Buddy Payment has developed the Buddy App, a banking platform to coach people managing their money. Municipalities use the App as a scalable prevention tool in their fight against the growing debt problem. The capital injection into the company is a combination of an investment, loan and subsidy and is used to scale up the App nationwide.

For this capital round, Social Impact Fund Rotterdam participates with €500,000 and is joining the second investment of a group of informal investors who also participated during an earlier capital round of the company. “We are a Rotterdam-oriented fund and the debt problem in the city is large. The Buddy team proved that they can develop an effective product and distribute to a large group of municipalities,” says Bart Meijs, managing director of Social Impact Fund Rotterdam. In addition to these investments, Rabobank has also provided a loan of €500,000 through their Startup & Scale up team to supplement a previous loan issued to the company by the Rabobank Foundation. Regional investment fund UNIIQ converts a previous loan and thus also joins as a shareholder.

The Buddy App uses the possibilities of PSD2 to combine daily banking with tailor-made budget coaching. The core of the Buddy App are the algorithms for providing insights into and safeguard the fixed expenses so that users receive a stable monthly budget to live from. In addition, Buddy automatically saves money for the user and provides coaching through budget reports and tips for improving the financial situation.

In 2020, Buddy Payment won a tender from 93 involved municipalities. The capital injection will be used to finance the roll-out to these municipalities and to reach more users. “The investment allows the Buddy-team to focus fully on the national rollout of the platform. The group of investors fit perfectly with the social character of the company and have strong connections in the public and social domain,” says Camiel Kuiper, director of Buddy Payment.

Debt in the Netherlands

In the Netherlands there are approximately 2 million households with risk of increasing debts and 0.6 million households are facing problematic debts. Only one in three households with problematic debts are part of a debt counseling program of the municipality. For this reason, dozens of municipalities, including Rotterdam, Amsterdam and The Hague, work with the platform. ”We want to support many more residents of The Hague with their money matters. That is why we work with the Buddy App,” says Jan van der Hulst, Manager Debt Assistance in The Hague.

The total costs to the society as a result of financial problems amounts to €17 billion per year.