- Finanzero is a real-time online loan broker which provides loans for cars and houses to Brazilian citizens.
- The citizens are only required to submit the utility bill for address proof, proof of their income, and government ID for the loan approval.
Introduction:
FinanZero is a Brazilian online credit marketplace founded in 2016. Today it announces the closing of a $7 million round of funding. So far the company has managed to raise $22.85 million to date. The real-time online loan broker enables people to submit the application for a personal loan, car equity loan, or a home equity loan for free and receive an answer within minutes. The key to the company’s success is that it doesn’t provide the loans itself but has built a partnership with about 51 banks and fintech who power up the loans.
About FinanZero:
FinanZero is located in Brazil’s financial capital Sao Paulo and only 52 employees run the company. “From day one we said, ‘We only work with a success fee.’ So we only get paid when the customer signs the loan contract,” said Olle Widen, the company’s co-founder, and CEO.
Instead of charging the customer, FinanZero receives a commission from one of its partners. With the increasing volume of credit applications, the company saw 61% revenue growth from 2019 to 2020. The company gets an average of 750000 applications every single month. The Brazilian finance and banking market is ripe for destruction since it has been traditionally favorable for the rich.
About the Brazilian culture:
The vast majority of Brazilian citizens have very low incomes. The citizens are left with numbered options as far as financing is concerned. This forces them into compounding dead from which they will never be able to escape. Traditionally young Brazilians have stayed with their families until they got married which is a cultural aspect with them. But the bottom line of this is that mortgages are infinitely hard to receive approval.
With products like FinanZero and NuBank, Brazilians have begun to find more economic mobility and independence from the legacy institutions which have dictated that life for a long time. FinanZero and NuBank America’s largest digital bank.
About the founder of FinanZero:
Widen who happens to be a Swedish person moved to Brazil about 10 years ago for personal reasons. He pitched the idea of FinanZero by Webrock Ventures which is an investment company that focuses on bringing Nordic innovation to Brazil.
At that time Swedish startup Lendo, made waves in Sweden and the team realized that a similar model would succeed in Brazil. This model was a precursor to FinanZero. Brazil is known for its bureaucracy and red tape. Thus it was framed for a streamlined and hassle-free approach to loans.
They wanted to copy Lendo as per the original idea. But as others discovered the team was to tropicalize the product and the experience. For this, they had to build a customized solution for the Brazilian market and its citizens.
Statement from Widen:
“The founder of Lendo was a childhood friend of mine,” said Widen, of his close ties to the Swedish fintech. For the application of a loan on FinanZero, the citizens don’t have to provide their credit scores. Instead, they just need to provide a utility bill for proof of address, income, and their government ID.
“Our business model is very based on the bank’s risk appetite and we saw 60% growth from 2019-2020. We are close to 3 million visits per month, about 1.5 are unique and in March of 2021, we had 800,000 people fill out the entire loan form. We have about a 10% approval rating across all products,” Widen said.
The funding round was led by Swedish investors VEF, Dunross & Co., and Atlant Fonder, which all happen to be the previous investors in the company. The funding will go to the marketing department where they will use the money for TV commercials.
