Warren extends round and attracts Citi Ventures

Capture complements series C, made last year, and fintech is already preparing series D

Fintech Warren has just closed the extension of its series C round, with a new contribution from shareholders such as GIC and Kaszek and bringing Citi Ventures to the company’s capital stock. It is only the second Brazilian company in the corporate venture capital portfolio of the American bank that, among dozens of startups in the portfolio, only had proptech Loft as a national asset.

The value of additional capital is not revealed by CEO Tito Gusmão, due to a confidentiality agreement with the funds, but he assures that there was an increase in valuation – in times of flat rounds and down round discussions. “We didn’t even have this discussion because the extension was already an option with negotiated terms and that we decided to exercise”, Gusmão tells Pipeline.

Series C was announced by Warren in April of last year, with funding of R$300 million. Citi Ventures had come to evaluate the company at the time, but the round was practically closed.

In the series C extension, the company gains momentum for the growth of its institutional business – as it has been operating in fixed income issues, it needs cash to firm up operations – and also to increase the team and technology in the retail business. Fintech recently announced its entry into the international market for Brazilian investors.

But Warren is also planning to open a series D round soon, and then the CEO anticipates more laborious negotiations on values. “Given the market moment, some funds certainly tend to put more pressure on the investment conversations, but we see a lot of growth opportunity and we want to increase the cash to invest in the brand, in the technology team and in M&A”, he says.

At the beginning of last year, Warren had BRL 3 billion in custody and it jumped to BRL 18 billion in one year and is expected to double in size. An eventual acquisition would help accelerate this path to the goal. Gusmão has already started conversations with some investment consultancies and multi family offices.

“We see a consolidation movement in this market, which ends up having two big players and we see ourselves as a third way”, says the CEO, referring to XP Investimentos and BTG Pactual. The company’s main differentiator in this dispute, argues the founder, is the origin model without commissions per product, with annual remuneration for the investment advisor so that they choose the best funds and assets according to the client’s interest and not for financial incentives. At XP, the company started to work with both models in recent years, depending on what the customer prefers.

The business model and the new expansion fronts of the company should help in the conversations of the next round. “We’ve always been kind of against the tide of hyper growth, that sudden acceleration for money to come back in the future. Warren is a cash generator and a sustainable growth thesis”, says Gusmão.

For him, this is a demand (or consequence) of the company’s own core business. “Investment money is the hardest to earn. It depends a lot on trust, construction, transparency and financial education so that the client puts a small part of his portfolio with us, and gradually increases it. Until he starts recommending it to his friends too.”

Warren’s focus is on clients with between BRL 300,000 and BRL 500,000 of invested equity, although investments can start at BRL 100 and there are clients in the house with more than BRL 3 million invested.

Source: Value Pipeline