The New York-based General Atlantic led a Series B fundraising round in which the Brazilian banking as a service company QI Tech raised $200 million.
QI Tech, an infrastructure platform founded in 2018 by Marcelo Bentivoglio, Marcelo Buosi, and Pedro Mac Dowell, allows the development of banking, credit, and payment solutions via a modular API. It is also licensed by the Direct Credit Society (SCD). According to CEO Mac Dowell, an SCD is a kind of national bank charter in Brazil, although it has some restrictions. (QI Tech states that it is the first SCD the Brazilian Central Bank has authorized.)
In essence, QI Tech enables any business to function as a bank and provide financial products to its clients, staff members, or vendors. For instance, Mac Dowell stated that “the telecom could partner with QI and act like a bank” if a telecom business provided payroll loans to its staff.
QI Tech’s solution includes digital registration tools, bank slips, wire transfers, Pix, data validation, credit scoring, digital account setup, and credit underwriting for different economic sectors. Additionally, it underpins many use cases, such as e-commerce customers’ buy-now, pay-later strategies or asset managers, and fintechs’ student loan and home equity issues.
Through email, Mac Dowell stated, “Our key differentiators are the technology and the combination of features that create a ‘one-stop-shop’ solution.” “Like Stripe, but for more complicated financial products, any developer may build digital accounts, process payments, or issue loans in only a few integration steps thanks to the seamless technology. There isn’t a single IT business that can provide the whole feature set in Brazil or the United States. Fintechs frequently work with banks to develop their product offerings. However, banks’ use of contemporary modular technology is typically restricted. A tech business with a bank license is QI Tech, creating the ideal solution for both worlds.
With this latest round of funding, the São Paulo-based business has secured $262 million in venture capital since its founding in 2018. QI Tech secured $50 million in a Series A fundraising round sponsored by the Sovereign Investment Fund of Singapore (GIC) in November 2021 after operating on a bootstrapped basis from December 2018 to November 2021. The company claims to have been profitable since its first year of operation. In the most recent funding round, Across Capital, which invested $12 million in the business in October 2022, increased its stake in QI Tech by double. The company refused to disclose its current worth.
An email from Bentivoglio stated, “Since the beginning, we aimed for scalability and profitability, a strategy that was not very well seen but turned out to be the new way.” “We stayed true to our core convictions that a business can create extremely scalable products that generate a lot of revenue, even in the early stages.”
The firm recorded $21.2 million in net revenues during the first half of 2023, an 89% rise over the same time in 2022. Its more than 300 clients include 99 (Didi), Shopee, and Vivo Telefonica. Customers of the business are billed on a pay-as-you-go basis. Clients that use QI Tech APIs pay a set price for each transaction they handle.
There are now 120 workers at the firm, compared to just 50 a year ago. With the additional funds, QI Tech intends to investigate “strategic M&A opportunities” and pursue a “bold growth strategy.”
The funds will be utilized to finance select purchases that can assist in expanding our product offering or consolidate a vertical presence as part of our goal to accelerate growth through acquisitions, according to Mac Dowell. A startup company called Zaig, which offered KYC, AML, antifraud, and credit scoring engines, was bought by QI Tech in December of 2021. Additionally, QI Tech bought Builders Bank, a business that developed banking applications, earlier this year. Along with growing new verticals like its banking-as-a-service segment (white-label banking and transaction experience, including digital accounts and card issuance) and the QI DTVM, the broker-dealer license that allows QI Tech to provide administration and custody services to investment funds, the company also intends to use the funds for its lending-as-a-service business.
After following QI Tech for several years, Luiz Ribeiro, managing director and co-head of General Atlantic’s Brazilian office, stated that his company is “impressed by the vision of the leadership team.”
“We have been keeping a careful eye on Brazil’s financial markets infrastructure for years, and QI Tech has one of the most impressive platforms in the industry. A increasing hunger for digital payments and credit products in the nation, as well as increased acceptance of embedded finance, are among the market tailwinds that have helped the firm grow significantly (and successfully) in recent years, he noted in an email. “QI Tech is committed to offering clients high-quality, relevant goods, even in the face of secular trends, as demonstrated by our outstanding customer satisfaction ratings. The leadership group, their ability to carry out plans, and their forward-thinking outlook have all impressed us and helped them to forge and maintain a dominant position in the industry.
Brazil is the home of several prosperous fintech businesses. Nubank has expanded to become a digital bank with more than $35 billion in assets, providing customers with checking accounts, credit cards, and life insurance. Additionally, one of the biggest fintech M&A deals of the year is probably the Brazilian payments infrastructure firm Pismo, which Visa announced it was buying for $1 billion in cash in late June.