Stark Bank, one of the few Latin American startups to receive funding from Jeff Bezos' family office, is generating profits from its business of helping companies process payments while the funds raised from its funding rounds remain virtually untouched.
The Sao Paulo-based company processed 155 billion reais ($31 billion) worth of payments in 2023, a tripling from the previous year, while doubling net profit to 71.5 million reais, founder Rafael Stark said in a Interview for the first time keeping an eye on the company's financial results for 2023.
The startup, which helps companies process payments, invoices and receivables, is focused on winning domestic market share from large corporate banks, said Stark, who owns 38% of the company. Its approximately 600 customers include Gol Linhas Aereas Inteligentes SA, Localiza Rent a Car SA, Cia Ultragaz SA and startup colleagues Loft and QuintoAndar.
“While many technology companies are trying to stop making losses, we are seeing high profitability,” said the 35-year-old Stark. “There is no need to constantly raise money and dilute my share. It’s better to grow later and create much more value.”
Series B
In its Series B round in 2022, Stark raised $45 million from investors including Bezos Expeditions AmazonThe founder's family office of .com Inc. and Ribbit Capital with a valuation of $250 million. Previous investors These included Fabio Igel of Monashees Capital, Stewart Butterfield of Slack Technologies Inc. and Brian Armstrong of Coinbase Global Inc. and Arash Ferdowsi of Dropbox Inc.
Stark said the company's market share on various metrics remains low among corporate banks in Brazil, showing growth potential. While Stark doesn't have a formal banking license, it has the ability to lend from its own resources and plans to spend more on marketing in 2024 after holding off for years to develop the product.
Stark said the company allows its customers to automate time-consuming tasks like invoicing and payroll.
“If a company handles a lot of transactions, it can lose information, and if it is 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 around five people doing the same work.”
Around 30% of the almost 90 employees are engineers.
Stark's focus on supporting other technology companies and ability to customize solutions for customers is an advantage compared to large Brazilian banks, said Bruno Diniz, managing partner of consulting firm 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 offer this tailored type of service to the big players. And once they create a customer solution for one player, they replicate it and start offering it to all other customers.”
Stark was born Rafael Castro de Matos in the central state of Goias. He studied engineering in Brazil and later received a scholarship to the USA, where he attended California Polytechnic University and Stanford University. He founded his company in 2018 and legally changed his last name to Stark in all official documents.
Drawing parallels to the growth path of digital bank Nu Holdings Ltd. draws, he expects a possible IPO about a decade after the founding – or shortly before 2029 – and is concentrating for now on Brazil and Sao Paulo, where most of the country's largest companies are based.
One glaring difference at Stark from other tech startups is that employees are expected to be in the office five days a week. To sweeten the deal, he expanded the top floor of the building to soon house a bar, restaurant and meeting areas for employees. Stark also says he pays above-market wages and offers a stipend to those who live near the office.
“I don’t believe in remote work,” he said. “We need people who agree with what we are building. So someone who embraces their own comfort zone and remote work doesn't agree with Stark's values. To achieve great things, you have to step out of your comfort zone.”