You probably know Creditas' latest news: the unicorn is now valued at US$ 4.8B, after obtaining a bank license and raising a round last August. But big names and numbers don't show you how hard the journey has been up to that point, nor give you the valuable lessons you can learn from this fintech turned into a giant.
"I'd love the overnight success, but it just didn't happen to me", says Sergio Furio in his chat on our Latitud Podcast. Creditas' founder shared the story of how his fintech started, and some learnings from those early days that every startup founder can apply to their own endeavor.
Creditas has seen its success in Brazil, but Sergio Furio is actually from Spain. Silvia, his wife, is the local one, and she played an important role in making Creditas happen – which just goes to show how having the right partner, in life and/or in business, can increase the odds of your startup succeeding.
Silvia and Sergio met while working as consultants in New York. Sergio got to learn from the Brazilian how high interest rates were in her country and asked her to move back to Brazil with him.
While Sergio has been embraced by Brazilians themselves, being a foreigner wasn't positive when setting up a company or when requesting basic financial services. It took almost a year to formalize Creditas because Sergio didn't have his national document ready yet. It also took him about five months to have his own bank account.
While waiting for all that to happen, the founder paid employees by 1) going to an ATM, 2) using his credit card from the US, 3) cashing out R$ 1.000 per day, and 4) accumulating the money until he could pay each employee.
But every cloud has a silver lining. "One month I couldn’t do that, for whatever reason. And then Silvia lent me the money, she actually paid the employees. That was like R$ 20,000 reais for the five employees that we had. I didn’t give her the money. So, two months later, I said, 'why don’t you become my first investor?'. And then I wrote a very nice convertible note in a napkin, and that was the initial funding."
Silvia's contributions didn't stop there. When Creditas took off, she also recommended workmates that would become VPs of Auto, Home, and Business Development. Silvia was so well connected that she even recommended Sergio to SoftBank executives. SoftBank eventually led Creditas' US$ 231M series D in 2019.
Creditas started in April 2012, and it first went by the name BankFacil. Today it has a full-fledged financing ecosystem. It offers home equity loans, auto equity loans, real estate and vehicle marketplaces, and payroll loans and discounts on products for employees.
This ecosystem wasn't launched on day one – even though Creditas' north star has been "reshaping financial services in Brazil" since the beginning. That's because, in the early and hard days, it was impossible to think about Creditas in those ambitious terms.
"The ecosystem was not ready. I didn’t have the funding and everything was too expensive. So we selected a model that was easy to implement", recalls Sergio.'
Creditas' first step to reaching its north star was producing content. This content generated leads that would be used for credit origination services. Creditas processed users' applications for other companies' financial solutions, telling those users whether they should or shouldn't make use of them.
"In those early days, the economics really sucked, right? It was nonsense. There was no way of creating a significant business just with a lead generation machine, without having the control of the value chain", recalls Sergio. Creditas kept that model for about a year and a half – that's its first example of persistence, and there are many more to come.
In 2013, the fintech acquired Alberto Gaidys' Grana AQUI, a small fintech doing lead generation for home equity loans. Looking at the potential of home equity loans to offer access to cheaper credit, Sergio took over both companies' management and united them through the Creditas brand.
The fintech ideated its plan to verticalize in 2014: it would not only generate leads, but also handle credit applications, grant the credit, and deal with all the legal aspects of lending. And, in every single step, have a digital approach.
"It was an origination platform. Once we got there, we said, 'This is not enough, we need to go one step beyond that. We need to have our own loans, not only loans that we originated from somebody else'."
But one thing is saying it, another thing is doing it. Creditas took about two to three years from that M&A to actually have something that made sense, recalls Sergio. The year was 2016, and it was also when Creditas raised its Series A.
After this goal was reached, Creditas' team started to question its operation constantly and took other steps in the following years. To become a full lending platform, the fintech invested and also attracted external investors in their loans. Creditas was also responsible for collecting those loans. Then, it went beyond lending and started to buy or sell cars and houses for customers. Finally, in July 2022, it bought a banking license.
Sergio emphasizes how important it is to bet on an ambitious north star. First, because relevant markets are a condition for achieving high multipliers of growth – exactly what venture capital funds are looking for. Second, big segments allow you to reassess and pivot. And, believe us, this process can happen the time when you're in the early days of a startup.
"If you want to work in a new technology for swimming pools, this market is probably gonna be too small. If you make a mistake – you don’t have a clear go-to-market, or you can't find out the right type of customers –, then you’re probably gonna fail because you’re not gonna have enough time to survive through it", says Sergio.
So, if you select a bigger audience in a bigger market, you’ll have more chances. Now, there’s a catch: in a very broad segment, you have the risk of becoming irrelevant because there are so many players. Another risk is suffering from a lack of focus. That's why we say that you need to take small steps.
"I think that that’s something that really resonates with me. I didn't do it by choice, but if I'd have the chance of becoming an entrepreneur again, I would think a lot about exactly that: selecting a big market and then taking a narrow approach, that I could use as a path to grow the business and move into adjacent spaces", says Sergio. "That's what happened with Creditas. By creating a lot of different views on the same principle, we had a much larger market."
Sergio remembers some comments when he was expanding Creditas: "You are building a technology company. Why the hell are you gonna be lending money to people? That's asset-intensive. You should be just doing technology, taking care of the customer and this beautiful experience, with a small team…"
Creditas ended up taking its own path – one that wasn't in the plans. "You start with 'being a customer in financial services sucks. You’re paying way too much, and that margin is unjustified.' And that’s what guides you. The way that you try to improve that reality is totally unknown."
Today, we all know what are fintechs: how aggressive they are and how they have that mindset of “yeah, I can change the status quo, and I can be 10 times better than a bank.”
All these things hadn’t been figured out yet when Creditas started, back in 2012. And you're probably a startup founder that feels as lost as Sergio felt at that moment. So, what can you do?
Creditas' founder says that you shouldn't rationalize your trajectory. You build a startup so that it can thrive over the next 10, 20, or 50 years. Creating a strategy for that amount of time is impossible.
"I have never thought before on the current view that we have, that banking in the future is gonna be much more than pure banking, it's gonna be solutions. And that means… We sell iPhones as part of our business. We have a business unit to sell iPhones. I have never thought that before. But now it makes sense because it attacks a piece of my business model, which is the CAC", recalls Sergio.
What you can do, then? Create a culture that becomes a building block of your startup, no matter how much time passes. And have adaptation be an integral part of that culture.
"The strategy in the old days, when we said 'let's create a business plan of 3 years, of 5 years', that doesn’t make sense anymore. It all changes so fast, and customers change so fast too, that you really need to be a master in adaptation. (...) The aggressiveness, the mindset [of fintechs], that persists."