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Sinapse acquires UpTick, to be a 'one-stop-shop' for finance for SMEs in Brazil

September 14, 2023
Por
Danylo Martins
Danylo Martins
Jornalista, fundador e publisher do Finsiders
📷
Finsiders
With the acquisition of UpTick, a consulting and accounting firm, Sinapse expects to increase its monthly recurring revenues by 30%.
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Diogo Martins (on the right of the picture) and Walter Cavalcante (in the centre) from São Paulo graduated in accountancy, but never worked in the sector. Each followed a different career path. While the former set up an innovation consultancy for start-ups, the latter made a career in the world of mergers and acquisitions (M&A). Until they became partners and founded Sinapse Finance in early 2018, with an eye on automated financial management for small and medium-sized enterprises (SMEs).

Okay, but what does all this have to do with accounting? Everything. Now, the duo is reunited with the area. That's because Sinapse's platform is moving towards being a 'one-stop-shop' for finance for SMEs, and this puzzle was missing precisely the "piece" of the accounting service. "Imagine the financial and accounting routines on the same platform," says Walter.

To realise this vision, the entrepreneur told Finsiders exclusively that Sinapse has just bought 100% of UpTick, a consultancy and accounting firm aimed at SMEs and start-ups. The transaction is being carried out via an exchange of shares. The value of the deal was not disclosed, but Walter says that the company paid a multiple of 1.4x revenue, which he considers "above average" for accounting firm portfolios.

With the acquisition, UpTick founder Fernando Martins Ribeiro joins the Sinapse team and will be responsible for leading the accounting product. The firm's 25-strong team will also become part of the fintech. The deal adds 55 clients to Sinapse's base, which now has a portfolio of 170 SMEs. The focus is on companies with revenues of up to R$50 million a year.

Evolution

The deal with UpTick is expected to increase the company's monthly recurring revenue (MRR) by 30 per cent.

"This year, our turnover should be around R$10 million. In 2022, we'll make R$5 million," says Walter. "We're integrating operations and systems. With the 'house in order', the next step is to go to the market to raise more capital," adds the founder.

In April last year, the fintech company raised its first round of investment, worth R$4.4 million. The investment was led by the BR Angels group and included the participation of Aimorés Investimentos and angel investors such as Paulo Silveira (Alura), Guilherme Décourt (ex-Monashees and now a partner at École 42), Rudy Tarasantchi (technology director at Flash Benefícios) and Karen Kanaan (ex-Endeavor and also a partner at 42).

According to the CEO, the acquisition is transformational for Sinapse. Created more than five years ago with a 'CFO as a service' solution, the start-up has evolved into a platform that automates financial processes for SMEs.

"In the beginning, we offered a service and had no technology. The first version of the platform was launched in the middle of 2021," says Walter.

Now, the idea is to add the accounting service, which until then was carried out through partner firms.

"What we're proposing now is another level of productivity, with a 'one-stop-shop' vision of financial solutions for companies," says the founder.
He says that the aim is not to compete with ERPs. Quite the opposite. "We don't replace ERP, but rather operate with our technology running on top of management systems," he explains. In this sense, Sinapse is integrated with players such as Omie, Bling, Oracle NetSuite and Senior Mega.

In addition, the start-up has set up a partner ecosystem, in which it resells products and services and keeps a fee. In all, there are currently more than 100 partner solutions - from legal consultancy to credit, means of payment, foreign exchange and investment solutions.

"It's our fastest growing revenue. Nearly a fifth of our revenue comes from the marketplace. Today, 70 per cent of our clients have already contracted solutions through the ecosystem," says Walter.

AI

On another front, Sinapse is testing the use of artificial intelligence (AI) with large language models (LLM), a technology based on machine learning algorithms. The idea is to facilitate and automate operational processes such as: accounts payable, accounts receivable, classifying entries and capturing information. The model is in the final stages of development and should be launched in the coming months.

"The idea is to have a virtual assistant that captures data from customer communications and can answer questions such as last month's EBITDA, or what actions to take to improve my results," Walter explains. However, this doesn't mean replacing humans. "These are tasks that our team does and will continue to do. The robot still has contextual problems."

Second-time founders

Both public school students from the outskirts of São Paulo and graduates of FEA-USP, Walter and his partner Diogo are second-time founders. After working at financial advisory firm Upside, Diogo founded Supernova, a consultancy focused on financing innovation projects for start-ups, which has served clients such as VTEX, Involves, Omie, Social Miner and Braile Biomédica.

Walter co-founded and chaired the Financial Market League at FEA-USP between 2008 and 2009. The following year, he founded Agrupe, one of the first Brazilian group buying sites (remember them?), which had more than 100,000 subscribers. The business was sold to businessman and television presenter Carlos Massa, known as Ratinho. With the exit, Walter embarked on the world of M&A and started working at Pátria. Later, he was CFO of management software ERPFlex and, in 2018, joined Diogo at Supernova, the birthplace of Sinapse.

Competition

Given the size of the SME market in Brazil, Sinapse is naturally not the only startup to have set out to solve this segment's financial management woes. One of its main competitors is BHub, founded by Jorge Vargas Neto, which is betting on a 'backoffice as a service' solution and already serves more than 1,000 companies.

