Rafael Stark On Raising $61 Million To Create The First Challenger Bank For Enterprises

Rafael Stark is now on his second tech startup. This time around, he has already raised tens of millions of dollars from the likes of Jeff Bezos, and business leaders from Slack and Coinbase. His venture, Hummingbird, has attracted investment from top-tier financiers like Rahul Mehta, Ribbit Capital, Bezos Expeditions, and Lachy Groom.

In this episode, you will learn:

• Startup fundraising
• What’s coming next with Stark Infra
• Efficient and profitable growth

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For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Rafael Stark:

Rafael Stark is an engineer with problem-solving in his blood. He started his own Product Studio called Hummingbird and came across a client wanting to automate refunds, and that’s when he realized there was a market-wide opportunity to simplify several payment processes at scale.

Stark Bank was born to modernize the financial infrastructure in Brazil through the power of integration. They were a part of YC’s 2020 batch, and are now helping companies such as Loft, Quinto Andar, and Buser make operations smoother than ever.

Connect with Rafael Stark:

• Crunchbase
• LinkedIn
• Instagram
• SignalHire
• Rocketreach

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty hello everyone and welcome to the deal maker show. So today we have a very exciting founder. You know, joining you know a founder that is making it happen. You know in Latin America and Brazil so um.

Rafael Stark: I.

Alejandro Cremades: You know, honestly you know we’re gonna be talking about all the good stuff today. We’re gonna be talking about building scaling financing. You know all the good stuff that we like to hear and I find that the story of our guest today you’re goingnna find it, you know, really incredible so without further ado. Let’s welcome our guest today Rahael Stark

Rafael Stark: Thank you for having me.

Alejandro Cremades: Welcome to the show. So originally born in Brazil Rafael so why give us a little of a walkth through memory lane. How was life growing up.

Rafael Stark: Oh and grew up in a country in the middle of brazilo for farming and cows and I myself I’m self-taugh. So I Always like it to study learn stuff by myself. I got accepted I start to work early when I was like 16 after I lost my father because I’m the oldest brother so I have to help my mom and my family ah I have more 2 brothers.

Alejandro Cremades: How many, but how many siblings a Rafael 2 brothers and I’m wondering. Obviously you know as an entrepreneur entrepreneur you know, dealing with uncertainty I’m sure that those were really uncertain and and difficult times for the family. So What do you think you. You learned you know as a human being you know from going through something so so difficult so tough like losing your father so early.

Rafael Stark: Yeah, yeah, it’s It’s super painful to to loss of father especially because he he was. He was the provider of the house so was super hard for my familymin that period. Um, but I E a.

Rafael Stark: I don’t know if this helped me me or it’s just me that to work harder. You know I try to learn stuff and make money and get a job you know and since since like 16 I I always tried to be like financial independent for my family. Ah, so when I was like 20 I got accepted and the best engineers school in Brazil is it is like kind of brazilia mit equivalent to you know Ah and I I moved you to Sao Paulo the the the most expensive stating in Brazil is like they teach like math chemistry physics the artist to make some money I did like summer jobs by starting coding and. Selling software I did like research in in schools like in physics to make some money so I tried different stuff hard time like to to provide myself and then sometimes money to my family to to support them. No. So I think the bad stuff. That’s have happen in your life sometimes push you to do more than other folks at studs and work together with you.

Alejandro Cremades: Ah, hundred percent now for you. Obviously you know you you were you were alluding to it. You studied you studied engineering but I know that 1 thing that was pretty pretty incredible for you as an experience was to be able to go abroad. And come to the United States you know you had the exposure to you know places like Stanford and and things like that. So you know what? what opened up for you. Okay.

Rafael Stark: I think first I improved my english I’m still working on that but the pure time my english was like awful. So 1 of the first classes that I took at west was publicly speakinging public speaking sorry. Ah, and was I was terrible. I was terrible on that but but helps helps a lot on improve my my name so is the first thing I drove my english so second things is some cultural difference. So brazilians act in a way. Us citizens act in another race so clear different some some some events that people behave differently. So I think it was a shock and opened. Um my mind a little bit. And the third thing I think ah the the schools the colleges are mean us. Um, and the the d is different approach than Brazil because it persists super technical I just took like engineering super engineering classes versus in o you took like few. Some major engineering class but you can like take some some class in other areas that’s not in engineering. So I think this is super nice and complements your interest about learning different matters.

Alejandro Cremades: Now in your case in your case. Also I mean while while you were literally doing your studies I mean you were alluding to earlier that that going through the experience. You know the the family tragedy that yeah that happened and and obviously the challenge is you know that you learn you know the importance of making money. And one of the things that you did while being in University That’s when you started you know to develop apps and to really you know start taking a look at what on entrepreneurship look like is that right.

Rafael Stark: Yeah, well 1 super interestingy story that came in my mind right now is when I was at Stanford I took like I said at one quarter at Stanford so I took a few classes. 1 of them was technology entrepreneurship. So during the the classes we were. We have to um, developing an idea of a startup and try to pursue to pitch that know and think about business and create a business but when I was at at Stanford. Um I did to make money you know.

Rafael Stark: So I I did have a party in my apartment and I ra it like 200 people you know in my apartment was ah a specific part in Brazil called feestag jeanina so it’s a junior a June party so super traditional in Brazil so invited all the internationals. And 200 people arerriving in my place you know and I was thinking hey if I make $5 enough for each people here in an open bar party in Brazil super commonma we call open bar party that basically buy a lot of drinks and people came to your house and they pay like. Ah, five five dollars five you know bucks ten bucks you know in you to of the party to help with the costs you know and I I did ah a party that I charged like five bucks and buy a lot of ah like alcohols and musicji stuff like that. I didn’t have money like I borrow $500 with my friend and go to Walmart like buy a lot of drinks. Ah and that day I did like $2000 in a a single part in my life. That period of my life was too much money. You know in a single night.

