Episode 008 - FOCUS-ON-FINTECH Series - André Bastos, Co-Founder & COO, REBEL - São Paulo, Brasil

Introduction

• Welcome to Distilling Venture Capital. I am your host, Bill Griesinger
• Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world. My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape. And provide you with information you can use.

Episode Introduction:

• Welcome back everyone. Today's Episode is another in my Focus-on-Fintech Series where I bring you a close-up look into the companies in the Fintech Sector and the innovations they are bringing to financial services markets;
• And, based on the intro theme music for today's Episode, (Aquarela do Brasil by Gal Costa) you may have guessed we are headed again to the land of Samba, Carnaval, Futebol and now, FINTECH - Brasil. We'll revisit why Brasil has become one of the hottest Fintech markets globally, attracting massive investor and consumer interest.
• Today I highlight one of the fastest growing Fintech companies in Brasil, São Paulo-based REBEL, a leading consumer lending fintech I've been following for around a year or so now…(That's REBEL.com.br)

The REBEL Story

• To help me do all of that, I am super-excited and pleased to be joined today by André Bastos, a Co-Founder of REBEL and currently its COO, among other things;
• André, thank you very much for joining me today.
• There are a lot of interesting and important characteristics of the REBEL bus. model I want to get into today but;
• To start things off, please give us some background, history on the formation of the company and what REBEL offers; when and how you got started, and the motivations behind the creation the company. What was the impetus, motivation?

The REBEL Business Model & Business Model Characteristics

• REBEL services offering; Starting with a true Lending offering as opposed to credit card or payment services like many other fintech models
• Importance of developing your proprietary Credit Scoring Technology; as a competitive advantage
• Talk about how REBEL drives client engagement and loyalty; REBEL is taking a unique, dedicated approach when it comes to cust. Engagement – right? With a hands-on, Human touch;
• What is the role and strategy of the Financial Wellness offering?
• Is there a consumer finance education component to this initiative? Why is that important?
• Discuss how blockchain and Machine Learning plays a critical role in REBEL's offering and strategy…How do you utilize the capabilities of blockchain technology?
• Will REBEL consider secured lending in the future?
• Will you expand to other geographies in LatAm, elsewhere, in the future?
• Licensing opportunity for the credit score tech. in other geographies?
• Is there any unique or special story around the company name REBEL and your branding strategies?

Other Brasil Fintech Companies that Have Raised Capital Recently:

• NuBank has raised over $800MM, starting with just a credit card offering, now valued at over $10B;
• Neon Pagamentos just raised a $300MM Series C round earlier this month and has raised over $420MM;
• Klarna raised $650MM at a $10.6B valuation, double its prior; Offers a buy-now-pay-later in 4 installments bus. model – Mach. Learning approach

Growth Prospects for REBEL?

• REBEL has had impressive growth:
• • Loan Originations nearly tripled 2H 2019 vs 1H 2019
  • How did 1H 2020 track?
  • What's growth expectation for 2020?
  • When do you predict reaching breakeven and CF positive results?

• What is your addressable market? $100B USD for unsecured consumer loans – huge!

Brasil Credit Markets – Historical Perspective

• I wanted to discuss credit markets in Brasil historically and why the current environment is so much more Fintech-friendly than in the past – as regulators have become somewhat accommodative embracing digital solutions and competition in financial services.
• Provide a short historical perspective of the role of credit and equity in Brasil…Brasil has not historically had "deep" credit markets – and very expensived; Condition of historically high interest rates…
• If you weren't a large corporation with access to the public stock market, you really couldn't raise capital or get credit/debt – you had to grow your business with cash – which means limiting and constraining your growth.
• Banco Central – Central Bank created a new class of financial services company in mid-2018 (sociedade de crédito direto – SCD OR Society of Direct Credit). What does it mean for consumers, businesses and new digital offerings?
• CVM – Comissão de Valores Mobiliários; Brazilian equivalent of the SEC
• Then, in May 2020, The Brazilian Central Bank and the National Monetary Council set out open banking regulations. The data-sharing framework aims to foster financial inclusion, drive competition in financial services and increase security.
• Finally, O Banco Central is launching its own digital payment platform - PIX
• Regulatory Initiative Supported by Central Bank: "The premise is that the personal data held by banks and other financial institutions do not belong to them, but to the respective holders, customers," according to Marcelo Chiavassa, professor of digital law at Universidade Presbiteriana Mackenzie Campinas
• Financial institutions must begin adhering to new rules stipulating that data belongs to individuals, says Maristela Martins, country manager for Brazil at Backbase.
• How important are these regulations for Brasil credit and financial services markets, in your view?

Plans for Capital to Grow – discuss only what you care to disclose here;

• Capital you've raised in the past and who your investor partners are;
• REBEL just raised a substantial securitization facility end of 2019 representing a validation of your business model, technology and customer engagement;
• Importance of access to other liquidity facilities to grow loan portfolio with favorable cost of capital and generate profitability;
• Importance of Diversity of capital sources;
• Capital needs to grow and scale the business;
• Are there any plans to take your business model and credit tech to markets outside of Brasil?

Closing Remarks:

• André, thank you very much for joining me today… I would love to do a follow up sometime as you make progress, to get an update on how things are going.

Contact Information - REBEL

• André, how can those seeking additional information and wishing to learn more about REBEL contact you or the firm?
• Website: www.rebel.com.br

Thank you for joining me for this edition of DVC. I hope you found today's discussion with André Bastos and REBEL interesting and it gave you some things to think about regarding rapidly advancing growth and trends of Fintech services in Brasil.

Thank you again and I look forward to joining you for my next Episode of Distilling VC.