Stark Bank, one of the few startups in Latin America to receive funding from Jeff Bezos’ family office, is generating profits from its business of helping companies manage payments, leaving the money raised from its funding rounds almost untouched.
The Sao Paulo-based company handled 155 billion reais ($31 billion) in payments in 2023, a three-fold jump from the previous year, while it more than doubled net profit to 71.5 million reais, founder Rafael Stark said in an interview, revealing the data kept a close eye on the company’s 2023 financial results for the first time.
The startup, which helps companies process payments, invoices and credit, is focused on taking domestic market share from large corporate banks, said Stark, who owns 38% of the company. Its list of around 600 clients includes Gol Linhas Aereas Inteligentes SA, Localiza Rent a Car SA, Cia Ultragaz SA and fellow startups Loft and QuintoAndar.
“While many tech companies are trying to stop losing money, we are seeing high levels of profitability,” Stark, 35, said. “There is no need to continue raising funds and dilute my stake. It’s better to grow and create a lot more value later down the road.”
B series
In its Series B round in 2022, Stark raised $45 million from investors including Bezos Expeditions, the family office of the founder of Amazon.com Inc., and Ribbit Capital at a $250 million valuation. Previous investors have included Fabio Igel of Monashees Capital, Stewart Butterfield of Slack Technologies Inc., Brian Armstrong of Coinbase Global Inc. and Arash Ferdowsi of Dropbox Inc.
Stark said the company’s market share across various metrics remains small among corporate banks in Brazil, showing potential for growth. While Stark doesn’t have a formal banking license, it is able to lend from its own cash and plans to spend more on marketing in 2024, after years of keeping a low profile to build the product.
Stark said the company allows its customers to automate time-consuming tasks such as invoicing and payroll.
“When a company handles a lot of transactions, it can lose information, and if it’s not organized, it can lose a lot of money,” he said. “We enable the company to be more efficient. This means that sometimes a team of 30 people doing manual tasks and making human errors can be reduced to about five people doing the same job.”
About 30% of its nearly 90 employees are engineers.
Stark’s focus on helping technology companies and ability to customize solutions for clients is an advantage over big Brazilian banks, said Bruno Diniz, managing partner at consultancy Spiralem, which works with fintechs.
“Interesting niche”
“They found a very interesting niche,” Diniz said. “They are very lean in their technology stack, which allows them to provide this type of customized service for large operators. And once they create a customer solution for one player, they replicate it and start offering it to all other customers.”
Born Rafael Castro de Matos in the central state of Goias, Stark studied engineering in Brazil and later received a scholarship to the United States, where he attended California Polytechnic University and Stanford University. He founded his company in 2018 and legally changed his last name to Stark on all official documents.
In drawing parallels with the growth path of digital bank Nu Holdings Ltd., he anticipates a potential initial public offering about a decade after founding – or close to 2029 – and focuses for now on Brazil and Sao Paulo, where most The largest companies are based in the country.
One noticeable difference between Stark and other tech startups is that employees are expected to be in the office five days a week. To sweeten the deal, he built the top floor of the building to soon house a bar, restaurant and meeting areas for employees. Stark also says it pays above-market wages, while offering a stipend to those who live near the office.
“I don’t believe in remote work,” he said. “We need people aligned with what we are building. So someone who is aligned with their comfort zone and remote work is not aligned with Stark’s values. To do great things, you have to get out of your comfort zone.”