Fintech Open Co makes first acquisition and advances in digital credit score
In March 2021, Geru and Rebel merged their operations to create Open Co, an unsecured personal credit fintech that was born with 100,000 active customers. Now, two years after the merger, the company is incorporating a new brand to add new elements to this equation.
The company announces this Thursday, December 15, the purchase of BoletoFlex, a startup from Santa Catarina specializing in the Buy Now Pay Later (BNPL) model, the digital version of the “old” credit card popularized in Brazil by networks such as Casas Bahia , which has been awakening the appetite of companies in Brazil and abroad.
First acquisition in fintech’s trajectory, the agreement was anticipated exclusively to the NeoFeed🇧🇷 With the transaction, which involved an exchange of shares. Célio Ikeda, Pedro Noll, Carlos Nakazawa and Leandro Machado, the four partners of BoletoFlex, become shareholders of Open Co. The company did not disclose what was the valuation of the startup in the negotiation.
“We saw in BoletoFlex the opportunity to consolidate work that we had already been doing in Buy Now Pay Later”, says Sandro Reiss, co-founder of Open Co, to NeoFeed🇧🇷 “They have a strong team and have been doing this for a long time. With this acquisition, we are taking a couple of steps at once.”
In this path, the company will incorporate 100% of the BoletoFlex team. Founded in 2019 and headquartered in Florianópolis (SC), the startup has around 20 employees, especially in areas such as technology and data science. The Open Co team, in turn, has approximately 250 professionals.
The BoletoFlex model allows the consumer to pay online purchases without the need for a credit card. To this end, the company maintains partnerships with brands and retailers, and is integrated into the channels of these companies, whether physical stores, digital or even telesales operations.
It is in this network developed by BoletoFlex that Open Co sees one of the main rationales for the acquisition. Currently, the startup has more than 100 partners, in a portfolio made up of names such as Ame Digital, Multi (formerly Multilaser), Mobly, CVC, Atrio and Positivo.
Open Co’s current base in the Buy Now Pay Later space includes approximately 20 partners, including MadeiraMadeira, a unicorn startup that owns a furniture and home goods platform. With the arrival of BoletoFlex, the goal is to reach 1,500 partners by 2025.
“The fact that it is the only product in the portfolio made them scale a lot on this front”, explains Rodrigo Bruni, head of B2B at Open Co. “We were not in most of these partners and we will gain a relevant portfolio increase to become a reference in this space.”
BoletoFlex’s partner network is made up of more than 100 partners and names such as Multi, Ame Digital, CVC and Mobly
By giving the credit card a digital store bath, the BNPL market moved US$ 125 billion globally in 2021, according to Precedence Research. By 2030, the consultancy projects compound annual growth of 43.8% in the segment and revenues of US$ 3.2 trillion at the end of that period.
Today, this market includes names that were born under this model, such as the American Affirm and the Swedish Klarna. The two companies, however, have been facing difficulties, given the effects of the macroeconomic scenario and the corrections that are affecting technology companies.
At the same time, the BNPL segment has already attracted industry giants like Amazon and PayPal. The most recent sign came from Apple which, in June of this year, announced the launch of Apple Pay Later, a service that is its bet on this format.
In Brazil, Open Co will also compete for space with large companies, including Via, owner of Casas Bahia, and Midway, a finance company owned by the Guararapes group, controller of Riachuelo, which are already developing solutions under this concept.
Another rival is the Colombian Addi, which landed in Brazil in March of this year and which has already raised a total of US$ 376 million in resources, between contributions and debt operations, with companies such as Andreessen Horowitz, Goldman Sachs and Softbank.
New to this dispute, Open Co has other lines in its portfolio. The company’s flagship are personal loans, with credit from R$ 1,000 to R$ 50,000, in up to 36 installments and with personalized rates from 1.9% per month. Fintech sees, however, an important role for BNPL in this scope.
“There are several journeys in which we can have a point of contact with a customer, but the moment of financing the consumption of a good is a very positive moment in the consumer’s life”, says Reiss. “So, BNPL is a gateway to our ecosystem that we are going to encourage.”
Open Co has already served more than 7 million customers and accumulates a volume of more than R$ 3 billion in loans granted. To continue financing these operations, the most recent funding, carried out in November, involved a Credit Rights Investment Fund (FIDC) of R$ 200 million.
Open Co has already served more than 7 million customers and accumulates a volume of more than R$ 3 billion in loans granted
Before, the company had already raised an FIDC of R$ 1.5 billion, in April 2021. Despite this volume of resources, in 2022, the company’s plans were affected by the macroeconomic scenario, the increase in the cost of capital, the high interest rates and, consequently, default.
While not disclosing default levels in Open Co’s portfolio, Reiss notes that they are worse than the operation’s historical averages, but still performing “better than the market average”.
“Different from what we had planned, we chose to grow our credit portfolio less this year”, he says. “Thus, we decided to look more inwards and continue investing in the team, technology, products and channels.”
This strategy was supported by a BRL 600 million contribution, led by Softbank and raised in December 2021. Now, after closing its first acquisition, the company does not rule out adding new pieces to its M&As track.
“We don’t have a deliberate, grandiose plan for inorganic expansion. Our focus is on building our experiences in-house,” says Reiss. “But we’ve had a lot of conversations, and if someone is doing something we want, ahead of us or in a different way, we’re going to look at the opportunity.”