Company: Nibo
Investors: Redpoint eventures, Valor Capital, Vostok Emerging Finance

Nibo is a fintech startup empowering small businesses to navigate Brazil’s complicated accounting and tax landscape. With 2,000 accountants on the platform, and integrations with over sixty major accounting software solutions in Brazil, Nibo raised a R$20m Series A from Swedish investor Vostok Emerging Finance, with participation from existing investors Redpoint eventures and Valor Capital, to scale their platform.

In this interview with Nibo co-founder and CEO Gabriel Gaspar, we learn:

• Why Nibo is partnering with (instead of trying to automate) Brazil’s small business accountants
• Why Brazilians spend more hours per year complying with tax and accounting regulation than anywhere else on the planet
• How they explained the opportunity to Swedish fintech investor Vostok Emerging Finance

LAVCA: Nibo’s model is to empower small business (SMB) accountants, instead of trying to replace them with software. What can you share about this strategy?

Gabriel Gaspar: Accountants perform two very different types of jobs: data processing and advisory. Some companies are offering low-cost, low-touch data processing work for SMBs. We believe this is valuable, but it doesn’t cover all the needs that SMBs have. There are more than nine million SMBs in Brazil that lack the necessary expertise in management, financial, accounting, taxes, and payroll.

Managing an SMB in Brazil is like walking between landmines.

Managing an SMB in Brazil is like walking between landmines. There are so many opportunities to make small mistakes that can blow up your business. We believe that accountants are the right professionals to help SMBs succeed in such a complex and risky business environment. But, to do this, accountants need technology and guidance. This is where Nibo shines and can make a positive impact.

LAVCA: How did you explain an opportunity in the Brazilian accounting landscape to Vostok, a Swedish investor?

Gabriel Gaspar: Vostok is 100% focused in the fintech space, so they understand what we do and they have in-depth and valuable knowledge about similar companies in other geographies. Nibo is Vostok’s second investment in the region; they also invested in FinanZero, a marketplace for consumer loans in Brazil.

LAVCA: The more entrepreneurs LAVCA talks to, the more we understand that entrepreneurs in Latin America are often tackling problems that are either more complicated in the same vertical, with more market upside (compared to the US), or they are tackling problems in which their geography offers a strategic advantage. Nibo is certainly dealing with a more complicated accounting/tax landscape. What is the scope of the problem you are taking on and what is the impact for small businesses in Brazil?

Gabriel Gaspar: Managing an SMB in Brazil is hard, but running an accounting company is a complete nightmare. The legislation is complex and it changes every day. Accountants are fined for any mistake and members of the team feel miserable because they’ve studied accounting for years, but spend their days doing think-less manual work as a result of bureaucracy and lack of automation.

Per PwC and World Bank Group*, companies in Brazil currently spend approximately 2,600 hours per year to comply with tax and accounting regulation, more than anywhere else on Earth, compared to an average of 264 hours per year for countries around the globe.

…companies in Brazil currently spend approximately 2,600 hours per year to comply with tax and accounting regulation, compared to an average of 264 hours per year for countries around the globe.

However, the 2,000 or so accountants and firms that use Nibo have an 8-10 times productivity gain, and this changes their life completely. They suddenly have time to visit their clients and more opportunities to boost their sales by offering additional value-added services and to grow their client base. They can now afford to go out on holidays and enjoy their lives more.

LAVCA: Nibo was founded in 2012 and recently reached break-even. How do you walk the line between aggressive (and cash-intensive) growth, and profitability, where you have less dependence on outside capital?

Gabriel Gaspar: This is a great topic. The truth is that we are operating in an emerging market and the “mood” with our region swings a lot. Back in 2009/2010, Brazil was in the global spotlight. The country made the cover story of The Economist, and preoperational startups were raising millions of dollars with PowerPoint presentations. Last year, our president was getting impeached, the economy was going downhill and amazing startups with great traction and good economics were struggling to get funding.

If you run a startup in an emerging market, you must know that winter is just around the corner and it will come sooner or later. It’s important to have the break-even point within reach to make it through those storms.

I was discussing this dilemma with a local investor last year when he told me that unicorns only grow in amazing weather and great terrain, but if there is a shift in temperature or if there’s a drought they die. To make it in Brazil, he said, you must be a “Cabra da montanha”, a mountain goat. I laughed but got his point.

Nibo’s executive team and board is very bullish on our prospects to continue on this growth curve. We’re solving critical problems like increasing productivity, minimizing work that’s not enjoyable or profitable for accountants, and creating more cash flow – which is critical to keeping the SMBs alive. We want to grow quickly but keep our feet on the ground.

LAVCA: What’s next for Nibo? Do you want to conquer more of the Brazilian market? If so, how are you doing it — anything you can say about your partnership strategy? Are you looking to expand into other LatAm markets?

Gabriel Gaspar: Yes, definitely. We raised our Series A because we want to expand our commercial efforts. In our case, this means doing more of what we are already doing by growing our user base and investing in new technology development. Our mission is to provide the best support to accountants who want to help their SMB clients succeed. The opportunity in Brazil is really big and we believe we can become a billion-dollar company here in Brazil before moving anywhere else.

LAVCA: You have investment from Brazilian investors Valor Capital and Redpoint eventures. How have they have been helpful to Nibo thus far?

Gabriel Gaspar: Anderson Thees (Redpoint eventures) and Antoine Colaco (Valor) have been on our board since 2014, and Alexis Koumoudos (Vostok) just joined. The dynamic has been amazing. A lot better than I thought was possible.

I usually say that good investors do two things: they help you, and they don’t get in the way.

I usually say that good investors do two things: they help you, and they don’t get in the way. Our investors help us with anything we need, from structuring complex strategic discussions, to organizing a trip to Silicon Valley so that we can understand the best practices in each area, to introducing us to strategic investors. We usually have a formal board meeting every three months, but most conversations happen informally, whenever needed, through Slack, Skype or other informal channels.

While you’d think this is more common, I know a handful of companies that handle a huge amount of bureaucracy, paperwork, and worthless processes imposed by their investors that add no value to their businesses. We get basically zero of this with our investors, and the information they formally require from us is a fraction of the data we already generate for our own use.