Brazilian Fintech raises US$8.5 million in investment
WorkCapital, Rapidoo and F(x) advance in the Brazilian market by financing micro and small enterprises.
The Israeli Fintech WorkCapital, which works with anticipated receivables, received US$8.5 million from the Monashees, FJ Lab, and Mindset Fatures funds, as well as foreign angel investors. Each of these agents will get a cut from the company. With the amount, the startup has the objective of tripling its operations in Brazil.
The Fintech has its Research and Development (R&D) headquarters in Israel, where the CEO and one of the founders, the Brazilian Simcha Neumark, lived in 2013 and had the idea to create the platform. But the area of operation at the moment is only in Brazil. Of the four startup partners, three are Brazilian and one American.
For Neumark, the startup’s aim is to facilitate this down payment of receivables to small and medium-sized enterprises (SMEs), which generally suffer from high interest rates charged by financial institutions. The entrepreneur preferred not to disclose the average interest rate, but ensured that this rate is individualized. The company already has approximately 34 thousand customers in the platform and aims to expand the service to other countries.
Also in the business of loans for MSEs, Rapidoo tries to innovate by means of discount of drafts in a totally online process. The startup of São Paulo targets only companies with revenues of up to R$150,000 per month and anticipates invoices of up to 90 days. The hiring process takes, on average, one hour.
The procedure is quite simple. The client must enter the site and make a registration. After that, a control panel appears, in which you can send invoices. At the end of the transaction, the company requesting the down payment receives an email contract, which must be signed to complete the transaction.
However, there are some requirements to perform this process. In addition to the minimum maturity of the bills up to 90 days, the total amount of all notes that will be discounted cannot exceed R$40,000. As for the anticipation operation, Rapidoo gives 85% of the money immediately, while the remaining 15% are retained until payment of the full amount. The factoring rate is 5% per month over how much is saved.
Established as a company in June 2016, the startup started with the interest of four entrepreneurs in the factoring market and the perception that an online service was lacking for this kind of financial operation in Brazil. “This concept already exists in the US and Europe, but In Brazil it did not exist yet, and the market here is much more prevalent,” says the company’s CEO, Caspar Gerleve.
What Rapidoo has done can be considered as a differential in two specific points: the absence of checks; And the facilitation of registration. This is the opinion of the president of the Syndicate of Fomento Mercantil Factoring (SINFAC-SP), Hamilton de Brito Júnior, who has been working with this type of financial transaction for over 5 years.
“The commercial promotion works a lot with check, which is in the process of disappearing,” says Brito Júnior. Only accepting electronic drafts is something that differentiates the startup from other institutions that perform factoring. The biggest innovation, however, according to the president of SINFAC-SP, is about the registration. “We have to make the visit, to know who the client is, and then to make a registration,” he says. “For them, just having the digital draft is enough,” he adds.
Interest
Typically, the institutions most sought by MSEs to contract credit are banks, the National Bank for Economic and Social Development (BNDES) and factoring institutions. In the case of commercial development, according to the National Association of Trade Development (ANFAC), the average interest rate for the average operation is 4.4% per month.
For the professor of the School of Business Administration of São Paulo (EAESP) of the finance area of the Fundacao Getúlio Vargas (FGV) César Caselani, the commercial development can be a good option to get resources and to obtain more working capital. “By taking short-term cash, you can pay employees and suppliers of raw materials,” he says. “Factoring serves fundamentally to pay bills that are on their deadlines in everyday life,” he adds.
While recognizing the practicality of Fintech startups, service startups, being informed about what the company is, how long it exists and who the financial institutions involved are, it’s something important, according to Caselani.
He explains that it is necessary to be aware before carrying out banking operations, mainly for the possibility of being caught in a virtual crime, whose tendency is to increase a lot in the next years with the segmentation of financial operations.
Funds
In the case of F(x), the anticipation of receivables for companies is carried out with contracts with investment funds. The Fintech also maintains long-term credit operations for MSEs.
Created in March of 2017, the startup monetizes by means of percentage on the operation. According to the founder of the nascent company, Dan Cohen, the MSEs request the values they want and the Fintech is responsible for negotiating with the investment funds the release of the value and the interest rate.
Source: Diário Comércio Indústria & Serviços
Billy D. Aldea-Martinez, heads up Latin America and Brazil for Piano, the world’s leader SaaS Platform that allows media companies to launch Direct Monetization models, such as metering and paywall solutions for digital content and user data analysis.
Billy is also a Digital Monetization Strategy consultant and exclusively works with Latin America’s largest media groups, such as Editora Abril (Brazil), Grupo Globo (Brazil) as well as Grupo Copesa (Chile).
He also serves as Board Advisor & Angel Investor for adtech & martech startups such as Start-up Chile, Start-up Peru, Parallel18 (PR) Admetricks and Starter Daily.
For more Latin American Technology articles, click here.
Follow Billy D. Aldea-Martinez on Twitter @aldeamartinez
