Portuguese Mafalda Barros and Uruguayan Gonzalo Blanco lived in Chile and worked at McKinsey when they met. They went to do a Master’s at Stanford University and last year when they were graduating, they took advantage of the entrepreneurship lab at the Californian university to create Quansa, a benefits platform dedicated to the financial health of employees.
In the entrepreneurs’ initial project, Brazil was the ideal place for Quansa’s business model, but testing the company in Chile was faster and cheaper. They received a $25,000 prize from a startup acceleration competition and began operations in Chile in 2020.
Now, Quansa has raised a $3.6 million investment in a Seed round led by Valor Capital Group to grow in Brazil, where the fintech began operations last month. “We want to triple the business and grow in Brazil in the next two years, but we also look at the region. Quansa is a Latin American product and that is definitely in our plans,” Barros said in an interview with LABS.
Also participating in the new round were funds Pear VC, Canary, Norte, Magma, and Sequoia, through Sequoia Scouts, an initiative through which startups that are part of the fund’s portfolio nominate new entrepreneurs. Individuals Ariel Lambrecht (founder of 99), Mariana Dias and Bruna Guimarães (founders of Gupy), Maurício Feldman (founder of Volanty), and Mada Seghete (founder of Branch Metrics) also contributed.
“By the end of 2022, we want to be available to around 100,000 users in Brazil and Chile. This will mean growth in technology and CX (Customer Experience) teams, as well as in sales and product,” says Barros.
Employees’ financial health as a corporate benefit: Quansa
Quansa was born as a company tied to the mission of social aid and is in the process of obtaining the B Company certificate for companies that meet ESG (Environmental, Social and Corporate Governance) requirements.
As well as telemedicine, mental health and other benefits associated with the Human Resources sector of companies with the Great Place To Work seal in Brazil, for instance, Quansa offers help for employees’ financial health as a corporate culture. Blanco explains that the fintech does not sell loans, nor does it see the company’s payroll as a form of distribution to reach individuals. Who pays for the fintech service is the company that hires the benefit, with a monthly fee per employee.
“We do a diagnosis, we get to know the employee to know where they are in terms of financial health, if they are super vulnerable or if they are more prepared. We diagnose people using technology and the employee sets priorities that we will help them work within the coming months. It could be making sure you pay your credit card in full every month or even signing a salary advance with your employer for free to ensure you pay your bills on time,” Blanco explains.
The advance payment works like this: If the company only pays on the fifth working day and the employee needs BRL 200 at the end of the month, Quansa mediates with the employer so that every month-end BRL 200 is included in the paycheck.
It’s not the same thing as emergency cash for individuals. In the B2B2C model associated with the HR and payroll team, Quansa does not charge commission for the partnerships it has with payroll loan companies. “We only trigger a payroll loan partner when it is actually good for the user. If the lending company charges a commission, we pass this value on cashback to the employee. It is important because the employee has to trust that Quansa has no incentives to hire any product.”
Quansa also intends to help employees with “what to do if there is money left over at the end of the month”, evaluating the bank account, products, and rates, and helping on the best investment options.
Last year, Andreessen Horowitz (a16z) led a US$35 million round to the U.S. firm Brightside, which also works with financial health as a benefit, but the aids are distinct from Quansa because Latin America, and in particular, the Brazilian hiring model, has other specificities for salary anticipation, for example.
“Of the countries I know in Latin America, Brazil is by far the easiest country to operationalize flexible salary anticipation. In Chile it is more expensive to do this, as there is nothing like Brazil’s instant payments system PIX,” says Blanco. “Mexico has proportionally more unbanked than Brazil. Brazil doesn’t have that problem so much anymore. Brazil’s problem is interest rates. People pay more in Brazil than in other countries for that lack of financial planning. The system penalizes disproportionately. At the same time, it’s very easy to get loans in Brazil. It’s a situation in which the system monetizes the financial illness of people who don’t earn much,” he says.
Compared to other countries, Brazilians have lower wages and are more indebted to different products. Payroll loans, which interest rates are lower, has strength in Brazil, but in Chile it hasn’t taken off, according to Blanco.
“Brazil has better products, cheaper products, and Open Banking and PIX journeys that make companies bring better solutions. Our team is aligned on leveraging Open Banking so that the number of partners and competition increases so we can bring the best solution for each person.”
Quansa does not serve employees with robots, but with consultants, who do not sell complex products or investments in the stock market. The consultant advises the employee on overdraft and bank rates, for example.
“For Quansa to exist, many things have to go right. And one of the things that helps the infrastructure is the ecosystem. Brazil is one of the most developed places we know by the Brazil’s Central Bank agenda, by the ecosystem. It’s not by chance that Nubank is in Brazil.