SoftBank backed online lender Creditas, a company from the alternative lending space, which does not seem to have experienced exponential growth in valuations.
Brazil-based consumer lender Creditas received $200m from telecoms conglomerate SoftBank, reportedly at a $700m post-money valuation. The company did not reveal how it would use the fresh funding but presumably to amplify the range of collateral it accepts and also considers making loans to businesses. SoftBank is not the first corporate investor to back the business. Santander innoVentures, the venturing unit of Spain-based bank Santander, has backed it in the past and so has media and e-commerce group Naspers through its Fintech Fund and its venturing arm Naspers Ventures.
Launched in 2012 as BankFacil, Creditas runs an online lending platform which offers personal consumer loans of different size, varying between R$5,000 and R$2m ($1,250 to $500,000). Creditas charges an average of 2% in interest on loans secured against a vehicle collateral and 1.25% interest on those against a real estate collateral. These low interest charges are extremely competitive when compared to interest rates charged by banks and other institutions in Brazil.
The alternative lending space has been part of the fintech corporate-backed global deal flow, which – as our GCV Analytics data suggests – grew between 2014 and 2017 from 29 to 54 rounds, as shown on the bar chart here. The number of corporate-backed rounds remained stable in 2018 at nearly the same level as the previous year. The total estimated capital in such grew in a similar fashion from $867m in 2014 to $3.49bn in 2016 and levelled off at about $2.52bn and $2.37bn in 2017 and 2018. This appears to indicate that valuations of emerging enterprises in this space may not have experienced the same surge as other sectors and subsectors. This is likely due to the nature of the lending business that– whether done electronically or on paper – involves, for the most part, the same process for loan-takers and lenders, which is hardly a subject to profound disruption – lending an amount today in exchange for the principal plus some interest at a later date.