Brazil is among the most attractive places to invest in FinTech and has already attracted the attention of several global venture capital and private equity funds. Thr top three FinTechs that received the most contributions received more than BRL 700 million (US$ 214,8 million) in recent years.
But the market continues to grow, with potential revenue of BRL 75 billion over the next 10 years, if FinTechs that are already operating are considered.
Find out who the top investors interested in this market are.
Who invested in Nubank, Creditas, and GuiaBolso
The Brazilian companies that received the most money have several investors in common. Know who contributed to each of them.
1. Nubank – Total: BRL 600 Million
The FinTech of the payment card industry is already known by the Brazilian public; it has more than 800,000 estimated customers. It received approximately BRL 600 million in five rounds of investments.
In addition to the funds mentioned below, billionaire entrepreneur Nicolas Berggruen also made a contribution to Nubank. Sequoia Capital may have been one of the key investors, with a seed investment of about BRL 1 million in 2013.
- DST Global: DST Global is the investment arm of Russia's Mail.ru group, skilled in private equity and venture capital investments in more advanced ventures.
- RedPoint e.Ventures: Risk fund for early-stage companies, formed in 2012 for investment in Brazilian FinTechs.
- Ribbit Capital: Venture capital firm based in Palo Alto, California. It invests globally in companies that provide financial solutions.
- Founders Fund: Venture capital company known for major investments in Silicon Valley. The investment in Nubank was first disclosed in South America.
- Sequoia Capital: Also original to California. It made its first investment in the country to the FinTech of its former employee, David Vélez (Founder and CEO of Nubank).
- Tiger Global Management: The New York firm manages hedge and private equity funds. It invests in companies of diverse segments globally.
- Kaszek Ventures: Argentina Kaszek specializes in growth capital and early-stage companies.
- QED Investors: Private equity and venture capital specializing in growth capital investments. It is based in Virginia, United States.
2. Creditas (formerly BankFacil) – Total: BRL 90 million
The Creditas digital credit platform is focused on secured loans. It has more than 3.5 million customers in the country and received approximately BRL 90 million in contributions from the last two years. In addition, it had an initial investment of BRL 3 million in 2013, made by the Brazilian fund Napkn Ventures, Rockaway Capital (Czech Republic risk fund) and angel investors. See who has invested in Creditas:
- International Finance Corporation (IFC): Member of the World Bank for private equity and venture capital.
- Naspers FinTech: FinTech financing arm of Naspers, a global entertainment and Internet company present in 130 countries.
- RedPoint e.Ventures
- Kaszek Ventures
- Quona Capital: Venture capital company for initial growth, focused on investing in financial technology in emerging markets.
- QED Investors
3. GuiaBolso – Total: BRL 90 Million
GuiaBolso received approximately BRL 90 million in four investment rounds. In the first round, in addition to e.Bricks Early Stage and Value Capital, six individual investors participated. See who invested in GuiaBolso:
- International Finance Corporation (IFC)
- Kaszek Ventures
- Ribbit Capital
- QED Investors
- Omidyar Network: A private equity and venture capital firm specializing in early-stage investment and growth, focusing on social change through advances in sectors such as the economy. Headquartered in California, it invests in for-profit and not-for-profit companies around the world.
- E.Bricks: Brazilian venture capital platform founded in 2013. It invests in several sectors including FinTech.
- Valor Capital: Venture capital company with a presence in Brazil and the United States. It has invested in three FinTechs, of which two are Brazilian.
In addition to the funds cited above, Brazilian company Monashees is worth mentioning. It invests in Internet companies in the embryonic stage. Among the FinTechs in its portfolio, there are ContaAzul, Magnetis and Kitado.
In Brazil, the FinTech disruption will be greater
According to Goldman Sachs, the impact of the disruption caused by FinTech should be greater in Brazil than in many other countries because of its highly concentrated banking sector. Another factor mentioned by the study is the interest rates for loans, which are among the highest in the world. The same aspect was observed in an interview by Creditas CEO Sergio Furio.
"The fact is that the growth of FinTech market share will be inevitable," says André Miceli, coordinator of MBA in Digital Marketing at Brazilian business school Fundação Getulio Vargas. According to him, it is quite likely, therefore, that banks, insurance companies and other financial agents “will take part in this new game through acquisitions or creation of cells to develop their own startups."
Banks try to adapt themselves
Traditional banks have already created ways to get closer to startups. Bradesco, for example, sponsors FinTech startups that produce adaptable solutions for the financial market through the inovaBra program. The bank also maintains a corporate venture to invest in companies.
Itaú, in partnership with Redpoint e.Ventures, maintains the Cubo coworking space in the city of Sao Paulo. Santander too has an investment fund for FinTechs called Santander InnoVentures.
Banco do Brasil has also invested in a project called Banco do Brasil Advanced Laboratory (LABB) in Silicon Valley. This way, bank employees know about innovative initiatives and test their own projects in this lab, which lies within Plug and Play.
Investments in the acceleration stage
One way to invest in FinTechs is through accelerators; there are at least 29 in the country. Visa, for example, is close to FinTechs through "ahead Visa." It is a Startup Farm acceleration program sponsored by the card company. Today, seven FinTechs in the Startup Farm portfolio are accelerating through the program.
"We have the entire team of VPs and directors sponsoring our startups and the result is that several are developing products with Visa support and with other partners," said Startup Farm CEO Alan Leite.
Other ways to invest in FinTech
Growth is not always driven by an accelerator. An alternative may be a community of startups, or "venture-building." This is the case for Banco Neon, which was part of the venture-building Distrito from its outset.
The Distrito Ventures, another arm of the company, led the first and second round of funding for Banco Neon. The business attracted the attention of a partner in the venture capital firm, Gustavo Araújo, who is part of the company's board. Neon is also part of DOMO Invest's portfolio and has Rodrigo Borges, a partner at DOMO, as an investor.
Investing through a venture capital company may require interviewing. "For every investment opportunity we look for only strategic investors, the so-called smart money, who understands business and is interested in collaborating to accelerate the product development process and the startup growth," explains Gustavo Gierun, Managing Partner of the Distrito Ventures.
For those who want to start investing, Startup Farm's Alan Leite indicates that the best way is the Associação Anjos do Brasil (Brazil’s Angels Association). "I believe that with little money, about BRL 10,000, you can start investing together with other savvy investors in early-stage startups."
This content was published in partnership with StartSe, the main Brazilian website about startups. The portal contains the StartSe Base, the largest database of startups in the country, with more than 5,000 registered companies.