One of the pioneers in unsecured lending for individuals in the country, Open Co (formerly Geru) has just announced a merger with BizCapital. The transaction marks the fintech's entry into B2B and consolidates a group now with R$ 5 billion in originated operations, in a strategy to better navigate an especially challenging scenario for the credit market. The deal was effected without involving financial capital, with the exchange of stakes.
"As we were never direct competitors, this flirtation had been going on for some time. I have followed Biz closely since its foundation, and have even been part of its board. We are the siblings separated in the maternity ward," jokes Sandro Reiss, CEO of Open Co. But as much as the operations were naturally complementary, the conversations required a good deal of planning on the part of the duo until a consensus was reached that it was the best time to unite operations, says Francisco Ferreira, founder of BizCapital. "The timing now is very good."
Open Co itself was born out of a merger in 2021, between Geru and Rebel, and has been expanding its operations via M&A. The fintech incorporated, late last year, BoletoFlex and its buy now pay later (BNPL) solution, the American version of the old crediário. Now, with the entry of BizCapital, it is starting to attend small and medium entrepreneurs in a more structured way - about 20% of the company's portfolio already supported incipient businesses, but via loans in the name of the contractor's founder.
Open Co serves about 10 million individuals, while BizCapital brings about one million SMEs to the customer base. With 20 million active small businesses in the country, there is great room for growth in the segment. The CEO remains Reiss, while his partner Rafael Pereira holds the COO position. BizCapital co-founders Ferreira and Cristiano Rocha coordinate the product area, as CTO and CRO, respectively. The brand will be maintained.
"Today there is a natural tendency for SMEs to search for credit in an integrated way, precisely because of the absurd gap that exists in the market," says Ferreira. "I think we are on our way to having more and more solutions for this public, even more so with Brazil going through regulatory and technological advances to make credit cheaper."
Together, Open Co and BizCapital have raised about $190 million in equity, with the most recent round being a December 2021 contribution from Softbank to the fintech for individuals. The two fintechs already had some shareholders in common, such as Chromo Invest and Monashees. XP Asset, IFC and LTS, a fund owned by Jorge Paulo Lemann, Marcel Telles and Beto Sicupira, will remain among the main shareholders.
While high interest rates dry up venture capital liquidity and make fundraising more challenging, Open's executives guarantee to be in a comfortable financial position with the monetization of its customer base, even though the business continues to burn cash as a strategic decision.
"The recent market cycle is not one of growth, there are high interest rates, defaults, and we have always financed ourselves via capital markets. But we have a proven business, highly scalable, and a strong active client base. Our short-term plans are more about continuing to invest to improve the product portfolio and strengthen relationships with partners," explains Reiss.
One of the pioneers in unsecured lending for individuals in the country, Open Co (formerly Geru) has just announced a merger with BizCapital. The transaction marks the fintech's entry into B2B and consolidates a group now with R$ 5 billion in originated operations, in a strategy to better navigate an especially challenging scenario for the credit market. The deal was effected without involving financial capital, with the exchange of stakes.
"As we were never direct competitors, this flirtation had been going on for some time. I have followed Biz closely since its foundation, and have even been part of its board. We are the siblings separated in the maternity ward," jokes Sandro Reiss, CEO of Open Co. But as much as the operations were naturally complementary, the conversations required a good deal of planning on the part of the duo until a consensus was reached that it was the best time to unite operations, says Francisco Ferreira, founder of BizCapital. "The timing now is very good."
Open Co itself was born out of a merger in 2021, between Geru and Rebel, and has been expanding its operations via M&A. The fintech incorporated, late last year, BoletoFlex and its buy now pay later (BNPL) solution, the American version of the old crediário. Now, with the entry of BizCapital, it is starting to attend small and medium entrepreneurs in a more structured way - about 20% of the company's portfolio already supported incipient businesses, but via loans in the name of the contractor's founder.
Open Co serves about 10 million individuals, while BizCapital brings about one million SMEs to the customer base. With 20 million active small businesses in the country, there is great room for growth in the segment. The CEO remains Reiss, while his partner Rafael Pereira holds the COO position. BizCapital co-founders Ferreira and Cristiano Rocha coordinate the product area, as CTO and CRO, respectively. The brand will be maintained.
"Today there is a natural tendency for SMEs to search for credit in an integrated way, precisely because of the absurd gap that exists in the market," says Ferreira. "I think we are on our way to having more and more solutions for this public, even more so with Brazil going through regulatory and technological advances to make credit cheaper."
Together, Open Co and BizCapital have raised about $190 million in equity, with the most recent round being a December 2021 contribution from Softbank to the fintech for individuals. The two fintechs already had some shareholders in common, such as Chromo Invest and Monashees. XP Asset, IFC and LTS, a fund owned by Jorge Paulo Lemann, Marcel Telles and Beto Sicupira, will remain among the main shareholders.
While high interest rates dry up venture capital liquidity and make fundraising more challenging, Open's executives guarantee to be in a comfortable financial position with the monetization of its customer base, even though the business continues to burn cash as a strategic decision.
"The recent market cycle is not one of growth, there are high interest rates, defaults, and we have always financed ourselves via capital markets. But we have a proven business, highly scalable, and a strong active client base. Our short-term plans are more about continuing to invest to improve the product portfolio and strengthen relationships with partners," explains Reiss.