How Nubank Grew to a $2 Billion Valuation


To understand Nubank, we must first understand the term ‘Fintech’. The term itself is a combination of the words ‘financial’ and ‘technology’, and refers to “any business that uses technology to enhance or automate financial services and processes. The term is a broad and rapidly growing industry serving both consumers and businesses. In a nutshell, Fintech aims to compete with traditional financial methods through the introduction and implementation of new financial technologies available.

Brazilian-based Nubank is a neobank (bank which operates entirely online with no branch networks involved), and it is currently the largest Fintech company located in Latin America, or to have its base there. Headquartered in Sao Paulo, it has spread its operations a bit with another office in Mexico City, and yet another, with a focus on engineering, in Berlin, Germany. Products made available by Nubank include personal loans, ‘NuConta’, which is a digital account, and an international credit card. They also offer something that stands out from all the rest: A credit card that is controlled, in its entirety, by a mobile application, which permits card users to handle all aspects of the card accounts right from their handheld devices. As of this writing Nubank is able to boast more than 25 million customers utilizing their products and services.

The $25 Billion Valuation

So, what are we talking about here? Good question. To make it clearer for you, Nubank made an announcement on January 28 that earned it a top spot in the Fintech world…as if it wasn’t occupying a top spot already. The announcement had to do with the Series G, which just so happens to be either the eighth or ninth fundraising event for a business and its investors. It takes place only after startup funding and efforts have failed, according to Quora, and is one way investors are able to put off the eventual loss of their invested funds in the case of failure.

Well, the announcement made by Nubank on January 28 consisted of the facts that they had managed to raise $400 million for the Season G round, which means that up to now the company has managed to raise a total of $1.2 billion. This puts the valuation for Nubank at the $25 billion mark (which actually stood at only the $10 billion two years ago). But what did it for them, besides the products they offer and the fundraising? A customer base of 34 million users, that’s what, and that is certainly nothing to sneeze at, especially when you consider the fact that Nubank started doing busines only eight years ago.

How Did They Manage to Do It?

According to co-founder and CEO David Velez in an interview with Tech Crunch, the incredible growth came from much cultivation. “We’ve gone from 12 million customers in 2019 to 34 million solely based on word of mouth.” That’s right. Surprisingly enough they gained their customers by getting the word out. As a matter of fact, the article goes on to say that by September of 2020 they were actually gaining around 41K customers each day. To top things off, the company is also able to brag up the fact that they spend zero dollars on customer acquisitions, so they are able to actually pay outstanding salaries to employees. This means great customer service, which actively works to gain customer loyalty, and the word spreads by itself. Quite to business plan, and that’s been proven out in spades. Thanks to the new $25 billion valuation basically secured Nubank as the fourth most valuable financial institution in Latin America, and it is also easily the biggest digital bank in the world, thanks to that astronomical number of customers, coupled with number of application downloads done for ease of use of their products and services.

The Appeal

You may be asking why people are so willing to forsake their traditional banking methods for something so impersonal, but you can bet there are some very good reasons. First of all, everyday ‘branch’ banks and their locations charge insanely high fees, and they just seem to get higher for each added product or service. “People were really done with being mistreated and paying high fees,” Velez continued in the interview, speaking specifically of banks in Brazil. There you literally have lines wrapping around the block, and the customers are treated less than respectfully. “It’s like they are doing you a favor by opening an account for you and then charging you 450% interest rate per year. Our bet was that people would really like to be treated like humans.”

Another huge factor is the fact that Nubank is able to reach those in need of banking services in Brazil and other locations that have no access to regular banking. This has been a huge point of appeal. With the pandemic taking place, the need for top-notch online banking became essential, and the word spread even faster. Then, with the addition of its savings account product, things became better than ever. We think it’s pretty obvious why Nubank reached a $25 billion valuation…it earned it.

Wrapping Things Up

The bottom line is that Nubank is the financial institution of today, but it will slide nicely into tomorrow and beyond. They want to do right by their customers, and it shows in their products and in the way they conduct customer service that is above and beyond anything offered in the traditional branch banks we have all been dealing with for years. The company is comfortable and happy, and are the investors…but most of all, by all appearances, the customers are the happiest. “Nubank was born out of the conviction that people deserved better, more transparent, and human financial services that would allow them to be in control of their money and their future,” Velez concluded. “We started seven years ago in Brazil, a country with one of the most concentrated banking sectors in the world, and we were able to free millions of people of the bureaucracy and the pain. Through technology and human customer service we were able to have a positive impact on their daily lives.” We think it’s pretty clear how Nubank got their $25 billion valuation, don’t you?

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