Exclusive: Facio Raises $5M Seed Supporting Brazilian Payroll Loan Platform

Brazilian fintech startup Facio is developing a financial education platform that not only offers free lectures and courses, but also salary-advance services.

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Monashees and ONEVC led the $5 million seed round for Facio and was joined by a group of strategic angel investors including Igor Marchesini of SumUp, Gabriel Braga from QuintoAndar and Michael Seibel, CEO of accelerator Y Combinator. Facio’s total funding to date is approximately $6.9 million, which includes an angel round in 2019.

The company was started in 2019 by Saulo Tristão, Ticiano Vieira and Márcio dos Santos. Tristão and Vieira previously worked together at mobile payments startup SumUp.

“We started Facio because I saw the problem firsthand, even at SumUp,” Tristão told Crunchbase News. “The low-salaried population is so large, and we saw the differences in the great resources in the U.S. and wanted to provide early access to salaries.”

Moving the risk

Traditional payday loans put the risk on the employee, but with Facio’s model, the employer is the one helping the employee, so the risk would be if the company was not able to pay the salary, he said. That enables Facio to charge fees that are 100 percent cheaper than other alternatives in Brazil.

At the same time, the company is proving that when employees get out of debt, there is a 17 percent improvement in productivity, without any extra costs for the employer, Tristão added.

Marcelo Lima, partner at Monashees, said in a written statement that connecting a means of payment directly to a company’s payroll enables employees to anticipate their salaries and use future income toward their financial goals.

“It is a giant market in Brazil that allows you to offer anticipation and credit to millions of customers who today end up paying very expensive interest rates or simply have no other alternatives,” he added. “Facio, by creating value for both companies and employees, is building a B2B2C platform that allows scaling and developing engagement with customers without depending on the competitive and expensive paid channels of consumption.”

Going after growth

Now armed with a capital infusion, Tristão said nearly half of the money will be deployed to the loans as working capital, while the rest will go toward growing Facio’s sales team, scaling and getting a Brazilian license to become a financial institution. The license will enable the company to open bank accounts, take deposits and issue the payroll loans.

The global pandemic was hard on Facio this year. The company experienced some hardships from April to July, but by August started to grow, Tristão said. In August alone, Facio grew 10 times and has doubled each month. The company has made more than $1.2 million across 7 million loans and has received more than that back in the way of fees, he added.

Next up, the company intends to increase the number of products, which include more banking capabilities after Facio obtains its license.

Illustration: Li-Anne Dias