When companies fail #2: A case study

Last November I wrote a post explaining that companies that succeed must provide compelling solutions to underserved markets, unlock scalable distribution, and manage risk and liquidity. I also argued that companies that fail create value on which future innovation builds upon.

SympliFi, one of the companies I was most excited for in our portfolio at Fairbridge wound down its operations recently. And, I wanted to share what we learned from that process.

The Philosophy

Fairbridge Limited Partners back us to take bold, calculated risks by betting on founders who are reimagining broken systems and building entirely new models to tackle urgent social challenges in large, underserved markets. This is not easy work. Some companies will fall short. But the ones that break through transform their markets, deliver extraordinary customer value and generate outlier returns for our investors and for society. For thesis-driven funds like Fairbridge, even failure sharpens our edge. Honest reflection of what didn’t work, what needs to change, what is unacceptable deepens our insight, raising the odds that the next bet changes everything.

Why Fairbridge invested in SympliFi

SympliFi was founded with an ambitious vision to harness diasporic capital for productive uses in emerging markets. SympliFi’s premise was to leverage the growing market of remittances, and familiar peer to peer lending to grow capital available for small business lending.

When evaluating investments, we assess companies across four criteria:

1. Progress Gap / market: Global remittances reached ~$1 trillion in 2024 with $685B going to LMICs. Additionally, Africa in particular, significantly lags other continents in capital per capita (see appendix).

2. Team: Maurice and Gregoire, SympliFi’s founders cut their teeth at the micro lending giant Groupe Boabab, and new the market cold. They lived and breathed the markets they served, bringing in unique insight and were excellent operators

3. Economic design: SympliFi made it so easy for diasporans to earn extra yield in a ZIRP environment while providing much needed financing to small businesses seeking lower APR alternatives to exorbitant bank financing

4. Affordability: We were excited to invest in a company with global potential, with superior capital efficiency, and with an attractive valuation

What went wrong?

Digital wallets and analytics: Small businesses in emerging markets transact via digital wallets, connected to their mobile phone providers. Lenders need proprietary infrastructure to comprehensively understand credit worthiness. SympliFi did not invest in this critical layer, effectively being relegated to an affiliate-based sourcing and underwriting model
Boots on the ground: Relationship-building for small business lending relies heavily on founder-led sales in the earlier stages. SympliFi founders did not fully commit to being on the ground, flying in instead from London and France
Macroeconomics: Rising interest rates in the west created opportunity cost for yield lowering profit margins and threatening the volume of capital available on the platform

We love the market for productive cross border capital!

While we are no longer investing in Africa, we remain bullish in our thesis of remittances as a credible source of capital. And, since our investment in SympliFi, p2p and small business lending; driven by alternative proprietary rating systems and funded by creative retail sources of capital has seen significant growth. We are actively investing in these spaces.
Remittances are a US market: Over 30% of all global remittances originate from the Unites States. Remittances are a US market
Remittance markets are resilient: In 2024, global remittance flows were $905bn, a 6% year over year growth against challenging macroeconomic environment
Technology is stronger: Technology rails for moving capital are becoming faster, cheaper, more scalable, and compatible with institutional regulation (see appendix)  
Remittances is a sleepy market: Imagination in the remittances space has been limited. Most new startups have focused on just improving cost and speed on a basic underlying transfer product. Key areas of Fx, yield, insurance etc. remain largely untapped
Capital gaps persist: Capital gaps in emerging markets, especially in Africa continue to widen due to increased pressure on local government budgets away from local business investment and forex scarcity from local businesses (see appendix)
 

We are doubling down

For the brave and creative founder, the opportunity for directing massive pools of diasporic capital towards productive use is an opportunity ripe for the picking. Please reach out to us or introduce us to compelling founders you have come across!

Appendix

Availability of capital for investment by region -2024

Protocols for Cross border movement of capital