Open Co

Open Co is a São Paulo-based consumer credit company operating in Brazil. It provides consumers with digital access to credit alongside tools intended to improve their financial health, positioning its offering against incumbent lenders that charge high interest rates in a market with one of the highest interest rate spreads in the world. The credit application and origination process is described as fully digital, with rates lower than those of traditional banks.

The company was created in 2021 through the merger of Geru, an online lender then eight years old, and Rebel, a four-year-old startup that used artificial intelligence and bank account data to underwrite risk and assess customers' financial health. Its stated mission is to finance consumption for Brazilians in a sustainable way and to break the cycle of high delinquency and high interest rates. Co-founders cited in coverage include Sandro Reiss and Rafael Pereira.

As of December 2021 the company had 230 employees, more than half of them working in technology and product roles. Management said the business was profitable at the operating level but was investing heavily in growth, technology and product, so that cash requirements exceeded cash generated by operations.

Founding story

Open Co originated as the combination of two existing Brazilian lending businesses, Geru and Rebel, brought together in 2021. Its founders framed the company around the observation that access to good-quality credit at the point and time of need is a central obstacle to financial wellness in Brazil, where incumbents charge very high interest rates and delinquency is widespread.

Business model

Open Co lends to Brazilian consumers through digital channels, underwriting risk using artificial intelligence and bank account data. It also establishes partnerships with merchants, retailers and service providers in order to be present at the point where consumers need credit, which its investors describe as a way of increasing merchant traffic, order value, conversion and GMV.

Revenue is generated from consumer lending, with the company projecting close to $196 million in revenues for 2022 versus roughly a third of that in 2021.

Traction

Combining the results of its two predecessor businesses, the company said it had helped consumers save more than $500 million in interest expenses and had provided nearly $405 million in credit to more than 200,000 people as of December 2021.

Latest developments

In December 2021 the company announced a $115 million round led by SoftBank Latin America Fund with participation from Raiz Investimentos, IFC and LTS, earmarked for expansion, significant investment in technology and product development, and hiring. At that time it projected close to $196 million in 2022 revenue, roughly three times its 2021 level, and aimed to enable customers to access more than $616 million in financing during 2022.