Open Co, a São Paulo-based consumer credit company, announced that it has raised $115 million in a round led by SoftBank Latin America Fund. Open Co was created earlier this year by the merger of Geru, an eight-year-old online lender, and Rebel, a four-year-old startup using AI and bank account data to underwrite risk and assess clients’ financial health. Its aim is to “finance consumption for Brazilians in a healthy way.” It plans to do this in a few ways, but for starters, by not charging 300% interest rates. Open Co provides clients with access to credit and access to tools that are designed to improve their financial lives, not make them worse. The process is 100% digital, with no bureaucracy involved; it claims to be fast, and the rates are lower than those of traditional banks.
An estimated 52% of the population use credit to pay for basic expenses, creating an unsecured consumer credit market of about $200 billion, of which about 70% is in revolving credit. As a result, 62 million Brazilians have overdue accounts or missed payments. Open Co wants to give Brazilian people more options, and so far, the people seem to be welcoming those options with well, open arms. There is a lot of buzz around “buy now, pay later” nowadays, but the truth is — its execs point out — that it has always existed in Brazil, a country where people usually buy things in installments with their credit cards. Looking ahead, the Open Co team is refreshingly transparent regarding financials. To get even more specific, the team is projecting to reach nearly $196 million in revenues in 2022, a “3x” growth compared to 2021. It also aims to allow its customers to access over $616 million in financing in 2022. Combining the results of its two predecessors, Open Co says it has helped consumers save more than $500 million in interest expenses over the years and has been increasingly establishing partnerships with merchants, retailers, and service providers to be closer to its clients’ point of need when requesting credit. Overall, it has provided nearly $405 million in credit to more than 200,000 people so far.