GIC led a BRL300m Series C in Brazilian digital brokerage Warren, with follow-on from KASZEK, MELI Fund Ribbit Capital, Chromo Invest, QED Investors and Quartz. QED Investors led a USD22.5m Series B in 2020; Ribbit Capital led a BRL25m Series A in 2019.
(Press Release) -On the heels of celebrating its four-year anniversary, Warren has consolidated its position among Brazil’s top financial institutions by announcing a R$ 300 million Series C round.
The round was led by Singapore’s sovereign wealth fund GIC, a long-term global investor with investments in large groups such as Nubank, Sankhya, VR Benefícios and Hotmart.
This funding round, which, at twice as much as the two prior rounds, was a record for the company, also included participation from Ribbit Capital, Kaszek and Chromo Invest – investors since Series A – and from QED Investors, Meli Fund and Quartz – investors since Series B.
The fundraise reinforces Warren’s place as a pioneer in disrupting Brazil’s financial market, offering a transparent model aligned with the client.
“Before Warren, Brazilians had to choose between either earning very low interest on savings accounts or paying very high commission fees to brokers who are incentivized to sell them products they don’t need, says Lauren Morton, a partner at QED Investors.
“Warren changes everything by redefining how Brazilians build their equity. Their team combines vast industry experience with an unwavering passion for the mission of democratizing investing in Brazil. This approach has had excellent results and Warren is now the country’s largest independent broker.”
The investment will help in hiring more workers to continue to bring the best features in the market to clients, for both investors and professional partners. It will also go to potential M&As being considered which could add even more to the complete experience offered by the company. By incorporating another global fund into its portfolio, Warren is reinforcing how valuable it is in the Brazilian market to have a business model that is aligned, transparent and free of conflicts of interest.
“We will bring our message to potential clients and business partners with much more impact,” says Warren CEO Tito Gusmão. “We are the only ones in Brazil offering clients total transparency. Everyone else is still working with a model where the client’s interest is not treated as a priority. This needs to end and Warren has taken the lead. Our clients are always the focus and we only grow when our clients grow.”
Warren is notable in the market for delivering a complete investment experience free of complications, through a savings account, direct access trading and managed portfolios that can be created according to goals. In the latter, the client chooses an investment goal and the products and allocation are selected according to the term and investor’s profile. In contrast to the market, this and other services are offered by the broker with a flat fee.
This fee-based billing model is the most transparent model that a broker can use and it is most aligned with client needs. “We didn’t invent the wheel. We just distributed to everyone a model to which only the very wealthy had access and which is already commonly found in developed economies, including the USA and Australia, to name a few,” added Tito. “Using the Warren model, we democratize wealth management services. Our clients invest according to their goals, they pay no brokerage fees, paying only a flat fee for all of our services and moreover receiving 100 percent of our commission back when they invest in funds belonging to other managers on our platform.
The fee-based model is still new in Brazil, as opposed to commission-based model – a compensation system used by the largest brokers and investment banks that is based on commissions being built into the products that are recommended to and contracted by investors, such as investment funds.
Another major innovation from the broker is its platform for investment market professionals: Warren for Business. Some of the new funding will go to enhancing technological resources, which should help the brand reach 400 partners by the end of this year and giving this platform a 60 percent share of Warren’s total AUM – it currently accounts for 20 percent. Right now, there are 300 professionals connected and using Warren’s platform to facilitate and serve as a major ally in development of their business.
In an effort to grow both its digital and physical presence, Warren has in the last four years invested in people and in the platform’s brick-and-mortar offices. Since opening in 2017, the company has seen its assets under management and number of employees grow ten-fold – 400 employees are currently working at a total of nine spaces, with locations in Porto Alegre, São Paulo, the interior of Santa Catarina and in Paraná.
This increase occurred in the middle of the Covid-19 pandemic. In 2020, the company was dedicated to completing its entire portfolio of offers for clients, including currency exchange products, life insurance, education, financial planning and offshore, in addition to starting up its institutional business, which helped to further leverage the good relationship already built with managers in the Brazilian market. This means that Warren now provides a complete wealth management ecosystem for its clients. The company went from R$ 500 million in 2020 to R$ 5 billion in total under management, with hopes to reach R$ 10 billion by the end of 2021. According to Gusmão, the idea is for growth and hirings to continue at the same pace.
Continuing along the path to democratization of good investing, Warren has already gone through two investment rounds: in 2019, R$ 25 million was raised, and in 2020, R$ 120 million was raised. The first round was led by Ribbit, an American venture capital fund in Silicon Valley that has invested in fintechs such as Robinhood, Coinbase and Wealthfront. The second round was led by QED Investors, a venture capital fund investing in companies including Nubank, Loft and GuiaBolso.
Series C is the biggest round ever for Warren, which continues to count on participation by Kaszek Ventures and from Chromo Invest, a Rio Grande do Sul-based fund manager, as well as from Ribbit. The QED Investors, Meli Fund and Quartz funds, which entered Series B, are also taking part in the broker’s third round of funding and are now reinforcing their new investment.
According to Tiago Wallau Kretzmann, a partner at Chromo Invest, this new funding will let Warren further expand its product and service offerings, providing both big and small investors with a complete solution. “For years, Chromo has supported and invested in the transformation that Warren has been making in the financial market, offering a new way to invest that is aligned with client interests, on a unique, intuitive and efficient platform,” he says.
Christiano Galló, a partner at Quartz, is of the same mind as Kretzmann. “The Warren model truly places the client at the center, looking to build a long-term relationship with the investor, with more chances for the client to obtain good returns and avoid making investments in products that are only favorable to those selling them,” Galló says.
In the opinion of Nicolas Berman, a co-founder and partner at Kaszek, believes that now more than ever, people need to rely on institutions that put client interests first. “Warren offers this with great clarity and effort and stands out as a third option, because it offers Brazilians a unique opportunity to securely build their equity while considering what really matters, which are their own goals in life,” says Berman.
Nikolay Kostov, a partner at Ribbit Capital, shares the Kaszek co-founder’s position: “Warren is revolutionizing how Brazilians invest to lead better financial lives. And even during the difficult times of the last year, Warren delivered differentiated growth, while rapidly launching more products and services to meet the ever evolving needs of its clients. The Warren team is driven by a shared passion to create the best wealth management and investing experience in Brazil, offering both a cutting-edge digital platform coupled with highly personalized services and advice.”
“We are proud to be part of yet another round of investment in Warren and to see that we continue to be aligned with the mission of democratizing access to financial services in Latin America,” says Renato Pereira, a partner at Meli Fund.
Warren launched in 2017 as a broker and asset manager under Brazilian Securities and Exchange Commission (CVM), Brazilian Association of Financial and Capital Market Entities (Anbima) and Brazilian Central Bank regulations, with the belief that investments are an instrument for people to fulfill their short-, medium- and long-term life projects. By managing globally diverse portfolios, a free savings account with a 100% return on the Interbank Certificate of Deposit (CDI) and a Trade tab for more autonomous clients, Warren offers a comprehensive solution for every moment in the investor’s life, whether a beginner or a seasoned veteran in the investment market. The company is a pioneer with its Warren Model, offering a relationship that is 100% transparent and aligned with the client, using a flat fee, goal-based investment and 100% cashback on third-party products.