Kamino, for its part, recently redesigned its offer to boost its growth, mainly with an eye on SMEs. The move came months after the fintech company incorporated the startup Nimbly, which specialises in managing and executing payments.

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.

Diogo Martins (on the right of the picture) and Walter Cavalcante (in the centre) from São Paulo graduated in accountancy, but never worked in the sector. Each followed a different career path. While the former set up an innovation consultancy for start-ups, the latter made a career in the world of mergers and acquisitions (M&A). Until they became partners and founded Sinapse Finance in early 2018, with an eye on automated financial management for small and medium-sized enterprises (SMEs).

Okay, but what does all this have to do with accounting? Everything. Now, the duo is reunited with the area. That's because Sinapse's platform is moving towards being a 'one-stop-shop' for finance for SMEs, and this puzzle was missing precisely the "piece" of the accounting service. "Imagine the financial and accounting routines on the same platform," says Walter.

To realise this vision, the entrepreneur told Finsiders exclusively that Sinapse has just bought 100% of UpTick, a consultancy and accounting firm aimed at SMEs and start-ups. The transaction is being carried out via an exchange of shares. The value of the deal was not disclosed, but Walter says that the company paid a multiple of 1.4x revenue, which he considers "above average" for accounting firm portfolios.

With the acquisition, UpTick founder Fernando Martins Ribeiro joins the Sinapse team and will be responsible for leading the accounting product. The firm's 25-strong team will also become part of the fintech. The deal adds 55 clients to Sinapse's base, which now has a portfolio of 170 SMEs. The focus is on companies with revenues of up to R$50 million a year.

Evolution

The deal with UpTick is expected to increase the company's monthly recurring revenue (MRR) by 30 per cent.

"This year, our turnover should be around R$10 million. In 2022, we'll make R$5 million," says Walter. "We're integrating operations and systems. With the 'house in order', the next step is to go to the market to raise more capital," adds the founder.

In April last year, the fintech company raised its first round of investment, worth R$4.4 million. The investment was led by the BR Angels group and included the participation of Aimorés Investimentos and angel investors such as Paulo Silveira (Alura), Guilherme Décourt (ex-Monashees and now a partner at École 42), Rudy Tarasantchi (technology director at Flash Benefícios) and Karen Kanaan (ex-Endeavor and also a partner at 42).

According to the CEO, the acquisition is transformational for Sinapse. Created more than five years ago with a 'CFO as a service' solution, the start-up has evolved into a platform that automates financial processes for SMEs.

"In the beginning, we offered a service and had no technology. The first version of the platform was launched in the middle of 2021," says Walter.

Now, the idea is to add the accounting service, which until then was carried out through partner firms.

"What we're proposing now is another level of productivity, with a 'one-stop-shop' vision of financial solutions for companies," says the founder.
He says that the aim is not to compete with ERPs. Quite the opposite. "We don't replace ERP, but rather operate with our technology running on top of management systems," he explains. In this sense, Sinapse is integrated with players such as Omie, Bling, Oracle NetSuite and Senior Mega.

In addition, the start-up has set up a partner ecosystem, in which it resells products and services and keeps a fee. In all, there are currently more than 100 partner solutions - from legal consultancy to credit, means of payment, foreign exchange and investment solutions.

"It's our fastest growing revenue. Nearly a fifth of our revenue comes from the marketplace. Today, 70 per cent of our clients have already contracted solutions through the ecosystem," says Walter.

AI

On another front, Sinapse is testing the use of artificial intelligence (AI) with large language models (LLM), a technology based on machine learning algorithms. The idea is to facilitate and automate operational processes such as: accounts payable, accounts receivable, classifying entries and capturing information. The model is in the final stages of development and should be launched in the coming months.

"The idea is to have a virtual assistant that captures data from customer communications and can answer questions such as last month's EBITDA, or what actions to take to improve my results," Walter explains. However, this doesn't mean replacing humans. "These are tasks that our team does and will continue to do. The robot still has contextual problems."

Second-time founders

Both public school students from the outskirts of São Paulo and graduates of FEA-USP, Walter and his partner Diogo are second-time founders. After working at financial advisory firm Upside, Diogo founded Supernova, a consultancy focused on financing innovation projects for start-ups, which has served clients such as VTEX, Involves, Omie, Social Miner and Braile Biomédica.

Walter co-founded and chaired the Financial Market League at FEA-USP between 2008 and 2009. The following year, he founded Agrupe, one of the first Brazilian group buying sites (remember them?), which had more than 100,000 subscribers. The business was sold to businessman and television presenter Carlos Massa, known as Ratinho. With the exit, Walter embarked on the world of M&A and started working at Pátria. Later, he was CFO of management software ERPFlex and, in 2018, joined Diogo at Supernova, the birthplace of Sinapse.

Competition

Given the size of the SME market in Brazil, Sinapse is naturally not the only startup to have set out to solve this segment's financial management woes. One of its main competitors is BHub, founded by Jorge Vargas Neto, which is betting on a 'backoffice as a service' solution and already serves more than 1,000 companies.

Kamino, for its part, recently redesigned its offer to boost its growth, mainly with an eye on SMEs. The move came months after the fintech company incorporated the startup Nimbly, which specialises in managing and executing payments.

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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