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Contxto – The speculations were true; the Japanese conglomerate Softbank has formalized its intentions to invest US$200 million in the Brazilian fintech startup, Creditas. The round set the company’s valuation at US$700 million post-money.
SoftBank executives announced the big news at a recent dinner party, according to the Brazil Journal. Based on the report, the Brazilian lending market is still unexplored territory for large banks, hence the interest.
This development comes after a few months of uncertainty. Originally, SoftBank was planning to facilitate a joint investment between its Vision Fund and long-awaited Innovation Fund worth US$5 billion.
Originally known as Easy Bank, Sergio Furio and Leandro da Costa founded Creditas in 2012 as a credit lender. In 2016, they started implementing a model where borrowers use a property or vehicle as loan collateral. This model greatly reduces the chance of default to less than 2 percent. Credits range between R$5 thousand and R$2 million, approximately US$1.3 thousand to US$518 thousand.
The monthly average interest rate on overdrafts and credit cards in over 13 percent. With Creditas, however, the company charges 2 percent interest for vehicle-based loans and 1.25 percent on property-based loans.
So far, Creditas has distributed more than US$500 million of loans. At the same time, the company continues to grow at a steady pace. Net revenue increased threefold in 2016, seven times in 2017, and five times in 2018. The company’s goal is to grow by 27 before 2022.
There is over R$10 trillion (over US$2 trillion) in assets (between vehicles and real estate) in Brazil, according to a Creditas’ estimate.
Since the founding, Creditas has raised US$88 million during various investment rounds. The most recent was a Series C worth US$55 million from December 2017 to April 2019. Past investors have included Vostok, Kaspersky Ventures, Repoint, Naspers, and QED.