Brazil’s Neon reaches unicorn status as BBVA buys additional stake

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Spanish bank BBVA has increased its investment in Brazilian fintech Neon, acquiring a 21.7% stake in the neobank. Following the $300 million deal, BBVA’s participation in the firm totals 29.7%.

Neon referred to the investment as a Series D round and, for the first time, described itself as a unicorn. “Neon, Brazil’s first digital account and one of the world’s biggest unicorn fintechs, has raised $300 million in its Series D round,” the company said in a press statement.

However, Neon had achieved unicorn status in 2020, as Startups readers will know, when the fintech raised $300 million in a Series C round. Since 2016, Neon has raised 3.7 billion Brazilian reais in funding.

Old friends

BBVA invested in Neon for the first time in the Series C round, through its investment vehicle Propel Venture Partners. The bank is a shareholder in other digital platforms around the world, such as British neobank Atom, and has relevant retail operations in other Latin American countries. Here in Brazil, its operations are focused on loans and financing.

“Neon has proven to offer products connected to the financial needs of Brazilians, as demonstrated by its customer acquisition numbers. In addition, it has the capacity to continue growing rapidly and having the potential to launch products very quickly in a market with as much potential as Brazil”, said Carlos Torres Vila, BBVA’s chairman.

According to Neon, BBVA’s capital injection will help the company develop its technology, marketing, and products to accelerate Neon’s goal “to be the main partner of the Brazilian worker”. Acquisitions are also on the radar. So far, there have been 4 operations, the most recent being the purchase of credit firm Biorc, which still requires regulatory approval.

Strategies

The fintech’s strategy is to launch new products based on its Demo credit platform, an intelligence for granting credit based on the best product for each moment of the customers’ lives. “This is something different for 90 million people with some paid activity in Brazil who seek sustainable credit, which makes the company a natural choice as the main account”, said Neon in the statement.

Neon tripled in size in 2021, reaching 15 million customers, 88% of which belong to Brazil’s lower socioeconomic classes. In 2022, the company plans to at least double its revenue. The company handles more than 5.8 billion Brazilian reais per month in transactions. “We will provide all our customers with simple and sustainable ways to get credit fairly. This is our contribution to reducing inequalities and making a difference in people’s lives”, Neon’s founder Pedro Conrade said in the statement.

“Funding allows us to accelerate this purpose and serve more and more workers. Neon has grown a lot and is getting stronger every day, but one thing has never changed, our purpose of improving the finances of Brazilian workers, which is what drives us. With the support and global experience of BBVA in digitization and credit, we will make even greater advances”, Conrade added. Last year, Neon wound up its business account, in order to focus solely on individual entrepreneurs.

(translation by Gabriela Del Carmen, editing by Angelica Mari)