Brazilian neobank Cora announced on Tuesday that it secured $116 million in a Series B round led by Greenoaks Capital. Cora is the “Nubank for small and medium-sized businesses” and today offers digital accounts, debit cards, and a restricted Visa flagged credit card for some users.
When Igor Senra, co-founder and CEO at Cora, spoke to LABS in 2020, the fintech had roughly 20,000 customers and aimed to reach 40,000. But since then, the company raised a $26.7 million Ribbit Capital-led round in April and the business scaled to 60,000 customers. But the acceleration really came in August: 140,000 customers and the expectation of closing the year with 380,000.
The new round did not come for cash needs, but due to the rapid growth that caught the attention of Greenoaks Capital, which had already participated in the Series A four months earlier. The California-based fund decided to bring forward the infusion, initially planned for 2022. Ribbit Capital, Kaszek Ventures, QED Investors, and the newer international names Tiger Global and Tencent also joined the round.
What is the secret of scaling? Experience, product customization, and ideal market scenario. Senra and his partner Leonardo Mendes already had a 13-year experience with fintechs. They co-founded one of Brazil‘s first online payment solutions startups in 2007, Moip (which today belongs to the NYSE-listed PagSeguro).
“The experience we accumulated found a special market condition, which is the global trend of migration to digital banking. When we found this condition, we were able to build it based on the client’s needs. We talk a lot with the client, we understand what he wants and we develop more adherent products,” said Senra, in an interview with LABS.
Cora kicked off in December 2019, when the fledgling startup raised $10 million in a Seed round from Kaszek Ventures and Ribbit Capital. In all, the fintech has now added up to $152.7 million in venture capital investments.
Last year, when Cora received authorization from the Brazilian Central Bank to act as a financial institution, the startup was losing money with each customer who remained on its base because, with the free app, it did not generate significant revenue. Today, that has changed, and Senra says Cora makes money with each customer.
Like Nubank (and most startups), Cora generates revenue – undisclosed – but does not make a profit out of it. Why does a successful company has a large net loss? Senra explains that the startup is growing the customer base at a very high speed, which raises the cost of customer acquisition, and it does not give enough time to dilute within what the company earns.
“In terms of volume transacted on the platform since we launched, we have grown 60% per month. Incumbents take years to get to that, you can’t compare [us with them].”
The newly injected capital will be applied to the development of new products and solutions. “We want to grow, but we want to continue improving the quality of the service we provide. When most companies grow, they lose their way and the quality of the product decreases. A good part of our resources will be allocated to maintain the quality of what we have now”, said the CEO.
Another part of the amount will be used to grant credit to companies that use the neobank. The idea is to incorporate credit products, invoice discounting, working capital, and, eventually, even investments.
Team: hybrid work and employees’ stocks
The startup has 168 employees today and hopes to reach the end of the year with about 250. “Next year we should reach 500,” says Senra.
Of the 168 employees, about 130 are already Cora’s stockholders. The fintech adopted a “partnership” program that allows employees to buy company shares, financed by the startup itself. “Everyone will be a partner, it’s just time to formalize it,” explains the CEO. Cora recently hired the execs Susana Yamamoto as CFO (Chief Financial Officer) and Mônica Leite as CLO (Chief Legal & Compliance Officer).
Growing amid the COVID-19 pandemic, the neobank now has a remote team spread across several states in Brazil. But for next year, the fintech plans to go back to the office with a hybrid model: one week in-person and three from wherever the employee wants (including the office).
“We can rewrite how people will work from now on. For me it is very clear that remote work has several benefits, but loses in some other things such as interaction, contact between people and the creation of links is a bit more difficult, “he said.
So far, Senra believes “that’s the winning model [for hybrid working]”. “We are willing to try something different than this weird model that a lot of companies are trying to do to save rent.”