Why We Invested: GuiaBolso
The last few months have marked important milestones for GuiaBolso: the company’s personal finance app crossed the impressive 3 million users mark across Brazil, and they just launched a proprietary lending platform to better serve their customers’ needs.
We first invested in GuiaBolso in 2014. At that time, innovators globally and in the US had awoken to the possibilities of new technologies to help consumers better understand and manage their finances, as well as provide a platform for broader access to financial services and products more appropriate to their individual profiles. This effort resulted in successful companies, which have scaled and today serve millions of customers, such as Mint.com and CreditKarma on the personal financial management side, and a number of next generation lenders like Prosper, SOFI, and Lending Club.
GuiaBolso set out to build a similar offering in Brazil — which was particularly compelling in the local market:
· Brazil hosts a massive and growing consumer credit market. However, loans are predominantly short-term, like credit card debt. The credit spreads are among the highest in the world and there is limited access to longer term products like mortgages.
· At the time of our investment, there were no personal finance management tools available for Brazilian consumers to help them develop a better relationship with their finances.
· Unlike the US, there is no near ubiquitous credit scoring platform like FICO in the country, nor is there transparency to help consumers manage and understand providers’ credit decisions.
Given these conditions, GuiaBolso’s platform was incredibly difficult to build.
For starters, while platforms like Mint could rely on aggregators like Yodlee or Plaid, in Brazil such providers did not exist. Similarly, CreditKarma could partner with a credit bureau that has strong US coverage customer data. In Brazil, no universally comprehensive solution existed.
Therefore, to build its personal finance tool, GuiaBolso had to create the full stack. They started by building Brazil’s first aggregator, to allow consumers to port their personal financial data seamlessly. The company then built a proprietary Financial Health Index, to help customers understand their financial health, and offer counsel on how to improve it. On top of that, they innovated a consumer-facing front end that combines the best of Mint and CreditKarma.
Ultimately, however, the objective — and monetization strategy — for GuiaBolso was not just to provide consumers insights into their finances, but also guide them to more appropriate and affordable financial products for their profiles. To do this they needed to attract partners, starting with credit.
The traditional players in Brazil weren’t moving fast enough at providing targeted offers through the platform. Therefore, GuiaBolso decided to create the first product themselves. They built Just Lending — an installment personal loan primarily for debt consolidation. In addition, the company has now opened up a white-label solution for small and medium banks to offer users credit at much lower rates than what they practice in the market. This is possible since they use GuiaBolso’s proprietary credit score and user flow for loan contracting 100 percent online in real-time.
Today, GuiaBolso has over 3 million users across the country and is one of the leading financial apps in both the Apple and Android app stores. Over time, their vision remains to create a full-fledged financial hub for Brazil, offering its users a wide range of financial products, from credit to savings, investments, and insurance — building each spoke themselves if needed.
It is still early on GuiaBolso’s journey, but as investors in the company and proponents of inclusion and financial health, we are excited about their progress so far.
