SAO PAULO – Brazil has about 12.7 million individual micro-entrepreneurs (MEIs) – and several startups are looking to serve this slice of customers. The latest startup in the industry to capture an ambitious round, with heavy investors, is Cora. fintech received a series B investment of more than R$600 million (US$116 million) to become the bank for small businesses that earn up to R$4.8 million per year.
The investment will be used to build credit products, improve the operation and maintain Cora’s growth rates. O From Zero To Top, entrepreneurship brand of InfoMoney, spoke with co-founder Igor Senra about the finance market for SMEs and plans after series B.
Business idea: SME bank
Cora began operating in October 2020. Fintech was created by entrepreneurs Igor Senra and Leonardo Mendes. The entrepreneurs already had experience in financial services: they founded Moip, a payments fintech sold to Wirecard in 2016.
Looking for financial services in less saturated markets, they came up against SMEs. “Most financial institutions have generic banking products, with little differentiation between the individual and corporate modalities. We listened to several small entrepreneurs to create a product focused on their needs”, says Senra.
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Cora provides a digital account that allows you to receive and make payments by bank slips, transfers and Pix free of charge. Other features that emerged from conversations with entrepreneurs were the automation of collection emails and a statement that already projects the entrepreneur’s cash flow for the next few days.
“We have a simple dashboard with paid and overdue bills, as well as a revenue projection that becomes more accurate according to the volume transacted. All functionalities are intended to free up the small business owner’s time, so that he can focus on the company’s main activity”, explains Senra.
Fintech monetizes itself through the debit and credit card it provides to entrepreneurs – acquirers pass on a commission for each purchase made by the card to Cora.
Cora serves more than 140,000 small businesses. “We were already looking at a trend of dissatisfaction among small businesses with the service provided by traditional institutions. But we were born during the pandemic, in a context that reinforced the trend of migration through the digitalization of various financial services”, says Senra.
Fintech has been growing at a rate of 40% per month in number of customers, while transactions are increasing at 60% per month. “The first transaction is always small, as a way to test the service. Then the entrepreneur makes larger transactions. It is natural for transactions to outgrow the customer base.”
New investment and expansion
Cora had raised a seed investment of $10 million and a Series A investment of $26.7 million. The $116 million series B came just four months after the series A. According to Cora, the round was only slated for 2022.
“We anticipate it because we saw high levels of growth, engagement and satisfaction. Capturing a new round now allows us to be more ambitious and focus on the business, not on preparing again to raise capital. We have the opportunity to take two steps at once”, says Senra.
The series B investment brought together former Cora investors, such as Greenoaks (a fund that invested in startups such as Brex, and Flipkart), Kaszek (Creditas, Cloudshop), QED (Loft, Nubank) and Ribbit Capital (Coinbase, Nubank, Warren). But it also brought new players, such as the Chinese conglomerate Tencent (Nubank, QuintoAndar) and the American fund Tiger Capital (Facebook, Uber).
Cora will use the $116 million to develop new credit products. For example, granting prepayment of receivables and working capital and expanding the credit card to the entire customer base. In terms of operation, fintech hopes to balance growth rates with good service indicators. “The objective is that the entrepreneur does not need to contact us. If he needs to, we must learn so he doesn’t have to speak again. The biggest reasons for contact in one month should not appear in the following month”, says Senra.
The goal is to grow more than 2.7 times this semester, going to 380 thousand customers. For 2022, the projection is to go beyond the first million small entrepreneurs served.
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