Fintech Firm Nubank Sets Its Sights on Highest Startup Valuation Ever

A Brazilian payment services firm backed by Berkshire Hathaway is seeking to IPO on the public markets with potentially one of the highest valuations ever for a startup. Nubank, formerly known as Nu Pagamentos, is based in São Paulo, Brazil, and has over 40 million customers all over the country.

Nubank, which offers a suite of digital financial products, is 8 years old and is pushing for a valuation beyond that of Itau Unibanco Holding SA (ITUB). Itau had a market cap of $54.31 billion as of Aug. 27, which Nubank hopes to surpass in its upcoming IPO.

TechCrunch reported on the firm’s Series G funding round in January 2021, which brought in $400 million. That round gave the company a $25 billion valuation and brought its total funding at that point to $1.2 billion.

Investors in Series G included Singapore’s GIC, Whale Rock, and Invesco. Tencent, Dragoneer, Ribbit Capital, and Sequoia invested in Nubank’s earlier rounds and also participated in the $400 million raise.

Nubank’s most recent valuation pegged the startup at $30 billion following a $500 million investment of new capital from Warren Buffett’s Berkshire Hathaway. In the June 2021 funding round, other investors contributed $250 million to the Brazilian fintech startup.

The fintech firm finished 2020 with a loss of 230 million reais and a loan book of about 18 billion reais. Reuters reported that Brazil’s central bank noted that Nubank was profitable in the first quarter of 2021, with a 6.8 million reais net income, or the equivalent of $1.3 million.

The company shows signs of growth. Nubank has issued more debit cards than Itau. It has also started to expand in Mexico and Colombia. The app-based product is accessible to more Brazilians than traditional banks.

TechCrunch noted that although Nubank started as a credit card company, it expanded to become a full-service bank. The company still doesn't have brick-and-mortar branches. A drop in the value of Brazil's currency since 1994 means that the exchange rate is roughly 5.2117 reais to $1.

David Velez, Nubank's founder and CEO, said in January, “Nubank was born out of the conviction that people deserved better, more transparent and human financial services that would allow them to be in control of their money and their future.”

Nubank has hired Morgan Stanley, Goldman Sachs, and Citigroup to lead the IPO on the U.S. markets, according to Reuters. A late 2021 or early 2022 IPO is anticipated for the fintech firm.

A source recently claimed that Nubank might be reaching for a $100 billion valuation, although that high of a valuation is unlikely at the time of its IPO. However, if Nubank surpasses the $54 billion of Itau’s valuation, it will certainly be one of the highest-valued fintechs. Nubank could easily beat Robinhood, which went public in July at a $32 billion valuation.

A CB Insights report ranked Nubank seventh among the most valuable unicorns in the world, according to Reuters. Other massively valuable fintech companies including Stripe, Klarna, and Revolut were ranked above Nubank in that listing.