Fintech companies of e-factoring go through 'season of acquisitions' in Brazil

July 26, 2020
Repórter e redatora na CNN Brasil
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Executives do accounts: fintechs anticipation of receivables have been highlighted in mergers and acquisitions.

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Amid the crisis imposed by the coronavirus, credit fintechs had to adapt to rapid and massive growth in demand. Among the modalities, startups specialized in anticipating receivables had an increase of around 70% in demand, according to an estimate by the Brazilian Association of Fintechs (ABFintechs).

In some cases, the data may be even greater. According to the advisory of Weel, a startup that serves 14,000 companies, mostly with annual sales of R $ 5 million, fintech saw its demand explode 120% in the months of March to May, compared to 2019.

The prepayment of receivables service is an alternative to tenants. It consists of advancing the payment of accounts receivable, contracts, duplicates or even checks so that companies can maintain working capital. The modality is able to offer credit at lower costs than financing, because the risk of default is less - since the other party has committed to pay via contract, check or other means.

This type of credit is popular with small and medium-sized companies that need to protect their cash, but it has also served large companies that need to sustain their supply chains. A large slaughterhouse, for example, which wants to ensure that meat producers go through the crisis without breaking, can operate with a triangulation between the treasury itself, the supplier company and the credit provider.

With the warming in the sector, and due to the fire test imposed on the fintechs as a whole by the pandemic, the market has seen new opportunities in acquisitions. Last Thursday (23), Liber Capital - which moved R $ 3 billion and grew 1000% in the first half of 2020 - announced the acquisition of 60% of Adianta, another fintech in the anticipation segment.

Likewise, at the end of last month, XP announced the purchase of Antecipa, which started operations in 2016 and received a significant contribution from the American company Redpoint last year. At first, an unobvious bet for a platform focused on individual investors, the new venture “has everything to do” with the XP arm of companies, as defended by Camilo Telles, founder of Antecipa.

“Antecipa fits into XP's logic because it offers other credit options, especially as an alternative to traditional banks, factorings (a financial transaction through which a company sells its credit rights) and FIDCs (Credit Rights Investment Funds). The big companies started to look at us as an investment option, because it generates a win-win relationship ”, he says.

Another acquisition, earlier this month, placed the One7 platform ahead of another anticipatory fintech, Rapidoo. Without revealing the value of the transaction, the company just announced that it will inject R $ 50 million in financing for the companies to pay their receivables.

Only among ABFintechs partners, there are 19 startups that work exclusively in advance or have started to specialize in the area in the last three years. According to Fabio Neufeld, leader of the association's credit vertical, less bureaucratic processes and lower rates than those of banks and factorings are the main advantages of these startups in terms of competitiveness.

“Prepayment is a form of credit that is very widespread. And the big benefit, in terms of financing, is the cost. In Brazil, this industry brought the technological factor from an early age, so we have a differential in experience, in faster approvals, in the assertiveness index, which is much greater than when everything was done by hand ”, he says.

A survey by PwC consultancy, carried out last year, shows that the segment already accounted for 16% of the credit fintechs' operation and that, among legal entities that request capital, 21% do so through the prepayment of receivables - be it in a combined way with a loan or other modality or exclusively.

Uncertainty

Now, in the pandemic, the number of clients of these startups increases, as entrepreneurs seek cheaper credit solutions, but at the same time, the amount transacted falls. “Since most businesses are earning less, they have less receivables to anticipate. In terms of volume, some companies have been moving less, ”explains Neufeld, from ABFintech.

But a concern on the horizon is default, since the crisis affects the economy almost in general. As a result, the strategy of these startups has been to protect their own cash. Sometimes, this means greater rigidity in the approval of new customers or even an increase in credit - Antecipa says it has increased the rate by about 15%.

Weel's vice president, Nathan Yoles, says the company adopted this strategy as a way of preserving itself. “The uncertainty scenario made us more selective in the release of new operations. We are prioritizing companies with annual sales starting at R $ 5 million. In addition, we prioritize the proximity and understanding of the moment of our customers. ”

There are no official data on defaults in the period. As risk assessments directly interfere in the valuation rounds of these companies, the numbers remain confidential. But a study by the brokerage firm Socopa, from Banco Paulista, showed that the FIDCs held by the institution had a 73% performance in liquidations at the end of June - against 36% in the first days of the same month. Statistics can indicate a similar recovery scenario within fintechs.

The head of companies at XP, Rodrigo Moreira, argues that this movement is not widespread. “The pandemic did not catch all companies in the same way. There was a lack of receivables in some customers, but not in others, ”he says. Moreira also says that the search for more credit is a sign of business maturing in the face of difficult times.

In addition, in the case of some fintechs, such as Liber or Antecipa, which operate as marketplaces, the anticipation company does not carry the risk of the operation. It is not the case for all, but even startups that operate their own fund, generally take care to reduce exposure and avoid bankruptcy, should the fund break down.

