Stark Bank wants to be the “Brazilian Brex” and bet on a credit card for startups

May 22, 2020
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Stark Bank promises to launch a credit card for startups, following a model that made American Brex, of Brazilians Henrique Dubugras and Pedro Franceschi, worth US $ 2.6 billion.

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So far, it has attracted investors such as Iporanga Ventures and individuals, such as Softbank partner Paulo Passoni

Entrepreneur Rafael Stark owned a company that developed applications for large companies. Until one day he faced a simple problem with a client: making a bank transfer API.

The service that seemed easy, especially for those who were engineers graduated from Instituto Tecnológico da Aeronáutica (ITA), was a tremendous headache. All processes were manual and technological integration was quite difficult. This is how Stark Bank, a digital bank that started developing an API for bank transfers, emerged in January 2019.

From the API, which are programming interfaces that serve to integrate software or a web-based platform, Stark Bank has developed several other services. After the bank transfer, Rafael created an API for payment of slips and another for paying taxes.

Thus, the entrepreneur won over 200 customers. Especially startups, such as Buser, Rappi, Ingresse, Kovi and Rebel. But also for large companies, like Colgate. "We must reach the mark of R $ 10 billion transacted in 2020", said Rafael Stark to NeoFeed.

Now, Stark Bank is preparing for its new project: to be a credit card issuer for startups, following the model of Brex, a fintech founded by Brazilians Henrique Dubugras and Pedro Franceschi in Silicon Valley, which is valued at US $ 2, 6 billion.

In January this year, Stark Bank received US $ 2 million in an investment led by Iporanga Ventures, the same fund that bet on Loggi, Olist and QueroEducação. The accelerator Y Combinator, which also invested in Brex, and the Silicon Valley Fund Foundation Capital participated in the round.

“Rafael is a technically very good founder and there is a huge payment industry that is still very archaic”, says Leonardo Teixeira, partner at Iporanga Ventures. "It is a pain that many companies have."

Rafael also managed to attract several entrepreneurs, who bet on the startup as an individual. Among them are Softbank partner in Latin America, Paulo Passoni; the founder of Buser, Marcelo Abritta; Ingresse's founder, Gabriel Benarros; and former Rappi CEO Bruno Nardon.

The money raised will be used to strengthen the digital bank, but also to get this strategy off the ground. Rafael is in advanced negotiations with a credit card banner and intends to put the service on the air in the second half of 2020. “After starting to have a commercial relationship with several companies, it is natural to explore other financial angles to grow”, says Teixeira, Iporanga Ventures.

Stark Bank's idea is to have a corporate credit card with mileage and points. "It will be all controlled by API," says Rafael, explaining that startups will be able to customize the limits for employees. "If you want to put a limit of R $ 500 for transportation, for example, just customize it via the API."

A corporate credit card for startups is a real demand in the Brazilian market. But it will not be an easy mission to conquer this market.

“The difficulty of giving credit cards to startups is the same as giving credit to the small business. If it were easy, anyone would do it. And even Nubank hasn't done it yet, ”says the founder of a startup, which has already received several contributions, but it took two years to get a corporate credit card.

To get the credit card, the startup will need to have a digital account with Stark Bank. The idea is to use this balance as a way to monitor the limit and to provide credit, following the model that was enshrined by Brex.

“But it is one thing to do that in Silicon Valley. Another is to try to repeat the same strategy in Brazil ”, says a source from the venture capital market, who knows the Brex model.

Brex founders: Pedro Franceschi (left) and Henrique Dubugras

Brex managed to gain traction in the American market by reversing the logic of providing credit. Banks look at the company's history. And, in general, startups have not passed and often do not even have a source of revenue.

Instead of looking at the past, Brex looked at the future and what venture capital funds were investing in the startup. They might not have revenue, but they received contributions and kept cash resources.

Through an API, just like Stark Bank, Brex has direct access to the startup's bank account and manages to increase or decrease the credit limit in real time, evaluating the available balance. "It is a simple logic, that no one had used," says the investor.

In Brazil, Stark Bank's first challenge is getting access to bank accounts. For now, Rafael will link the credit card limit to his own digital account.

But the development of open banking, which establishes the opening of customer data, which are kept under lock and key by the big banks, can help in this strategy.

Rafael believes he will be able to repeat the Brex model. He says he is used to serving startups that have received large contributions from venture capital funds.

In addition, your credit analysis will not be restricted to your bank account balance. “These companies use Stark Bank to make transfers, issue bills and pay taxes,” says Rafael. "We will use this information."

But even Brex, which raised $ 582 million in funds like DST Global and Kleiner Perkins, now faces its challenges. The company is highly capitalized, but startups are suffering from the coronavirus crisis.

Brex's two founders, Dubugras and Franceschi, are gearing up for a tougher reality, with many of their main customers, such as Airbnb, Outdoor Voices and ClassPass, cutting costs and laying off thousands of employees.

The startup has already reduced credit limits and is losing revenue, according to a report by The Information website, which covers the backstage of Silicon Valley. This attitude irritated some borrowers because they would not have been notified in advance.

