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Contxto – That Cora really is something. Never heard of Cora? Neither have most people as it’s one of the newest startups to hit the scene. Yet it has really given us something juicy to talk about.
This young Brazilian fintech emerged in 2019 and hasn’t even released a fully-functioning product. However, it’s already given Kaszek Ventures and Ribbit Capital something worth investing US$10 million in.
As far as plans go, a beta version of its product is in the works. Nevertheless, Cora anticipates a full release of a free account for medium-sized enterprises (SMEs) during the second half of 2020. Eventually, additional features will be added such as credit solutions and financial management tools. Other services in mind include billing payments, transfers and issuance of receipts.
Fintech Cora is the newest startup to appear in Brazil. Although what distinguishes the startup from other players in the Brazilian ecosystem are two factors.
First and foremost is its leadership. Recently founded by Igor Senra and Leo Mendes, this pair are not newcomers when it comes to digital solutions. They had already founded their first fintech by 2005, MOIP a payment company which was then sold to German multinational WireCard in 2016.
Safe to say that through their experience, Senra and Mendes knew the fintech woes of Brazil. But they were especially aware of the large banking and financial needs of SMEs in the country. Albeit they didn’t see WireCard’s interest in satisfying this demand.
Which brings us to the second reason Kaszek and Ribbit forked over US$10 million.
What may set Cora apart is also that its target market isn’t large-scale financial institutions nor individuals, as is the case with other startups like Nubank. Rather, taking the middle-ground, Cora wants to provide specialized financial services to SMEs. Particularly those with an annual revenue of up to R$4.8 million (approximately US$1.1 million).
It’s almost a certainty that Senra and Mendes will leverage their contacts and background in working with SMEs when they were running MOIP to gather potential customers for Cora.
SME market in Brazil
Small and medium-sized enterprises employ over 56 million people in Brazil out of its overall population of 200 million. Meaning these businesses provide a living to 28 percent of the population.
Yet, according to a study, one of the factors that owners consider of least importance for sustaining their businesses is support from financial establishments. There is even greater skepticism, perhaps even a cynical outlook, towards government policies in helping keep operations afloat.
This basically means SMEs don’t expect much from the Brazilian financial system or the government. Instead, they manage as best as they can through their own means to stay capitalized. This approach certainly affects their survival rate.
None of this paints a pretty picture, huh? But it does help illustrate Kaszek and Ribbit’s investment in Cora.