Business

Brazilian Open Co taps BRL 600 million from SoftBank to unlock credit without guarantees

This is the third round raised by the company, founded in January 2021 after the merger of fintechs Rebel and Geru; Open Co has already lent more than BRL 2.3 billion

Brazilian Open Co taps BRL 600 million from SoftBank to unlock credit without guarantees
Open Co's co-founders Sandro Reiss e Rafael Pereira. Photo: Courtesy
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Brazilian credit fintech Open Co has announced a BRL 600 million funding round led by SoftBank Latin America Fund. The company’s current shareholders, including Raiz Investimentos, International Finance Corporation (IFC), and LTS, also participated in the round.

This is the third investment raised by the company since its launching in January of this year. In March, Open Co announced its first round, led by IFC, of BRL 150 million; in April, the company secured BRL 1.5 billion through a Credit Rights Investment Fund (FIDC in Portuguese, a financial solution widely used in Brazilian credit markets) to expand its credit offer.

The new funds will be used to scale up the areas of people, technology, and product. The fintech also plans to expand the partnerships to finance consumption through buy-now-pay-later solutions.

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Open Co was founded after the merger of two other fintechs that had similar thesis: Geru, an online credit fintech founded by Sandro Reiss, and Rebel, a fintech led by Rafael Pereira that used artificial intelligence to do credit analysis.

Considering the operation of the two companies and the transactions made after the merger, Open Co already has provided over BRL 2.3 billion in loans, at customized rates starting at 1.9% per month, and has entered into partnerships with companies such as Ame, the digital wallet of B2W Group, and Voltz, the digital account of Energisa. In the last year, the company reports having grown three times and projects further growth in 2022.

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Open Co’s flagship is granting credit without guarantees. According to the fintech, this is a market that deals with BRL 1.1 trillion per year in Brazil, of which over BRL 700 billion correspond to rotating credits, one of the most expensive modalities, which has an interest rate that exceeds 300% per year. The result of the demand for credit plus high-interest rates is 62 million people in debt. 

“The difficulty in accessing credit is one of the biggest social issues in Brazil. With interest rates at the levels we see here, default grows; with the growth of default, interest rates increase even more. It’s a vicious cycle that we want to break”, explains Reiss.

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Felipe Fujiwara, investment leader at SoftBank Latin America Fund, said the company decided to invest in Open Co because of the business model that serves both ends of the consumption chain. “It increases access to those with low limits and high-interest rates, and at the same time, its solution offers retailers the possibility to increase traffic, conversion, and average ticket.”

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