FinanZero, a Brazilian online lending marketplace, announced today that it has completed a $ 7 million financing round – the fourth since its launch in 2016, launched in 2016. A total of $ 22.85 million has been raised to date.
The real-time online loan broker allows individuals to apply for a personal loan, auto equity loan, or home equity loan for free and get a response in minutes. A key to FinanZero’s success is that it does not offer the loans itself, but works with around 51 banks and fintechs that support the loans.
FinanZero is based in the Brazilian financial capital Sao Paulo and employs 52 people.
“From day one we said ‘we only work with a success fee’ so we don’t get paid until the customer signs the loan agreement,” said Olle Widen, co-founder and CEO of the company.
Instead of burdening the customer, FinanZero receives a commission from one of its partners. With a growing volume of loan applications – an average of 750,000 applications per month – the company saw revenue grow 61% from 2019 to 2020.
The Brazilian financial and banking market was ripe for disruption as it traditionally favored the rich.
Those with low incomes – the vast majority of Brazilian citizens – then have few funding options, which in turn forces them to run into debt that they are unlikely to escape. Traditionally, young Brazilians lived with their families until they were married, and while there is a cultural aspect to this, the bottom line is that mortgage approval is infinitely difficult.
With products like FinanZero and Nubank – Latin America’s largest digital bank – Brazilians are seeing increasing economic mobility and independence from the old institutions that have dictated their lives for so long.
The Swede Widen moved to Brazil about 10 years ago for personal reasons. There he was made aware of the idea of FinanZero by Webrok Ventures, an investment company focused on bringing Nordic innovation to Brazil.
At the time, Swedish startup Lendo – a precursor to FinanZero – was making waves in Sweden, and the team believed that a similar model would succeed and prepare in Brazil, a country known for its bureaucracy and bureaucracy therefore focus on a streamlining and a hassle of pre-paid approach to loans.
The original idea was to just copy Lendo, Widen said, but as others have found out, along the way, the team had to “tropize” the product and experience, which meant developing a bespoke solution for the Brazilian market and its people had to.
“The founder of Lendo was a childhood friend,” said Widen of his close relationship with the Swedish fintech.
In order to apply for a loan with FinanZero, you do not need to provide your creditworthiness. Instead, all you need is a utility bill (proof of address), proof of income, and your government ID. The process is so simple, Widen said, that 92% of loan applications are initiated from a smartphone.
“Our business model is heavily based on the bank’s risk appetite and we grew 60% from 2019 to 2020. We have nearly 3 million visits per month, about 1.5 are unique and as of March 2021 800,000 people filled out the entire loan form. We have an approval rating of around 10% for all products, ”said Widen.
The round was led by Swedish investors VEF, Dunross & Co and Atlant Fonder, all of whom are previous investors in the company. The funds go into marketing – most of it on television -, product development and talent acquisition.