Brazil’s Velvet to Provide Liquidity to Startups Shareholders as a Corporate Benefit

Brazilian neobank Neon and Mexican fintech Credijusto have joined the semi-annual share offering program for private companies

Velvet's co-founders: Carlos Naupari and Edouard Montmort.
May 05, 2022 | 05:00 AM

Bloomberg Línea — As Warren Buffett said at his annual meeting in Ohama, ‘cash’ is like oxygen. To bring liquidity to employees and shareholders of late-stage startups, the Brazilian fintech Velvet is launching its service to turn stock options into cash as a corporate benefit. For the program, called Velvet 360º, the fintech has already struck recurring secondary offering agreements with five startups: Brazilian neobank Neon, Indonesia’s Lummo, India’s fintech Open, and Mexican fintech Credijusto.

Under the program, employees with stakes will be able to transform their stock options or shares into cash through half-yearly offers. According to the fintech, the process is done together with the founders and directors of each company to determine the rules of eligibility, percentage of the sale, and pricing of the shares of employees who can participate. The fintech expects to move $200 million with these transactions over the next 12 months.

“The 360º program has as a great advantage for companies the attraction and retention of talent through the true money of stock options. The benefit adds value to the company and makes it come out ahead when it comes to retaining and attracting talent,” said Carlos Naupari, co-founder of Velvet, in a press release.

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Later this year, Velvet plans to offer loan products with vested options as collateral and strike price acquisition financing to facilitate the options exercise process. The idea is for Velvet to be the wallet through which employees receive the cash from their holdings.

“Stock option holders are often among the largest investors in the company, and it doesn’t make sense to have 100% of the equity invested in the startup you work for. Velvet will be an option to diversify the portfolio of today’s stock option holders through a wallet that will facilitate the buying and selling of private shares,” said Edouard de Montmort, co-founder of Velvet, in a press release.

Founded in September 2021, Velvet raised a $3 million Seed round later that year, led by Global Founders Capital. In February 2022, the fintech received a warehouse contribution of $200 million led by Yolo Investments, featuring participation of family offices from Switzerland and the United States. The startup has operations in Mexico, Brazil, Argentina, India, and the US.

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