In the promising Brazilian startup market, there is a niche that arouses special interest from the experienced investor Paulo Humberg. Creator of Shoptime, he founded the company 17 years ago KPTL, which has already invested in more than 100 companies at an early stage and has more than R $ 1 billion under management. In recent years, Humberg has been dedicated to understanding and pioneering the real estate market.
It’s where the KeyCash, startup specialized in real estate credit of which Humberg decided to become a partner. In the last four months, the company has approved R $ 90 million in secured mortgage loans and has ambitious plans for the next four years: to reach R $ 1 billion.
Demand seems to be there: in a few months offering credit on its website, without marketing campaigns, KeyCash received a demand equivalent to R $ 2 billion. “We are walking quietly to become a unicorn with a very efficient business,” says Humberg. To accelerate the expansion, the company is negotiating a round of fundraising, of an undisclosed amount.
The company was created in 2018 by a pair of experienced entrepreneurs. Clarissa Vieira left the leadership of data analytics at Ernest Young. Alessandro Silva stayed for 12 years in the biggest reference in online real estate in the country, the Zap Viva Real group.
Clarissa had experience with data, but saw opportunities in the market for personal reasons: she was getting rid of a property and felt the hardness on her skin. Silva, in turn, wanted to create a business that operated on broader fronts than the online classifieds. “The journey of choosing a property can last up to 3 years, and the big portals only participate in the last 6 months, when the client already knows where he wants to live and his credit capacity”, he says.
Offering credit was in the plans since the start, but the first steps were more, let’s say, traditional: buying, renovating and selling apartments in upper middle class neighborhoods in São Paulo. KeyCash bought and sold about 50 properties. The endeavor brought a lot of learning, but a lot of inconvenience. The business has complex cash flow and a difficult scale of expansion.
Gradually, entrepreneurs realized that it made more sense to take the foot off the reforms and bet once and for all on credit. The company still has a stock of six apartments, but in the last two years it has invested heavily in technology and data to reduce the information asymmetry between buyer and seller in this market. “The challenge is to give the price of the property in second, with a minimum margin of error”, says Clarissa.
The technology, say the entrepreneurs, is transforming a still traditional market in the country, although, like all others, it has been transformed by the pandemic. Brazil has about 50,000 real estate agents and 200,000 brokers. They make more than R $ 600 billion in real estate change hands every year. There is a huge opportunity to take this market online, and an even greater potential to expand the supply of credit in transactions.
The credit market for individuals in Brazil is around R $ 2 trillion. But the real estate credit market is equivalent to only 9% of GDP in the country, compared to 26% in Chile, 48% in the United States and up to 96% in Germany. According to the entrepreneurs of KeyCash, real estate credit will naturally occupy the share of other modalities, such as payroll loans. The logic is that a growing group of customers will prefer to give the property as collateral to lower loan rates – the average rate is 1% per month, 27% cheaper than the payroll, according to KeyCash.
The startup manages to reduce fees (and risks) by knowing the market in depth. The approval process starts online, but goes through an inspection of the property by a network of 1,000 partner brokers. “Brazil has R $ 6 trillion of real estate paid, and it is a tied money – the offer of 10% of that in credit could move the economy”, says Humberg. “It makes no sense for you to be sitting at R $ 1 million instead of making the economy run”.
Naturally, competition will grow in this market. On the one hand, you will have proptechs like Quinto Andar and Loft, more traditional credit companies, startups like Creditas, and also super-applications, which offer more and more financial services. For the entrepreneurs ahead of KeyCash, there is room for more than one winner in this market, and the intelligent use of data tends to be a great differentiator. “It is not enough to look at the credit score. It is necessary to understand in real estate ”, says Clarissa.