RIO DE JANEIRO, BRAZIL – Creditas has decided to venture heavily outside its financial products business by injecting R$95 million into Brazilian electric motorcycle manufacturer Voltz, the largest investment ever made by the fintech founded in 2012.
The investment turns Creditas, which focuses on an ecosystem based on “home, vehicle and salary” into a significant, albeit non-majority, Voltz shareholder.
The investment contributes with capital for the startup from Pernambuco to open a plant in Manaus in November, increase its number of stores and develop the embryo of a battery recharging network with the Ultrapar group, owner of Ipiranga gas stations, as an initial partner.
Ultrapar (UGPA3) is part of the investment round with a contribution of R$5 million, raising the total to R$100 million.
“We could dedicate years to developing 150 financial products, the same way digital banks do, but I don’t want to replicate the banking model,” said Sergio Furio, Creditas’ founder and CEO. He declined to say how large Creditas’ stake in Voltz will be and the company’s estimated value with the investment.
“We want to build a business model that can help people manage their assets, and in the case of motorcycles, I don’t want to be on a combustion-powered model of the past,” the executive said. He said he believes that over the next 5 to 10 years, combustion motorcycles in Brazil will be restricted to a share of only 20% of the national market, with the remainder being taken up by electric models.
Furio referred to the strategy of Creditas, which two weeks ago launched a used car buying and selling operation, which includes a plant in the São Paulo metropolitan region that refurbishes the vehicles for resale, in a format similar to that operated by startup Volanty.
“We realize that customers’ needs are changing… If we fail to be part of this journey, we lose customers,” said Furio. He said that while digital banks generate an annual revenue of R$80 to R$100 per customer, Creditas’ new initiatives enable an annual revenue of R$6,000 per customer.
Two in one
And in addition to financing Voltz’s electric motorcycles, Creditas is also entering another branch of business based on technology: battery recharging.
Under the system envisioned by Creditas and Voltz, battery recharging stations will be installed at Ipiranga gas stations. But instead of motorcyclists waiting for the vehicle’s battery to recharge, they will leave it at an automated point that will deliver a fully recharged one in its place.
“We envision a business model in which we sell and finance motorcycles and rent batteries. And Creditas will act as a capital provider to buy the batteries and rent them,” said Furio, adding that the company may set up a receivables fund based on battery rental revenues. Batteries represent about 40% of Voltz’s motorcycles’ value.
The rental model could be useful for users such as app delivery drivers, who in a day may need more mileage than the Voltz battery’s nominal 120 kilometers. The maker recently entered into a partnership with iFood national meal delivery giant, which will partially subsidize the bike’s financing for delivery drivers.
“Banks didn’t care”
According to Voltz’s founder and CEO, Renato Villar, 33, the pilot of the partnership with iFood begins in June and the alliance is expected to reach 10,000 bikes per year in which Voltz will sell motorcycles without the battery’s additional cost in the vehicles’ price, while owners rent the battery.
Villar said that before closing the deal with Creditas, Voltz met with large banks to discuss its business model in order to secure lower rates for financing motorcycles.
The startup’s logic for seeking lower interest rates for financing is based on telemetry technology built into motorcycles and batteries, which, according to Villar, reduces the risk of default and theft.
“We tried with some banks, but they didn’t give us much credit,” joked the executive. “To sell a motorcycle in Brazil, we need to sell credit, so we built a motorcycle that can be more accessible,” said Villar. The price of the EVS model is R$17,900, close to the price of a Honda Twister, one of the Japanese manufacturer’s best-selling models in Brazil.
Villar said that the investment funds announced on Monday will be enough for a year and a half to two years of operations. If the model of leasing batteries and recharging points is successful, a new round of funding will be required to increase the network, he added.