Brazil has 90 million smartphones and a population of 200 million, making the country one of the fastest growing mobile markets in the world. Nubank, a fin-tech company with a focus on catering, has raised funding to expand in the emerging Brazilian market.
Tiger Global Management led a Series B funding round based on a newly developed platinum MasterCard credit service that Nubank plans to allow users to manage through their smartphones. Tiger partnered with existing backers Sequoia Capital and Kaszek Ventures as well as QED Investors
The service was launched last year when the company announced $14.3 million in Series A funding. Since then, Nubank has attracted more than 200,000 applications by interested users, with around 100,000 on the waiting list. So far, around 750,000 purchases have been made using the credit facility.
There are gaps in the financial services market in Brazil, and Nubank is looking to exploit this. As a rule, Brazilians need to go to a physical location to apply for a credit facility, with subsequent correspondence delivered through the mail. Any user management is carried out over the phone, which can be a lengthy and frustrating process.
“We are eager to continue supporting the Nubank team in building a Brazilian leader in a big market,” said Doug Leone, partner in Sequoia. “The potential for companies that are truly customer-centric and also compete with better data and technology is just massive, especially in industries that have seen little real innovation in decades such as banking.”
Nubank Founder and CEO David Velez explained that Nubank makes its fee from the interchange for each transaction, which is close to 2 per cent. “We are so efficient that this is enough for us,” he says.
Countries like the US have a competitive market with a range of companies innovating their models using technology. This doesn’t apply in Brazil, according to Velez. He said, “There is a fear about entering the financial services market in a country like Brazil, which has a lot of complicated regulations,” presenting an opportunity for Nubank to come in and make a mark.