SalaryFits to seek growth capital, raise would fall between VC and PE, CEO says

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Jun 10 2019
by Kevin Nafziger

SalaryFits, the provider of a platform that lets a person take out a loan that can be repaid through installments deducted from their salary, is planning to raise growth capital, CEO Delber Lage told this news service.

SalaryFits expects to use the capital from a growth raise to expand in Europe and Asia. It is also considering entry into the US market, the CEO said. SalaryFits may enter the US as early as the second half of this year, although there is no certainty on the timing for a possible US move. It currently has customers in the UK, India, Portugal, Spain, Italy and Latin America, Lage said.

SalaryFits was founded in February 2016 and has its headquarters in London. To date, it has been self-funded by ZetraSoft (Zetra), its Brazil-based parent, Lage said. SalaryFits acts as Zetra’s international arm for markets outside of Brazil. Zetra was founded in 2002, is profitable, and generated about $27m in revenue last year. Zetra’s eConsig platform has around 3 million users and has facilitated more than $18bn in loans, according to Lage.

The company’s upcoming growth raise will be the first outside funding Zetra has sought in its 17-year history, the executive said. The growth raise is expected to fall “somewhere between venture capital and private equity,” he said. Because SalaryFits is part of a mature, profitable Fintech company, the growth raise could be attractive to private equity. Because proceeds will be used to expand SalaryFits’ international footprint, potentially by 3x to 5x its current size, the raise could also interest venture capital and other growth-oriented investors, he noted.

For many years, Zetra’s management felt its product was uniquely suited for Brazil. By 2016, when Zetra started SalaryFits, management’s views had evolved, as they saw other markets becoming more open to its approach. With the growth of open banking, markets outside of Brazil were more receptive to Zetra’s use of an integrated platform, a platform that required connecting financial institutions, employer payroll systems, and consumers. Additionally, with the growth in consumer lending options internationally, including the emergence of a number of short-term products that charged consumers very high-interest rates, Zetra’s payroll-based lending approach could be positioned as a reasonable alternative for both consumers and FI’s in those markets, because of lower rates and less default risk respectively, Lage said.

SalaryFits is free to employers and it does not charge a subscription to either employees or FIs to use its platform, but makes money on fees paid by the borrower and lender on a per transaction basis.

FI’s benefit from SalaryFits because they gain more certainty about loan repayment, as they retain the option of potentially deducting payments directly from the borrower’s salary. SalaryFits also provides data and tools FIs can use to evaluate borrower risk, according to the company. Employers also benefit from the platform because they can offer employees more financial services, while employees gain through their access to affordable credit options, according to SalaryFits.

SalaryFits recently announced a partnership with benefit provider, Edenred, in Portugal. It also inked two partnerships in India in recent months, including  one in April with PeopleStrong, a large India-based technology company, according to a press release.

Lage is also a partner at Manucci Advogados, a Sao Paulo-based law firm, where he worked prior to SalaryFits and where he provided advice to Brazilian Fintech companies on their internationalization efforts. He is also a professor at PUC Minas in Brazil, where he taught International Relations. He holds a Ph.D. in International Law from Universität Bonn in Germany and from PUC Minas.