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The emerging market fintech star

Estimated Valuation: US$ 420M

Industry: Fintech

Country: Brazil

CEO: Benjamin Gleason, Thiago Alvarez

Website: https://www.guiabolso.com.br/

HQ: Sao Paulo

GuiaBolso is one of the most successful finance applications in Latin America. Founded by Benjamin Gleason, an American economist with an MBA from UPenn and former CEO of Groupon Brazil, and Thiago Alvarez, a Brazilian native and former senior manager at McKinsey and Company, the company aims at helping people organize their personal finances and optimize their every day spending.

Since it first hit the app stores in 2014, the application has been a huge success, positioning itself among the most popular in the country, a position usually reserved for instant messaging, social networking, and music apps. As of the time of this writing, it has accumulated more than 5 million installs in the Android ecosystem alone, albeit its actual user base rounds the 2 million unique users.

And this success makes sense, as the product was the first in Brazil (and a pioneer in the region) to provide a simple means for users to get their whole finances under control. To do so, it integrates with users credit cards and bank accounts, as well as with the Receita Federal (Brazil’s Federal tax authority), in order to make a full assessment of their situation and create simple reports.

The app automatically grabs information about users’ accounts balance, their usual expenses – which it splits in different categories –, their debt, and it allows them to set spending goals, in order to save money, or to make it to the end of the month. Additionally, the application makes it easy to find the best credit opportunities and the lower rates in the market.

The product operates under a freemium business model, on which it offers its core functionality for free, and some extra features, like advanced financial planning, for a fee. Additionally, it collects commissions from banks and credit agents for financial products users buy through their platform.

But with all their success, GuiaBolso had a really modest start. Founded in 2012, the founders bootstrapped it out of Gleason’s house in Sao Paulo, in an attempt to avoid diluting themselves before they had a validated product that actually provided value. To achieve this, they followed the lean methodology, building just a landing page and researching the market until they fully understood what the Brazilians needed in terms of a financial application.

This led them to find out that middle class Brazilians in the C segment – this is, people in the emerging middle class, made up of workers who average an income of US$2,000 a month – struggle when it comes to dealing with their personal finances. Many people in this particular segment have gathered unmanageable debt, or are unable to balance their budget. And so, they created an application that would help this segment do just that.

GuiaBolso’s early adopters, however, were mostly higher middle class users, who found the app’s functionality appealing as well. According to Gleason, this has to do with the fact that 90% of Brazilians are not financially educated, and don’t really understand the basics of the banking products they possess. Also, with lower bancarization levels, the lower segments are not always equipped to take advantage of the App’s features. This, however, is changing, as more people in the country are starting to get accounts and credit cards. And this speaks of huge potential for this company’s business.

As of today, the company has raised over $23.5 Million dollars in 4 investment rounds, froum founds like e.Brick Ventures, Kaszek Ventures, Ribbit Capital, and Valor Capital Group, among others. However, even when they had a good understanding of the market, and a good idea of the application they were trying to build, the cofounders struggled a lot to get the seed money they needed to get started. And it was only after being turned down by 60 different investors that they managed to get the Seed money to get the project running.

Closing their series A was also hard. With a basic product, that still relied a lot on the manual input from their team, Alvarez and Gleason decided it was time to create a more automated tool, and took the American application Mint as an inspiration. To do so, they started seeking money, but after realizing Silicon Valley VCs were looking to invest more than they needed, they decided to close a smaller round led by Argentine based Kaszek Ventures. After that point, getting money became easier.

Today GuiaBolso has become one of the region’s most utter success stories, and has proven that even seemingly risky markets, where innovation is perceived to be complicated, can be tackled by intrepid entrepreneurs with disruptive ideas. In the upcoming year, the startup will undoubtedly keep growing, becoming an essential tool for an increasing amount of users in their home country, which is, after all, one of the largest Internet markets in the planet.

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