic and international financial technology provided the money, including Taarah Ventures, My Asia VC, Concept Vines, Building Capital, Arif Habib Ltd., and Cordoba Logistics and Ventures Ltd.
Partners from Outrun Ventures, strategic angel investors, the CSO of the IT company BPC, a founding partner of Mentors Fund, a fintech veteran, and the former CEO of Seccl, among others, also participated in the round.
Neem is an embedded finance platform that was established in 2019 by Nadeem Shaikh, Vladimira Briestenska, and Naeem Zamindar to promote financial wellness for Pakistan’s underbanked people.
The startup offers distinctive platforms for embedded financial services and engages in microlending for the communities that are supported by its partners.
For the time being, Neem needs a license from the Securities and Exchange Commission of Pakistan (SECP) to operate as an NBFC and engage in the lending business.
“Currently, they are financing through associates who hold these licenses. Shaikh was unable to identify these associates, but he could attest to their legal status and the fact that Neem was making loans through them.” CEO and co-founder Nadeem Shaikh.
Nadeem continued, “Neem is currently applying for a license.
With an estimated 100 million individuals living in Pakistan without a bank account and just 10% of them having access to credit, this country has a sizable unbanked population.
Consequently, Pakistan has struggled with financial inclusion for a long time. Pakistani fintech businesses have concentrated on expanding this access to bank accounts and credit options.
However, there are other factors as well that need to be under control to improve overall financial health and decision-making. Neem effectively serves both consumers and MSMEs in this manner.
Financial wellness at Neem emphasizes having control over four areas for better overall financial health: payments, where people have control over their finances and an effective method of doing so; credit facilities, which are reasonable in line with what they need to grow, such as working capital; insurance, which is a protection plan; and savings and investments for the future.
In reality, Nadeem explained, “we aim to fully allow all of those components over time.”
He said, “We are establishing the tech structure and business architecture by creating the right set of relationships to be able to give that whole spectrum of products to encourage consumers as well as SMEs. Some of the components are already in place.”
Neem operates under the premise that there is a significant opportunity to offer services covering every aspect of financial wellness due to Pakistan’s sizable underbanked population and limited access to credit.
To distribute financial wellness products, Neem’s Banking as a Service (BaaS) vertical provides specific platforms for its partners. For instance, Neem has a joint venture with the South African fintech startup Kuunda through which it has created a platform for credit scoring that will be used by one of its partners to provide working capital loans to kiryana merchants.
Similar to this, Neem may create a tailored platform to meet the specific needs of a partner who, for instance, serves the underbanked in the agricultural industry.
Neem’s BaaS platform may have integrated loan, insurance, payments, and marketplace options.
The business also has a lending division that disburses microloans to consumers and SMEs and determines creditworthiness for the issuance of such loans using anonymized data from partners.
The loans are given to the same partners’ end users to help them with their working capital needs, such as when a micro retailer has to refill its inventory.
Neem, therefore, operates as a B2B2C business.
Nadeem says, “We believe there is a very low degree of trust when it comes to financial institutions and financial services, especially in emerging economies, having spent a lot of time thinking and operating in other areas as founders.
“As a result, you must develop trust with people in communities, including those in agriculture, SME communities, logistics, eCommerce, and other sectors.
You must grant them access to the places where they have already transacted. To provide the correct kind of products for those clients, we are establishing a platform based on access and trust in those communities.
According to Nadeem, the company’s two main business verticals are loans and software as a service, and it hopes to become profitable in the next several years.
To expand its loan portfolio, the company intends to expand its technology stack, introduce new products and categories, and finish up some capitalization needs.
