At fintech Drip, a push from Y Combinator to explore Pix
Fintech Drip has just passed the Y Combinator sieve. The world’s largest accelerator chose only two Brazilian companies in the last selection of startups, when only 2% of the companies that applied for the acceleration program got a check. It is not easy, as we know, to raise capital these days. But that hasn’t been an obstacle for Drip, which made a round in September, when the three founding partners left their jobs at Nubank to put the project on its feet.
Inspired by the Buy Now, Pay Later (BNPL) model of global fintechs such as Klarna and AfterPay, with a push from Pix, Drip raised BRL 7 million with funds such as Acequia Capital, GFC and Possible Ventures to be a payment alternative for purchases installments online. The product was launched in January of this year, today in 50 partners (retailers or marketplaces), and will have about R$ 2.5 million more from Y Combinator to accelerate.
“In Brazil, many people understand that the BNPL model is the installment plan, but it is not quite like that. For this installment, the customer needs the card and we saw at Nubank that limit is a great pain for this consumer”, says Patrick Sterea, founder and CEO of Drip. “If you make a purchase of a thousand reais in 10 installments, you only need to have R$ 100 per month to pay, but your card limit was all used up, not to mention interest. The ticket has less practicality”, he compares. Drip wants to be the alternative between the card and the boleto.
The other co-founders are Paulo Albuquerque, head of technology at Drip, and Bianca Orsini, head of products, in a team currently with 10 people. As a new company, monthly growth is accelerated. In the last month, the jump was 120%, turning R$ 375 thousand in purchases of an average ticket of R$ 500. The customer profile that uses Drip today has an income between R$ 3 thousand and R$ 5 thousand.
The first retailers with which the company joined are clothing and the expansion starts with cosmetics and footwear retail, aimed at the young public. “He’s the one who’s hugging Pix the most. 40% of Brazilian adults are between 20 and 40 years old, but it is in this group that 60% of Pix transactions are concentrated”, says Sterea.
This week, the company integrates the payment solution in VTEX, the technological ecommerce platform of most Brazilian companies, with 3,000 partners. “We have seven already waiting for this integration, but VTEX increases our addressable market by more than 10 times and the pace of partners should increase”, says the entrepreneur.
As the operation cost is lower than the cost for card issuers, Drip works with cashback to encourage consumers to opt for the payment solution.
“Large banks cannot be more competitive in installments because the financial values are divided between acquirer, brand and issuer”, says Sterea, who before the digital bank went through Bain Company and Vinci Partners. “In a transaction in three installments without interest, with an advance cost, processing fee, a retailer pays up to more than 10% to Mercado Pago or PagSeguro, but less than 2% of that stays with the card issuing bank. In payment with Pix, our revenue can be up to five times greater than that of the issuer, which allows us to pass on part of this to the consumer.”
Drip has been using equity in operations, but should raise with venture debt and structure FIDC in the coming months, as it gains volume in transactions.
Source: Value Pipeline