Brazilian neobank Neon announced on Monday a $300 million (nearly BRL 1.6 billion) new funding round led by BBVA. With this investment, BBVA acquires a 21.7% stake in Neon. As the Group already held a stake since 2018 through its venture capital fund Propel, now BBVA’s stake will total 29.7% of Neon.
Founded in 2016, Neon aims to improve access to financial services for individuals, self-employed and small businesses; its product portfolio includes free checking accounts, debit and credit cards, payroll loans and specialized products for small businesses. The digital bank currently has 15 million clients, 88% from the middle and lower social classes, and handles more than BRL 5.8 billion per month in transactions. The Series D round will be allocated to technology, marketing, products, and capital to expand Neon’s reach.
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The company’s strategy is to launch new products based on its Democredit platform, proprietary intelligence for credit approval. Neon believes that this is a differential for the huge contingent of Brazilians who seek sustainable financing. “BBVA’s investment and global expertise will allow Neon to offer loans in a more simple, sustainable and inclusive way. We want to reach more Brazilians, contributing to reducing inequalities and making a difference in their lives,” Neon founder Pedro Conrade said.
Neon represents a new step in BBVA’s strategy to enter new markets, allowing the company to gain exposure to retail banking in Brazil, a market with one of the highest potential in the world, given the size of its economy (8º in the world and 1º in Latin America), its large population and the development of interesting propositions in the digital financial services arena.
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“The commitment to innovation is part of BBVA’s DNA, and digital is opening new ways for us to grow in very attractive markets,” BBVA chairman Carlos Torres Vila said. “Neon’s value proposition connects with the financial needs of Brazilians serving as a platform to continue to grow rapidly in a market with great potential.”
Since its creation in 2016 and prior to BBVA’s investment, Neon had raised $423 million from investors through several financing rounds. In 2018, the digital bank secured a Series A with Propel Venture Partners, Monashees, Quona Capital and Flourish Ventures. The following year, it received a Series B led by General Atlantic and Banco Votorantim. In 2020, Neon secured a $300 million investment led by General Atlantic, and followed by BlackRock, Vulcan Capital, PayPal Ventures, Endeavor Catalyst and Propel.
Neon’s management team includes Conrade and executive managing partner Jean Sigrist, who will continue to lead the company.