Creditas Valuation Reaches $4.8B with Fidelity Investment

Creditas Secures $260 Million in Series F Funding, Reaching $4.8 Billion Valuation

Brazilian financial institution Creditas recently announced the successful completion of a $260 million Series F funding round. This new investment brings the company’s total valuation to $4.8 billion.

Funding History and Growth

This valuation represents a significant increase from the fintech’s previous $1.75 billion valuation recorded in December 2020, when it secured $255 million in funding. To date, São Paulo-based Creditas has amassed over $829 million in funding across six investment rounds. A substantial portion of this capital, approximately $745 million, has been raised within the last three years.

The start of this year is marked by this robust funding, following a 2021 that witnessed a surge in venture capital investments within Latin American fintech startups. Investment in the sector climbed to over $13.2 billion in 2021, a considerable jump from the $2.3 billion seen in 2020.

Investment Details

Fidelity Management & Research LLC spearheaded Creditas’s latest investment. Additional participation came from new investors, including Spanish fintech fund Actyus and Greentrail Capital. Existing investors also contributed to the Series F round, namely QED Investors, VEF, SoftBank Vision Fund 1, SoftBank Latin America Fund, Kaszek Ventures, Lightock, Headline, Wellington Management and Advent International, through its affiliate Sunley House Capital.

Financial Performance and Transparency

Creditas distinguishes itself through its financial transparency, a practice uncommon among startups. This openness positions the company favorably as it progresses toward a potential public offering. In the third quarter of 2021, Creditas reported US$46.8 million in revenue, a 233% increase from the $14 million recorded in the same period of 2020. However, the company’s net loss also expanded to $14.8 million, compared to $8.25 million. CEO Sergio Furio anticipates approximately $200 million in annualized revenue for 2021.

This rapid revenue expansion is typically observed in younger companies. For a decade-old organization to achieve such growth is particularly noteworthy.

Credit Portfolio and Evolution

By the third quarter of 2021, the company’s credit portfolio under management had reached $532 million, up from $189.3 million in the third quarter of 2020.

Founded in 2012, Creditas initially operated as a collateralized lender through a marketplace model. It collaborated with banks to offer collateralized loans at rates significantly lower than traditional options (around 30% APR versus 85% APR).

In 2016, the company transitioned to a self-sufficient platform, directly securing funds for loans instead of relying on banks.

Expanding Ecosystem and Services

By 2019, Creditas had evolved into a comprehensive ecosystem centered around its customers. For instance, if a customer possessed a vehicle and required funds, Creditas would utilize the car as collateral, providing a low-interest loan. Subsequently, the company could facilitate the purchase of a new vehicle through its marketplace and offer insurance coverage.

“Currently, we function as a fintech that leverages these assets to deliver more affordable financing,” explained founder and CEO Sergio Furio to TechCrunch. “Furthermore, we provide protection and a marketplace for various sectors beyond automobiles.”

In essence, Creditas aims to become a “one-stop solution for individuals seeking a digital-first experience encompassing their homes, cars, motorcycles, and salary-based benefits.” This includes operating a car marketplace, Creditas Auto, an e-commerce platform with a payroll-deductible buy now, pay later model, Creditas Store, and Voltz, a Brazilian electric motorcycle manufacturer (following a strategic investment in Voltz Motors, focusing on next-generation electric motorcycles and scooters). The company is also developing financial software to support these operations.

Geographic Expansion and Future Plans

Creditas extended its operations beyond Brazil into Mexico 18 months ago. Furio highlighted Mexico as “a strategic driver for growth.”

He added, “We are confident that Creditas can disrupt the Mexican market by democratizing access to financial products and consumer solutions.”

“Our strategy involves continued growth through nurturing and expanding our ecosystem, offering financial solutions to marketplace customers, launching new products, broadening our geographic reach – including our successful entry into Mexico and the expansion of our tech hub in Valencia, Spain – and selectively pursuing strategic mergers and acquisitions,” Furio stated.

Team and Hiring

The company maintains a tech hub in Spain, where approximately 20% of its tech team is located.

Currently, Creditas employs over 4,200 individuals and intends to continue hiring with its new capital. While headcount doubled in the past year, Furio anticipates a more moderate hiring pace (growth of no more than 50%) over the next 12 months.

“This funding will enable us to expand our technology, marketing, and operations teams, but the rate of employee growth will likely slow down,” he explained to TechCrunch.

The company also plans to continue pursuing acquisitions, having completed four in 2021. Proceeds from the funding round will be allocated to “incorporating specialized products or niches” that are currently outside its scope.

Investor Confidence

Investors express strong confidence in the company’s future potential.

Will Pruett, managing director of Fidelity, described Creditas as “a rare fintech that cultivates genuine relationships with its customers, significantly reducing the cost of credit and enhancing their quality of life.”

QED Managing Partner Bill Cilluffo noted that his firm initially invested in Creditas during its Series A round in 2015.

“By diversifying its strategy beyond being solely a finance company, Creditas can now leverage a range of end-to-end solutions, from insurance to car sales, to serve a broader customer base than ever before,” he said.

“Creditas is a standout fintech asset due to its ability to combine rapid growth with strong revenue economics into an expanding total addressable market. We remain committed to supporting them and view the inclusion of shareholders like Fidelity and Wellington as validation of our belief that Creditas is poised for a successful public listing,” said David Nangle, CEO of VEF.

Regarding a potential public offering, Furio stated that the company is “continuously evaluating the market to determine the appropriate timing.”