Thus, despite the uncertainty, the directors remain optimistic. “During the crisis, many large companies started to strengthen and pay more attention to their supply chains, so that they too can get through this moment. And for that, they started looking for credit. I think this is a legacy of the pandemic, which drives this type of solution ”, analyzes Moreira.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

Amid the crisis imposed by the coronavirus, credit fintechs had to adapt to rapid and massive growth in demand. Among the modalities, startups specialized in anticipating receivables had an increase of around 70% in demand, according to an estimate by the Brazilian Association of Fintechs (ABFintechs).

In some cases, the data may be even greater. According to the advisory of Weel, a startup that serves 14,000 companies, mostly with annual sales of R $ 5 million, fintech saw its demand explode 120% in the months of March to May, compared to 2019.

The prepayment of receivables service is an alternative to tenants. It consists of advancing the payment of accounts receivable, contracts, duplicates or even checks so that companies can maintain working capital. The modality is able to offer credit at lower costs than financing, because the risk of default is less - since the other party has committed to pay via contract, check or other means.

This type of credit is popular with small and medium-sized companies that need to protect their cash, but it has also served large companies that need to sustain their supply chains. A large slaughterhouse, for example, which wants to ensure that meat producers go through the crisis without breaking, can operate with a triangulation between the treasury itself, the supplier company and the credit provider.

With the warming in the sector, and due to the fire test imposed on the fintechs as a whole by the pandemic, the market has seen new opportunities in acquisitions. Last Thursday (23), Liber Capital - which moved R $ 3 billion and grew 1000% in the first half of 2020 - announced the acquisition of 60% of Adianta, another fintech in the anticipation segment.

Likewise, at the end of last month, XP announced the purchase of Antecipa, which started operations in 2016 and received a significant contribution from the American company Redpoint last year. At first, an unobvious bet for a platform focused on individual investors, the new venture “has everything to do” with the XP arm of companies, as defended by Camilo Telles, founder of Antecipa.

“Antecipa fits into XP's logic because it offers other credit options, especially as an alternative to traditional banks, factorings (a financial transaction through which a company sells its credit rights) and FIDCs (Credit Rights Investment Funds). The big companies started to look at us as an investment option, because it generates a win-win relationship ”, he says.

Another acquisition, earlier this month, placed the One7 platform ahead of another anticipatory fintech, Rapidoo. Without revealing the value of the transaction, the company just announced that it will inject R $ 50 million in financing for the companies to pay their receivables.

Only among ABFintechs partners, there are 19 startups that work exclusively in advance or have started to specialize in the area in the last three years. According to Fabio Neufeld, leader of the association's credit vertical, less bureaucratic processes and lower rates than those of banks and factorings are the main advantages of these startups in terms of competitiveness.

“Prepayment is a form of credit that is very widespread. And the big benefit, in terms of financing, is the cost. In Brazil, this industry brought the technological factor from an early age, so we have a differential in experience, in faster approvals, in the assertiveness index, which is much greater than when everything was done by hand ”, he says.

A survey by PwC consultancy, carried out last year, shows that the segment already accounted for 16% of the credit fintechs' operation and that, among legal entities that request capital, 21% do so through the prepayment of receivables - be it in a combined way with a loan or other modality or exclusively.

Uncertainty

Now, in the pandemic, the number of clients of these startups increases, as entrepreneurs seek cheaper credit solutions, but at the same time, the amount transacted falls. “Since most businesses are earning less, they have less receivables to anticipate. In terms of volume, some companies have been moving less, ”explains Neufeld, from ABFintech.

But a concern on the horizon is default, since the crisis affects the economy almost in general. As a result, the strategy of these startups has been to protect their own cash. Sometimes, this means greater rigidity in the approval of new customers or even an increase in credit - Antecipa says it has increased the rate by about 15%.

Weel's vice president, Nathan Yoles, says the company adopted this strategy as a way of preserving itself. “The uncertainty scenario made us more selective in the release of new operations. We are prioritizing companies with annual sales starting at R $ 5 million. In addition, we prioritize the proximity and understanding of the moment of our customers. ”

There are no official data on defaults in the period. As risk assessments directly interfere in the valuation rounds of these companies, the numbers remain confidential. But a study by the brokerage firm Socopa, from Banco Paulista, showed that the FIDCs held by the institution had a 73% performance in liquidations at the end of June - against 36% in the first days of the same month. Statistics can indicate a similar recovery scenario within fintechs.

The head of companies at XP, Rodrigo Moreira, argues that this movement is not widespread. “The pandemic did not catch all companies in the same way. There was a lack of receivables in some customers, but not in others, ”he says. Moreira also says that the search for more credit is a sign of business maturing in the face of difficult times.

In addition, in the case of some fintechs, such as Liber or Antecipa, which operate as marketplaces, the anticipation company does not carry the risk of the operation. It is not the case for all, but even startups that operate their own fund, generally take care to reduce exposure and avoid bankruptcy, should the fund break down.

Thus, despite the uncertainty, the directors remain optimistic. “During the crisis, many large companies started to strengthen and pay more attention to their supply chains, so that they too can get through this moment. And for that, they started looking for credit. I think this is a legacy of the pandemic, which drives this type of solution ”, analyzes Moreira.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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