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58% of Fintechs Operate on Losses

Fintechs: Founders are highly qualified, 97% of them have undergraduate or graduate degree, master’s or doctoral degree.

Although 58% of fintechs claim to operate on the loss, 95% believe that 2018 will be a year of revenue growth.

“The vast majority of companies have an optimistic expectation of growth for this year and expect to become profitable in up to 2 years,”

said Luís Ruivo, partner of PwC consulting firm responsible for the Fintech Deep Dive 2018 study, in partnership with the Brazilian Association of Fintechs, ABFintechs. For the research, 224 founders of fintechs from all over the country were interviewed. The survey was released today (08/08) in an event promoted by ABFintechs.

The survey also showed that fintech entrepreneurs are highly qualified, 97% of them have undergraduate or graduate degrees, master’s or doctoral degrees.Therefore, the age group of entrepreneurs is also higher, ranging from 30 to 39 years.

“To open a fintech, you need more in-depth knowledge of technology and the financial sector. Therefore, hardly anyone from outside the market can found a fintech. You have to know the product”

says Ruivo.

According to the study, this high level of qualification and certain historic aspects of the national market make Brazil such an attractive place for the emergence of fintechs that the country can become an exporter of financial technology in the future.

However, one of the major obstacles highlighted was the difficulty in attracting investments to fintechs that are still starting.The annual turnover of these companies usually does not reach the mark of R $ 1 million and 41% of them claim not to have received any type of incentive. “The investor in Brazil, since he does not want to expose himself so much to risk, starts investing after the break-even . As there is not much competition, he has time to negotiate with the entrepreneur, only in the meantime the company has already died in the middle of the road, “says Rodrigo Soeiro, president of ABFintechs.

He also points out that only 17% of fintechs are aimed at the end consumer.

“This path is extremely expensive. It needs to have relevant financial support”

he says. But as a resource is scarce, Soeiro says that the probability of an entrepreneur to choose this path is small.

Other obstacles in the management of fintechs reported by entrepreneurs are related to attracting qualified professionals and gaining market visibility.

“One of the biggest barriers I see today is public recognition,”

said Renato Douek, a partner at Kavod Lending, a collective funding platform that allows anyone to lend money to small and medium-sized businesses.

The survey shows that due to banking concentration in the country, about 82% of financial assets are in the hands of the five largest institutions in Brazil. For Douek this hinders the growth of fintechs.

“Fintechs still generate a bit of distrust of the public.”

To keep growing, financial startups will need to reinvent themselves. This is Red’s belief for the future of fintechs.

“Offering a better digital experience is no longer a differential. Any financial company today offers a much improved service, “he says.” What we realize is that to make them more competitive, the use of data in large scale becomes important. “ The big bet is on new technologies such as artificial intelligence and blockchain.


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Oliver Smith


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