Brazilian fintech Nubank, founded in 2013 by David Vélez, recently announced a $750 million fundraising round. Investor Warren Buffett, head of conglomerate Berkshire Hathaway, contributed $500 million.
A considerable fund-raising effort
Neobank Nubank is currently Brazil's largest fintech, and its first "decacorn", a term used to describe startups valued at over $10 billion, whereas unicorns are valued at over $1 billion.
Nubank has just announced a major new round of financing, raising $750 million, taking its valuation to over $30 billion. This puts it just behind Banco Santander, Brazil's number 3 bank.
Among the investors was Warren Buffett, head of the Berkshire Hathaway conglomerate. He has invested $500 million in the neobank, the most substantial investment received by Nubank since its creation.
The undeniable success of Nubank
Founded in 2013 by David Vélez, the neobank took its first steps by offering low-fee credit cards. While the offer wasn't revolutionary in itself, it was an immediate hit with Brazilians, many of whom don't have a bank account. At the time, the market was held by just 5 banks: Caixa, Santander, Bradesco, Itaú and Banco do Brasil.
Nubank had to wait 4 years to obtain its banking license and be able to offer, from 2017, online bank accounts without fees (fees were applied only when customers withdrew money from other banks' ATMs).
By 2018, the fintech was valued at $1 billion, making it a unicorn with a growing customer base. Containment measures linked to the Covid-19 pandemic have attracted new customers. While 7 out of 10 Nubank customers are under the age of 36, new, older profiles have come on board, enabling the neobank to generate $963 million in revenues in 2020, up from $523 million in 2019.
With this latest round of financing, Nubank intends to continue its expansion in Latin America.