Building a FinTech Company in Brazil: Sergio Furio, CEO of BankFacil (Part 4)

Sergio Furio: We actually ended up doing exactly what we were seeing at that point, but there were too many question marks. We raised money from a couple of seed funds – one from Brazil and another from the Czech Republic. That was 25% of the round. Another 50% was from a set of 8 to 10 financial services executives. These were actually people who I had met during those 18 months.

I have been sitting with them and telling them our dream and where we were heading. They invested in the team that they were seeing. They liked the idea. They liked the market, but they thought that our ability to execute was reasonable. Another 25% was from my friends. They wanted to get into a company and support me.

Sramana Mitra: This is very typical of a seed round. It’s the founder’s relationships that play a big role because not everything is validated. It almost becomes a friends and family situation as opposed to a professional investor-led financing round. That’s the only way to do it when you do not have the proof points that are required to do a professional round.

Sergio Furio: When you look back in time, everything makes sense.

Sramana Mitra: Exactly. At that time, it doesn’t.

Sergio Furio: Right. If I break our history into three stages, the first stage was the crazy one. It was my own money. That was the first 18 months. The second 18 months was when I convinced those guys to support us. That gave us another 18 months. Then the last 18 months was from the Series A until this point when we are closing the Series B. It has been three periods of 18 months each.

The Series A was in May 2015. That was for $7.5 million. That was done with venture capitalists. We had Kaszek Ventures, Redpoint, QED, and Accion. All of them are international and well-recognized VCs. If you think about it, emerging markets have always this component of uncertainty, so raising money from VCs must suffer. They got into the company once all those things were already ticked.

Sramana Mitra: By Series A, you had all the proof points?

Sergio Furio: We still had a bunch of points that we had to prove, but I would say that the basic components of the model like working on collateralized loans and being more independent from the banking industry were already clear. We also had something very important, which was traction. The company was growing healthily. All those validation points were completed when we were doing the Series A.

Sramana Mitra: By the way, this is not just for emerging markets. These days, you need to get the basic validation done to get Series A.

Sergio Furio: I hear that has been constant in emerging markets. Resources have been scarcer. Therefore, investors are more picky. They could have the luxury of funding companies that have proven a couple of important models.

This segment is part 4 in the series : Building a FinTech Company in Brazil: Sergio Furio, CEO of BankFacil
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