Cora Raises $116M Series B Funding - Fintech News

Cora Secures $116 Million in Series B Funding

Cora, a digital lending platform serving small-and-medium-sized businesses in Brazil, has successfully completed a $116 million Series B funding round. This investment was spearheaded by Greenoaks Capital.

Significant Investment for a Latin American Startup

The size of this Series B is substantial, especially considering the Latin American market. It is particularly noteworthy that São Paulo-based Cora had only recently secured its $26.7 million Series A round, led by Ribbit Capital, in early April. To date, the company’s total funding reaches $152.7 million since its establishment in 2019.

Proactive Investment Approach

According to CEO and co-founder Igor Senra, Cora was not actively seeking funding. Instead, the company was approached by Greenoaks, an existing investor, along with other interested parties.

New and Existing Investors Participate

This funding round saw first-time investments from Tiger Global and Tencent. They joined existing investors including Greenoaks, Kaszek, QED, and Ribbit Capital in supporting Cora’s growth.

Focus on Building, Not Fundraising

Senra explained that Greenoaks expressed a strong desire to lead the Series B round, with the primary objective of allowing Cora to concentrate on company development rather than being preoccupied with fundraising efforts.

A Pattern of Backer Confidence

This investment mirrors previous rounds for Cora, where existing investors took the lead. The company interprets this as a positive indication of its progress and strategic direction. Details regarding the company’s valuation were not disclosed.

Licensed and Expanding Services

In the previous year, Cora received approval from the Central Bank of Brazil, obtaining a 403 banking license. The fintech launched its initial product in October 2020, offering a checking account integrated with a software solution designed to streamline financial management for SMBs. Currently, a corporate credit card is being tested in a limited beta program.

Credit Limits and Future Financial Solutions

As customers utilize their accounts for both receiving funds and managing expenses, credit limits are generally increased. The company envisions the evolution of this product to encompass a comprehensive suite of financial solutions tailored to the needs of small business owners.

Rapid Growth and Customer Acquisition

Since its launch last October, Cora has experienced a monthly customer growth rate of 40%, as reported by Senra. Simultaneously, the company’s transaction value and revenue have increased by nearly 60% each month. The startup now serves over 120,000 customers.

Volume Reflects Customer Trust

Senra emphasized to TechCrunch that the growth in transaction volume is exceeding the rate of customer acquisition. He believes that increasing volume demonstrates the trust customers have in Cora’s services.

Prioritizing Growth Over Immediate Profitability

The company is currently focused on growth and is not yet profitable. However, Senra highlighted that Cora maintains positive unit economics for each customer.

Revenue Model Based on Interchange Fees

Similar to many fintech companies, Cora primarily generates revenue through interchange fees, while offering most of its services free of charge to its customers.

Focus on the Brazilian Market

For the time being, Cora’s strategy centers on expanding within Brazil, which Senra considers a sufficiently large and complex market. International expansion is being considered for the future, potentially within three to four years.

Expanding Team and Investment Areas

Currently, Cora employs 150 individuals, a significant increase from 68 at the end of last year and 40 a year ago. Approximately 130 employees are equity partners within the company, according to Senra.

Capital Allocation and Product Development

The newly acquired capital will be allocated to product development, growth initiatives, operational improvements, and the expansion of its credit offerings. Cora is leveraging the data it collects to enhance its credit assessment capabilities, beginning with credit cards, followed by receivables financing and other credit products, including emergency credit and investment credit.

“Our aim is to gain a thorough understanding of our customers’ requirements and develop products that they genuinely appreciate,” Senra stated to TechCrunch. “We position ourselves as a contrast to traditional banks, which often fall short in providing excellent customer care.”

Expanding Target Segments

While currently focused on B2B service providers, Cora anticipates exploring additional segments, such as other types of SMBs, by the beginning of next year.

“With a total addressable market of 5 million companies, there is substantial potential for growth,” Senra added. “We are committed to expanding into new verticals.”

Greenoaks’ Perspective on the Brazilian Market

Patrick Backhouse of Greenoaks Capital believes that Brazil possesses a substantial SME economy that has historically been underserved by traditional banks.

“Current services are often costly and inefficient, creating opportunities for technology-driven providers to deliver superior and more affordable solutions,” he said. “We are confident that Cora is a unique company building efficient digital financial tools for small businesses. Since our initial investment in the company’s Series A round, we have observed accelerated momentum and validation of this significant market opportunity.”