Brazilian fintech a55, which provides credit lines to startups, announced on Tuesday a $35 million investment round led by investor Accial Capital, tech-enabled investor in fintech lending portfolios in emerging markets. The investment also had the participation of previous investors: E3 Negócios and Mouro Capital (successor fund of Santander InnoVentures, from Grupo Santander). The funds will bankroll the fintech‘s expansion, including the Mexican market.
Founded in 2017 by Hugo Mathecowitsch and André Wetter, a55 offers credit lines to startups focused on monthly recurring revenue (MRR), which is basically the revenue model of technology companies like Netflix and Spotify, which monthly charge for the service.

“We work for companies in the new economy. Usually these are startups that are on a growth path. We help these companies, especially those with a subscription model, with working capital,” Wetter explains in an interview with LABS.
Last year, the fintech also started serving e-commerce companies, financing inventory and investments in digital marketing. “It’s a sector that has grown amid the pandemic. Everyone who had a small shop tried to go digital, and this movement happened with a lot of difficulties. Many people couldn’t do digital marketing, couldn’t get integrators [platforms that integrate the shopkeeper’s business with marketplaces], and we helped in this digitization process [with financing].”
These lines of credit are for smaller ticket amounts, between BRL 20,000 and BRL 2 million, with terms of up to 24 months in Brazil. In Mexico, the fintech serves 30 larger clients, financing $500,000 on average, but the idea is to expand the scope and, over time, absorb the small businesses’ needs as well.
“We are taking our products to Mexico step by step. First, we made a product for this subscription market in Brazil. Then we made a platform, a financial dashboard, that helps those who work with this model to grow,” he explains. The a55 platform connects bank accounts, custody solutions, billing, payment methods, and credit intelligence.
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To finance the credit lines, a55 uses securitization operations, such as debenture issues, and a receivables investment fund (a type of fund composed of receivables from different types of issuers widely used in Brazilian credit market called FIDC). To date, the fintech has lent BRL 150 million to companies in Brazil and BRL 50 million to Mexican companies. In total, it has serviced more than 200 startups.
Without disclosing absolute numbers, the company says it has grown more than four times in revenue in 2020, and that it intends to grow six times this year. The overall goal of a55 is to surpass BRL 1 billion in credit origination in Brazil and US$100 million in Mexico by next year.
Why did a55 choose Mexico?
a55 currently has 80 employees and offices in São Paulo, Florianópolis, Manaus, and Mexico. According to Wetter, the idea of landing in Mexico is because, according to Wetter, the Mexican financial ecosystem “is much more advanced than in Brazil.”
“Here we are still talking a lot about open banking. In Mexico this is much simpler, you already have open banking there. You have access, for example, to the electronic invoices that a company is sending, to the income tax. As a fintech, you can make an authorized direct debit from your account,” explains Wetter.
It was much faster for us to get our system to work in Mexico than it was in Brazil. In Brazil it took me years, in Mexico it took me months.”
André Wetter, co-founder of a55.
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Wetter says that, in Mexico, it is also easier to open a Direct Credit Society, which helps the startup to make financing by seeking data from companies to give credit in an accessible and assertive way, “simpler than in Brazil.” The fintech company has open positions for Mexicans who understand the financial system.
From venture capital to credit lines: Wetter’s vision
“We want to finance entrepreneurs who are starting the business. Before we had credit lines for companies that already had some income, but now we have also started to have credit for very small companies, for that guy who opened his company six months ago.”
Before creating a55, Wetter worked with venture capital, investing in startups, at BTG Pactual bank, and consulting. The startup came from investing in tech companies combined with the lack of capacity of Brazilian startups to raise venture debt.
“Entrepreneurs had no other option than getting investment from new partners, so they always needed to split their stake. They couldn’t get venture debt because they had no collateral. These asset-light companies have no car, no patrimony, at most they’re a bunch of smart people and computers making business happens.”
a55 came to offer an alternative to this scenario: credit lines for these startups to grow with third-party capital and without the need for outside investment and participation.
Raising investments without diluting equity and without debt: the case of Reach
One of a55’s clients is Reach, a SaaS communications platform. The company recently conducted a revenue-based financing with a55.
Reach’s idea was to bring in capital, but without giving up equity and to avoid diluting the founders. The resources were raised through e-Captei, a company that helps entrepreneurs raise funds for their businesses, seeking solutions such as a55’s.
To LABS, Leonardo Simão, founder of e-Captei and strategic co-CEO at Reach, said he chose to do this round with a55 to avoid diluting the company and keep control in the hands of the partners (himself and Thiago Santos). “a55 doesn’t have a board seat, it doesn’t have any of that. Revenue-based financing is a very interesting option for startups.”
The transaction value was not disclosed, but with the investment, Reach has plans for accelerated growth in 2021, targeting R$35 million in annual recurring revenue (ARR).