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Contxto – Nubank is the world’s biggest challenger bank in the world. So, perhaps we shouldn’t be surprised that the company is doing big things all over the place. However, I don’t believe in coincidences, so let’s have a look at what Nu’s been doing over the past week.
A first international M&A for Nubank
Mind you this wasn’t the first-ever acquisition carried out by Nubank. Indeed, the Brazilian challenger is an old hand at that. Just a few months ago, in early January, it acqui-hired Plataformatec and its team of engineers.
Plataformatec, a Brazilian consulting firm, was Nubank’s first acquisition, because the bank wanted to tap into its pool of talented engineers and developers.
Interestingly, this week’s announcement marked a departure but also a pattern in Nubank’s behavior. The acquisition was its first foray into the wider world, but North Carolina-based Cognitect also happens to be a software consulting firm.
In this acqui-hire of Cognitect’s team of 20, the challenger is after the American consultant’s database and programming language, Datomic and Clojure. These the bank uses to carry out delicate auditing processes, which it will now be able to do in-house.
But that’s not all the challenger bank did this week.
Mexico gets new credit line
Closer to home, I jumped on a video call with Iván Canales, Nu’s Head of Product in Mexico, to discuss the launch of what they’re calling a “reinvention” of interest-free monthly installments.
What the product actually consists of is some nifty data visualization and creative financing. It is consistent with the neo-/challenger bank ethos of “transparency and democratization”.
- Related articles: Challenger and neo-banks in Brazil
However, it’s perhaps not the revolution the folks at Nu are trying to make it seem. In the end, what they are doing is giving customers who have bought goods via interest-free monthly installments the option to pay in advance and get a discount on their final tab.
Even though they don’t spell it out, I think I can taste what the secret sauce is made of here:
Even if the customer isn’t, someone somewhere along the supply chain is paying interests. Through alliances with the likes of Amazon, Nu is using its clout to pay for these goods in advance, cutting the costs of these interest payments and passing the savings onto judicious customers.
Helpful with those who struggle with credit? Yes. Revolutionary? We’ll see.
In the end, the “reinvention” is a bit of marketing bluster, no doubt, but also interesting in its timing.
So, here’s the deal. There have been whispers about the fact that Nubank has raised a Series G round worth US$300 million. CB Insights just went straight ahead and reported it as a fait accompli:
The problem is, even though we’ve asked various people at Nubank, the response has been the same:
I was thus stonewalled by Iván Canales during our interview, as well as by the company’s Mexican Head of PR. Nothing.
So, satisfied with the answer we packed our bags and called it a day and… Obviously, we reached out to David Velez, Founder and CEO at Nubank. But the response from him and his Brazilian press team was the same.
The company’s activity spree—the product launch, the acquisition of a US company, the continuous growth—might hint at the fact that there is quite a lot of money suddenly in the bank’s pocket.
But, my main interest was in the three-line-whip the company has instituted regarding the Series G question. So, am I being paranoid or is there something to this uniform stonewalling?
Nubank raises questions
Let’s go point by point:
Regional or country managers in Mexico will likely get wind of major deals, but yet not details and told to keep quiet, lest they want to risk their jobs. Because so few people would know, it would be pretty clear who spilled the beans if, say, a Mexican mediatech focused on Latam startups broke the story.
Further up the scale, in most companies, big funding deals or any strategic moves are often just known to the CEO, CFO, and board. Rarely will anyone outside of these folks will know of deals.
Ultimately, it is very unlikely that they’ll tell us anything about the deal until the ink has dried on the legal documents. These are delicate moments in the funding negotiations (if they are happening) and it is not uncommon for deals to fall through at the last moment.
So, in the end, I can only ask the big questions if this whole Series G business ends up being true:
- Why raise a smaller Series G than their US$400 million Series F? Is this a downround, perhaps?
- What will the money go to?
- Will we ever see another Latam scaleup show an interest in launching a US IPO (Initial Public Offering)? Is the future public or private?
So, there you have it. A lot of activity above and below board, and a lot of questions. When Nubank will talk to us, we’ll let you know what they answered.