Co-founders Rodrigo Tognini, Fernando Santos and Ricardo Gottschalk. Photo: Courtesy/ Conta Simples

Y Combinator's first major round in Brazil, Conta Simples brings together neobank and SaaS

Brazil-based fintech, which received a total of BRL 28 million from the U.S. accelerator, intends to become an SCD (Direct Credit Society)

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Brazilian fintech Conta Simples has secured a $2.5 million (about BRL 14 million) Seed Extension from Y Combinator. It is the first time that the U.S.-based accelerator, which traditionally invests small caps in many startups, invests such a large amount in a Brazilian company. The add-on brings the round to BRL 28 million and makes the company’s 5-fold its valuation (although Conta Simples does not disclose the amount).

Conta Simples was born in 2018 when CEO Rodrigo Tognini and co-founders Fernando Santos and Ricardo Gottschalk decided to explore the side of financial services for businesses. With names like Nubank, C6, Inter vying for the individual segment, Conta Simples account turned to the 20 million small business market in the country.

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“When Fernando and I started another startup, we had problems opening a corporate account in a traditional bank. So we entered this market to do checking accounts for new economy companies,” Tognini tells LABS.

Linked to the accounts, the fintech offers corporate Visa cards so that the entrepreneur does not mix personal and business expenses. Something similar to what Cora does.

From banking to software

In August 2019, when the startup effectively entered the market, Tognini realized that the client companies also needed solutions for financial management, related to accounting, accounts payable, payroll, which require teams dedicated only to these bureaucracies.

Last year, the fintech started to offer, in addition to the digital account, expense management software. Brazil‘s outlet Exame was one of the startup’s first major clients. Conta Simples then started opening accounts for larger companies and repositioning itself as a financial service and SaaS (Software as a Service) company.

It’s not as if Conta Simples is the first of its kind. Financial services companies like Brex, AirBase, Ramp, PayHawk, Monzo and Divvy already offer systems to manage corporate card spending, payroll, and vendor expenses, for example. But the demand is such that there is room for all of them.

Conta Simples says it grew 60% per month in 2020. Since January, the fintech‘s revenue has doubled, but Tognini expects to see it triple by the end of the year. “We have a team with 70 people and we want to end the year with 100 and next year reach 150 people,” he says.

To date, the startup has opened 25,000 business accounts and plans to reach 40,000. In order to offer more services, Conta Simples needs the approval of the Brazilian Central Bank. The fintech intends to apply to become an SCD (Direct Credit Society). “This SCD will make part of the financial service viable in the medium and long term. The idea is for us monetize like a bank. As an SCD we can do it,” states Tognini.

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Currently, the company offers financial services through APIs and integrations from several payment and financial institutions. A bank can take deposits from a customer and apply, lend, charge interest, work with that money. The SCD cannot. To offer credit, the SCD licensed must create credit structures to grant credit directly, such as FIDCs (a type of fund composed of receivables of different kinds of issuers widely used in the Brazilian credit market), for example.