finanzero, brazil’s free online credit marketplace, raises $7m
FinanZero Secures $7 Million in Funding
FinanZero, a Brazilian digital credit marketplace, has recently announced the completion of a $7 million funding round. This marks the company’s fourth financing since its inception in 2016, bringing its total funding to $22.85 million.
Streamlined Loan Application Process
The platform functions as a real-time online loan broker, enabling individuals to apply for personal, car equity, or home equity loans without charge. Loan applicants can receive a decision within minutes. A crucial aspect of FinanZero’s operational model is its partnership with approximately 51 banks and fintech companies that provide the loan capital.
Based in São Paulo, Brazil’s primary financial hub, FinanZero currently employs 52 individuals.
Success-Based Fee Structure
“We established from the outset that our compensation would be solely based on success,” stated Olle Widen, co-founder and CEO of the company. “We are only remunerated when a customer finalizes a loan agreement.”
Rather than directly charging customers, FinanZero receives a commission from its lending partners. With an average of 750,000 loan applications processed monthly, the company experienced a substantial 61% revenue increase between 2019 and 2020.
Addressing Financial Disparity in Brazil
The Brazilian financial sector has historically been characterized by limited accessibility, often favoring wealthier individuals. This has left a significant portion of the Brazilian population, particularly those with lower incomes, with restricted financing options.
Consequently, many Brazilians have been compelled to rely on debt that is difficult to overcome. Traditionally, it was common for young Brazilians to reside with their families until marriage, partly due to the challenges in securing mortgage approvals.
Platforms like FinanZero and Nubank, Latin America’s leading digital bank, are contributing to increased economic empowerment and independence for Brazilians, challenging the dominance of traditional financial institutions.
Origins and Inspiration
Olle Widen, originally from Sweden, relocated to Brazil approximately a decade ago. During his time there, he was presented with the concept for FinanZero by Webrock Ventures, a firm specializing in introducing Nordic innovation to the Brazilian market.
The Swedish startup Lendo, a forerunner to FinanZero, had already demonstrated success in Sweden. The team believed a comparable model could thrive in Brazil, a country known for its complex bureaucracy and the need for a more efficient loan application process.
Adapting to the Brazilian Market
While the initial plan involved replicating Lendo’s model, the FinanZero team quickly realized the necessity of adapting the product and user experience to the specific requirements of the Brazilian market. This involved developing a customized solution tailored to the needs of Brazilian consumers.
“The founder of Lendo is a close friend of mine,” Widen noted, highlighting the connection to the Swedish fintech.
Simplified Application Requirements
Applying for a loan through FinanZero does not require the submission of a credit score. Applicants only need to provide a utility bill as proof of address, income verification, and a government-issued identification document. The application process is designed for ease of use, with 92% of applications initiated via smartphone.
Growth and Future Plans
“Our business model is closely tied to the risk tolerance of banks, and we observed a 60% growth rate from 2019 to 2020,” Widen explained. “We currently receive nearly 3 million monthly visits, with approximately 1.5 million being unique users. In March 2021, we had 800,000 individuals complete the full loan application, resulting in an overall approval rate of around 10% across all products.”
The funding round was spearheaded by existing investors VEF, Dunross & Co, and Atlant Fonder, all based in Sweden. The capital will be allocated to marketing initiatives – primarily television advertising – product development, and the recruitment of new talent.