Rafael says that Stark Bank is capitalized after the investment and that it has cash to last up to two years. Despite not being profitable, the startup generates revenue and moves towards financial balance. “I want to do something that makes me feel and helps other entrepreneurs,” he says.

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.

So far, it has attracted investors such as Iporanga Ventures and individuals, such as Softbank partner Paulo Passoni

Entrepreneur Rafael Stark owned a company that developed applications for large companies. Until one day he faced a simple problem with a client: making a bank transfer API.

The service that seemed easy, especially for those who were engineers graduated from Instituto Tecnológico da Aeronáutica (ITA), was a tremendous headache. All processes were manual and technological integration was quite difficult. This is how Stark Bank, a digital bank that started developing an API for bank transfers, emerged in January 2019.

From the API, which are programming interfaces that serve to integrate software or a web-based platform, Stark Bank has developed several other services. After the bank transfer, Rafael created an API for payment of slips and another for paying taxes.

Thus, the entrepreneur won over 200 customers. Especially startups, such as Buser, Rappi, Ingresse, Kovi and Rebel. But also for large companies, like Colgate. "We must reach the mark of R $ 10 billion transacted in 2020", said Rafael Stark to NeoFeed.

Now, Stark Bank is preparing for its new project: to be a credit card issuer for startups, following the model of Brex, a fintech founded by Brazilians Henrique Dubugras and Pedro Franceschi in Silicon Valley, which is valued at US $ 2, 6 billion.

In January this year, Stark Bank received US $ 2 million in an investment led by Iporanga Ventures, the same fund that bet on Loggi, Olist and QueroEducação. The accelerator Y Combinator, which also invested in Brex, and the Silicon Valley Fund Foundation Capital participated in the round.

“Rafael is a technically very good founder and there is a huge payment industry that is still very archaic”, says Leonardo Teixeira, partner at Iporanga Ventures. "It is a pain that many companies have."

Rafael also managed to attract several entrepreneurs, who bet on the startup as an individual. Among them are Softbank partner in Latin America, Paulo Passoni; the founder of Buser, Marcelo Abritta; Ingresse's founder, Gabriel Benarros; and former Rappi CEO Bruno Nardon.

The money raised will be used to strengthen the digital bank, but also to get this strategy off the ground. Rafael is in advanced negotiations with a credit card banner and intends to put the service on the air in the second half of 2020. “After starting to have a commercial relationship with several companies, it is natural to explore other financial angles to grow”, says Teixeira, Iporanga Ventures.

Stark Bank's idea is to have a corporate credit card with mileage and points. "It will be all controlled by API," says Rafael, explaining that startups will be able to customize the limits for employees. "If you want to put a limit of R $ 500 for transportation, for example, just customize it via the API."

A corporate credit card for startups is a real demand in the Brazilian market. But it will not be an easy mission to conquer this market.

“The difficulty of giving credit cards to startups is the same as giving credit to the small business. If it were easy, anyone would do it. And even Nubank hasn't done it yet, ”says the founder of a startup, which has already received several contributions, but it took two years to get a corporate credit card.

To get the credit card, the startup will need to have a digital account with Stark Bank. The idea is to use this balance as a way to monitor the limit and to provide credit, following the model that was enshrined by Brex.

“But it is one thing to do that in Silicon Valley. Another is to try to repeat the same strategy in Brazil ”, says a source from the venture capital market, who knows the Brex model.

Brex founders: Pedro Franceschi (left) and Henrique Dubugras

Brex managed to gain traction in the American market by reversing the logic of providing credit. Banks look at the company's history. And, in general, startups have not passed and often do not even have a source of revenue.

Instead of looking at the past, Brex looked at the future and what venture capital funds were investing in the startup. They might not have revenue, but they received contributions and kept cash resources.

Through an API, just like Stark Bank, Brex has direct access to the startup's bank account and manages to increase or decrease the credit limit in real time, evaluating the available balance. "It is a simple logic, that no one had used," says the investor.

In Brazil, Stark Bank's first challenge is getting access to bank accounts. For now, Rafael will link the credit card limit to his own digital account.

But the development of open banking, which establishes the opening of customer data, which are kept under lock and key by the big banks, can help in this strategy.

Rafael believes he will be able to repeat the Brex model. He says he is used to serving startups that have received large contributions from venture capital funds.

In addition, your credit analysis will not be restricted to your bank account balance. “These companies use Stark Bank to make transfers, issue bills and pay taxes,” says Rafael. "We will use this information."

But even Brex, which raised $ 582 million in funds like DST Global and Kleiner Perkins, now faces its challenges. The company is highly capitalized, but startups are suffering from the coronavirus crisis.

Brex's two founders, Dubugras and Franceschi, are gearing up for a tougher reality, with many of their main customers, such as Airbnb, Outdoor Voices and ClassPass, cutting costs and laying off thousands of employees.

The startup has already reduced credit limits and is losing revenue, according to a report by The Information website, which covers the backstage of Silicon Valley. This attitude irritated some borrowers because they would not have been notified in advance.

Rafael says that Stark Bank is capitalized after the investment and that it has cash to last up to two years. Despite not being profitable, the startup generates revenue and moves towards financial balance. “I want to do something that makes me feel and helps other entrepreneurs,” he says.

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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