The Brazilian fintech PayHop has announced that it has received an R$11.5 million (nearly $2.2 million) investment round led by the investment arm of Serasa Experian. The round also saw the participation of Domo Invest and Citrino Gestão.
PayHop came to the market because of the new Brazilian Central Bank rule that, in June last year, changed the rules for the operationalization of the registration and negotiation of card receivables. This allowed retailers to use card receivables as collateral, without having to pay anticipation fees. Besides PayHop, Brazil’s fintech TruePay also emerged in the wake of the new regulation.
Thus, the startup provides credit for the supplier to sell its product knowing it will receive, while the retailer does not need to anticipate its card receivables, but can use what it has to receive as collateral to pay when the money from sales arrives.
The company’s co-founders, Eduardo Rossi (CEO) and Arthur Fontana (CTO) have experience with B2B credit, payments, and POS. PayHop operated for eight months with angel money. Now, Serasa has brought the startup’s first institutional round, money that will be applied to product development and commercial growth.
“We are inserted in B2B credit. For the supplier, we work with this pain of requests that come into the commercial area and are denied. In this sense, the partnership with Serasa is perfect because it gives us access to 50,000 distributors across Brazil who sell to retailers. Like every B2B business, we have the acquisition cost, which is made easier because of Serasa’s base,” says the CEO.
“This market is very large and continues to expand. There is a track for us to run, grow and specialize in this type of solution that benefits both links in the chain, the retailer and the supplier,” he said.
Fontana recalls that PayHop has built a way to mitigate default in distribution by offering the receivable that the retailer has as a guarantee for payment to the supplier. It is as if for the supplier the model was a guarantee as a service and for the retailer a “buy now, pay later” model.
With the new regulation, Brazilian Central Bank hopes to lower the cost of credit for small retailers. So PayHop’s business model charges a fee from the vendor. “Because we enable additional sales that they wouldn’t make,” explains Rossi.
The company expects to grow 10 times this year and reach 200 suppliers with 40 people on the team.
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