Nubank: Brazil’s Hottest Start-Up Value at $ 500 million

nubank

This Brazilian fintech company just made history

By: Joseph Miller

Nubank, one of the leading fintech companies in Brazil, has become the first Latin American company to win the Marketers That Matter Award.

This Silicon Valley award goes to marketing teams that have demonstrated innovation, and Nubank now joins Google, Netflix, GoPro, and Visa on the list of winners.

Vencedores do Prêmio - Foto: Divulgação

This is impressive for a company that launched about 18 months ago. Co-founder Cristina Junqueria started the company the way most startups begin: in her apartment and in various local coffee shops.

But the company went live in less than a year and raised its Series A in September 2014, the same month that Junqueria gave birth to her daughter. This might slow some people down, but she pushed ahead by filling out necessary paperwork from her hospital bed.

Nubank now boasts nearly three million Brazilians that have signed up for the Nubank card. This MasterCard international credit card comes with no fees and passes on savings to customers through lower interest rates.

Nubank, the first digital and branch-less credit card company in Brazil, has decided to focus almost solely on its mobile app, which customers can use to manage their accounts. They can apply for the card, activate it, pay bills, increase their credit card limit, and more right through the app.

The company’s entire mission is to provide a completely mobile credit card experience, a fact that is even embedded in the company’s name.

“The word ‘nu’ means naked or nude in Portuguese, so that’s where we’re coming from,” Junqueria told Business Insider. “Transparency and stripping off all the complexity.”

Nubank has been working to fill a gap in the Brazil market, taking advantage of existing inefficiencies of traditional financial service providers (which do not get to many cities of the country) coupled with technological innovations inherent in the company.

What are the digital banks?

While they still have to be governed by international rules of some patents as Visa and Master, now offer some innovations, especially as the mobile financial services.

The startup Nubank was launched in 2014 and now has 100 000 customers waiting for their card. The big advantage is the low value of tariffs, lower than its competitors. The company recorded a growth of users between 30-40% every month (2015).

One of the biggest keys to success for Nubank has been its navigation of Brazil’s fintech regulations. The U.K. continues to be the shining example of supportive and robust legislation that supports fintech companies, but not all nations are so lucky.

“In Brazil, the environment is completely different,” Junqueria said. “The business there is really hard, just managing the complexity of the labor laws and taxes.”

But Nubank was lucky because its business model did not necessarily rely on any potential regulatory changes in Brazil. The nation’s central bank recently issued a statement that makes it easier for startups to digitally collect information from customers, but this was more of a bonus than a vital adjustment.

“Currently, they’re not like the U.K., which is leading the thinking,” Junqueria said. “Brazil is not the most stable economic environment. They’re very much into understanding new models, but they’re more focused on [efficiency].”

The billionaire and prominent Silicon Valley financier Peter Thiel has returned to investing in Brazil. Founders Fund, the San Francisco-based venture capital firm Mr. Thiel co-founded, has led a new $52 million financing round in Nubank. The Founders Fund backing of Nubank appears to be its first investment in Brazil and South America, at least based on disclosed and known investments.

Two original investors, Sequoia Capital and Kaszek Ventures, which is based in Buenos Aires, also participated in the round, as did the New York investment firm Tiger Global Management, which first invested in Nubank last year. The new investment values Nubank at approximately $500 million, according to two individuals, significant for a company less than three years old.

Joseph Miller

Joseph Miller is a freelance writer with experience in reporting about finance/business, economy  and entrepreneurship

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