After SVB collapses, fintech for Brazilians gains 5,000 customers – 03/31/2023 – Market

While the world of startups and the entire banking system despaired over the bankruptcy of Silicon Valley Bank (SVB), a fintech owned by two Brazilians saw an opportunity: it launched a credit line for affected companies and, in two days, gained 5,000 customers and received US$ 2.3 billion (R$ 11.7 billion) in deposits.

“In hindsight, it seems like a great opportunity. But in the heat of the moment, it was too risky,” says Pedro Franceschi, who co-founded Brex, a fintech corporate card in Silicon Valley valued last year at $12, 3 billion.

One of the youngest billionaires on the planet on the Forbes list, Franceschi, 26, told the story in a lecture this Friday (31) at the Brazil Conference, an event organized by students from Harvard and MIT (Massachusetts Institute of Technology) universities, in Cambridge. , in the Boston region, USA. “I didn’t sleep much at the time and I probably haven’t slept until now either,” he joked.

Silicon Valley’s largest bank by deposits and 16th largest in the United States, with $209 billion in assets, SVB collapsed on March 10. Two days later, the Fed (American central bank) and the FDIC (credit guarantee fund) announced that they would honor the bank’s deposits, of US$ 175.4 billion, to avoid a bank run in the country.

“One of our biggest competitors had been in this area for 40 years and they were going out of business,” said Franceschi, who said that around 40% of Brex customers also used SVB services. According to him, four hours after the announcement of bankruptcy, Brex launched the emergency credit line for all SVB customers.

For the entrepreneur, the Fed rescue was important, otherwise the bank failure would be an “extinction event” for many startups.

Born in Rio, Franceschi founded Brex in 2017 while studying computer science at Stanford (a college he dropped out of a semester later) with Henrique Dubugras, after selling online payments startup Pagar.me to Stone.

Despite the success, the businessman said that the duo made some mistakes with the meteoric rise of the company, a unicorn, which, he said, reached revenues of US $ 10 million just six months after launching in Silicon Valley, in 2018, and to $100 million the following year. “Internally, their culture changes. ‘We are invincible, we can do everything at the same time and be successful.’

“At the end of 2019, we saw that everything was working and we decided to double everything. Let’s focus on different things. Startups were our strategy, but let’s start providing services to small and medium-sized businesses. From small customers like cafes to DoorDash (delivery platform ), AirBnB and Google. That was the scale we were operating and it didn’t work”, he recalled.

The businessman claims that it was not possible to focus on customer service when they had such a diverse portfolio and had to choose which path to follow. Last year, he says, he had to let go of 40,000 clients from smaller businesses, a “very painful decision, with a very bad result in terms of public relations”, he described.

Brex is hiring in Brazil, said Franceschi, in a move to decentralize the company’s headquarters after the pandemic, when they opened offices in New York, Salt Lake City and Vancouver (Canada).