Building a FinTech Company in Brazil: Sergio Furio, CEO of BankFacil (Part 3)

Sramana Mitra: While you were experimenting with lead generation and doing it on a shoestring experimentation mode, what kind of revenue level did you reach with that? Was that something that you used to bootstrap the new idea?

Sergio Furio: The reason why we were doing lead generation at that point was that it was cheaper. When it comes to the unit economics, the fact that the leads were not converting enough for the financial institutions meant that the revenues you were getting were very low. We were in a cost-per-acquisiton model.

The cost of acquiring that lead was pretty much the same. The revenue model didn’t make sense. You were spending the same in marketing. There was nobusiness model. When we started verticalizing, we managed to do two things. The first one is, we were solving the problem of conversion much better than the incumbents. The percentage of conversion from a lead to an actual closed loan significantly increased. As a consequence, we were getting paid more and more by the financial institutions.

The second thing that happened was because of the product, we were doing more in the process, and therefore, everyone was willing to pay us more. We were converting more and we were getting paid more. That model was feasible. Then we said, “We don’t just want to be the people who take the leads and process the loan. We want to close the loan and even provide financing.” That was the last step that we took where we became a full-fledged lending platform.

We take the customer, process the loan, approve the loan, book it, and in some cases, provide financing for the customer. Because we know the credit more than anyone else, we feel that we are in a good position to look for a better funding.

Sramana Mitra: How did you bootstrap this phase of validating your new idea?

Sergio Furio: We spent 18 months totally bootstrapped with my money. After those 18 months, we wanted to become a verticalized platform. We raised a $1.5 million seed round. With that money, we created the first two steps in the platform – the pre-qualification and processing of the loan. 18 months after that, we had already proved to the market that we were able to process and pre-qualify the loans better than anyone else. Then we raised our Series A. The objective of the Series A was to complete the platform.

Sramana Mitra: Whom did you raise this seed round from? Obviously, there were open issues at that point? With the investors, how did you mitigate those points that were still not validated at that point?

Sergio Furio: At that point in time, Brazil was not a fashionable country anymore. The investor concern was much higher. That space was extremely challenging for us. The venture capitalists were not willing to fund the company after those 18 months because the business model was not clear yet.

Sramana Mitra: Exactly.

This segment is part 3 in the series : Building a FinTech Company in Brazil: Sergio Furio, CEO of BankFacil
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