Flourish Fi, a white-label platform co-founded by Brazilian Pedro Moura and which uses gamification and behavioral science to financially empower bank and fintech users, was selected for the new round of Start Path, Mastercard‘s global “engagement with startups” program. Another Brazilian company, Swap, which trains and advises companies of different types to incorporate financial services, is also in the program.
Since the founding of Start Path in 2014, Mastercard has provided guidance and access to its ecosystem to more than 260 startups, who have collectively raised more than $5 billion in capital. “Guidance and access” mean not only mentoring and business contacts but also co-creation of products and services, product distribution agreements, access to the developer community of this ecosystem and its more than 100 APIs, among other possibilities. In return, Mastercard also has access to a series of innovations to accelerate its new positioning as a payments technology company, going far beyond the card.
According to Moura, co-founder of Flourish, fintech fills a piece of the behavioral and financial education puzzle that Mastercard and its partners need to navigate the possibilities of open finance, which is bringing a host of new customers to the financial system. “In Brazil, about 40 million [people accessed a digital account for the first time, due to emergency aid]. More than 34 million jobs were lost during the pandemic. Now that people are going back to work, will banks and financial institutions have the necessary tools to engage them, to create financial habits, and to encourage them to actually use these accounts?” asks Moura, referring to a challenge common to all of Latin America.
Thiago Dias, vice president of fintechs and enablers in Latin America and the Caribbean, told LABS that Flourish’s selection in the program has to do not only with pillars like financial education and innovation but with digital prosperity. “Financial inclusion is not just about opening a digital account and receiving a prepaid card at home. It goes far beyond that. It’s much more related to how much you understand the value that digital financial services add to your life and how much you can prosper when using them”, points out Dias.
According to him, the presence of Latin American startups is increasing in the program. Since the start of Start Path, 21 Latinas have gone through the program. “In this world of fintechs, borders are no longer a limit (…) Brazil ends up being more prominent due to the size and base of existing startups, in addition to a more developed ecosystem, where information arrives faster. But we have players that came from Colombia, Argentina, Chile, and Mexico. Overall, these are the five largest markets that lead in terms of entries and participants.”
Headquartered in Berkeley, United States, Flourish was founded in 2018 by Moura and Mexican-Filipino-American Jessica Eting. They received a $1.5 million seed round led by Canary in March this year and have since announced relevant partnerships in Latin America.
The first partnership announced in Brazil was Focus Financeira, a company that offers credit to individuals and companies, which began in September and is a good example of how Flourish works.
Customers who keep payments up-to-date and complete custom challenges in Focus’ app can be awarded Uber and UberEats gift cards, as well as participate in a BRL 10,000 raffle every month. The intention is to encourage customers to develop healthy financial habits. Over time, the reward for this can result in Focus offering new credit options, with lower interest rates based on users’ financial profiles. BancoSol, one of Bolivia’s largest microcredit banks, is also a client of Flourish.
According to Moura, the fintech should announce in the coming weeks a new partner: a bank from one of the largest retail chains in Larin America. Flourish intends to announce a new funding round by the second quarter of 2022.
How Start Path, Mastercard’s global startup program, works
Among some of the companies that have already gone through Start Path’s program are the Brazil-based fintechs RecargaPay, a mobile payments fintech that recently raised funds to offer microcredit, and idwall, a startup focused on digital authentication and security that raised a BRL 210 million ($36 million) round in June. Revolut, the most prominent British digital bank valued at over US$33 billion, also participated in Start Path.
Start Path is one of four programs encompassed by Mastercard Accelerate, the company’s global fintech cooperation initiative launched in 2019. There’s also Mastercard Fintech Express (a kind of set of rules, features, and services that provide a fast-paced expansion route for fintechs, especially regarding issuing cards, as Ualá and C6 Bank do), Mastercard Engage (which promotes the connection of fintechs with technology partners and network payment enablers) and Mastercard Developers (which gives access to Company APIs to fintech engineers and developers).
Applications for Start Path are always on. Every three months, a selection cut, which Mastercard calls “wave,” is made. Each Start Path startup selection wave goes through more or less 500 candidate startups, of which 10 to 12 will be selected. Among the criteria, Mastercard seeks startups that are already operational, with running products and customers.
Over six months, startups have access to different Mastercard initiatives, from supporting the development of products to presentations to partners in the ecosystem. Currently, Mastercard is looking at five major verticals: digital onboarding and identity verification; access to credit; financial management; customer experience; and new avenues of growth and profitability. “An exciting case [from the latter vertical] is Aper, a company from Argentina/Colombia that offers ‘marketplace as a service’; with it, any fintech or financial institution can quickly launch a marketplace. Just look at what Inter and C6 Bank [two Brazilian neobanks] have been doing with this solution,” exemplifies Dias.