Alejandro Cremades: No kidding now now now for you now. Obviously you know you got a good glimpse there of of what it looked like to to really you know come up with an idea and and and provide value and extract value. So at what point do you you know start to. Ah, really incubate the idea of what would be your first company hummingbird.

Rafael Stark: Yeah, so basically in that periods was my last year of college I start learn how to develop ios in android apps and and I launched 2 mobile apps in in 2013 so went it back to Brazil I graduated so I I need to start to make money. So I start pitching hey I know how to create apps. So I launch 2 mobile apps in these stores. So if you good if anyone have projects just hire me and then a company hire me. So but but I need to you already to receive money I need to open a company a tax id because um to order to receive you know so I opened. My first company is hummingbird so I started myself with my computer creating some apps for companies.

Rafael Stark: Yeah, so this is how I basically start I remember that’s a software house or a product and studio to develop ios Android apps websites apis for companies in Brazil.

Alejandro Cremades: So you actually grew that to you know, make some good money. You know you were making you know a few million. Let’s say a year and and and basically you know something happened because you know the idea obviously of Stark which is what you’re doing now you know really came about but I mean here you are. You know you’re operating a company that is generating good money and you’re making a good living. So how did the idea come about and at what point you’re like hey I think that I got to you know, close down. You know my current shop and and go all in on this one. So.

Rafael Stark: And.

Rafael Stark: Yeah, is is a super tough decision. You know so basically in 2013 I launched this show mobile webs but they they wasn’t at success you know and was just me. You know I wasn’t like a kind of startup world but I like it. Feeling of create product launch a product and with my hummingbird in order to scale I need to sell more projects and yeah, ah, you already to delete these those projects I need to hire more developers and so I have to scale with people in super expensive scale. Versus I launch a product and scale with like users that scale with like servers you know so I I and and when I create a soft apps for other people product for other people I sometimes I you know I want to create something that people want. I I do other things and I want you sell you know so I create whatever the but whatever the the person wants but I myself I’m a product guy so I love to talk to customers understand what exactly they would use and Z and and and launch you know so I work i. Always once you create ah a scale of product versus scalelight my consulting company humingbart as in the and I a participate I participated in like the 10 different projects.

Rafael Stark: And I always want this to to launch my own project my own product and start make the idea came super um, early in 2000 in the bith of 2018 colgate approaches. They they need to.

Rafael Stark: They want basically and this products you send money back to their customers and okay understand that refund system them We we need to create um Approval flow and then connect to a wire transfer api so you can do all the cash outs.

Rafael Stark: And Kogate say okay, it’s amazing. Private. But how we’re going to settle on those transactions and as myself as a developer I got to use it. You can actually a lot of apis from uber not in that period uber but google stripe ah to you know, a lot of good players and i. Start searching for an api for some wires or transfers in Brazil and talk to banks to fin tax to permit gateways and no one habits then I said you make it know and but in the beginning try to keep hummingbird and. Starting Prototype Star Bank ah but was a mess in that period so because it’s hard to find that good. So you know someone that could lead humingbird and make it being profitable and keep increasing revenue and I was. Creating starting. so so I found I found a period of my time that I have to take a decision or or I focus on Humberd or I focus on starback I could not do it both in parallel you know? and um I don’t know my heart.

Rafael Stark: And my I always want you to to to create up products and I think hey this could be super super big versus this the software house that was provide me good money. You know? Ah, but I knew that. Good should be harder to scale because they need to scale with people versus startbank that they could scale servers and scale like transactions and new users stuff like that. So I could do this with my small team. So I decide to stop Hamburg and focus entirely on star bankck.

Alejandro Cremades: Was it like an overnight thing or did you keep both in parallel in order to finance a little bit the operation of stark.

Rafael Stark: I could go both in parallel like for like foremouse maybe and I was cashing burning in hummingbird that was cashing burn start bank and I had like my. Umund capital the money that I make entirely my life during the humburg period. So it’s statue pop humberd and discontinuo other activities and puts every single penny in star bank you know so I have to fire like. Um, 70% of the helmingbird and picked the 30% in and put the focus one hunt. Ah 100 % of the time start make and in in the beginning start pick was a api for firsthand wires I didn’t think hey I going’ to create a bank. It was too ambitious.

Alejandro Cremades: So then.

Rafael Stark: For being that period of time though.

Alejandro Cremades: And and and what ended up being the business model of Stark How do you guys make money for the people that are listening to get it. Okay.

Rafael Stark: Today is different. You know us. So basically today we we make money a rate possible way. Um, so if our customers we we basically today start min help companies should receive money send money. So do their cash management. So. Inversive money received from our customers in pay money pay payroll pay all the providers ah taxes utilities. So we basically help companies to receive in ah millions of payments or pay millions of people in a scalaboy. And makes reconciliation the destin. What everything? What? what’s going on so we we make super easy for for accomplish to do it. Ah so we charge flat fees or operation in those cash management products. Ah like ¢50 example, you know, fifty fifty cents per transaction. In corporate cards is everything’s free so we give cards to to call past pen controls. We helped them to management their expenses. Super easy. We receive an interchange from from Mastercards we of course make money we floating because we receive depositss. We are on the way to launch fixing income investment. So basically bonds that yields interests. So we’re gonna to receive a ticketck rate over over that to help our customers for x we receive an inter change over for x transactions. Yeah so different sources today.

Alejandro Cremades: And and why in your mind because we say you you have the engineering angle and and and and you’re very much product driven. But why in your mind you know the best products always win against you know, maybe crappy products with great marketing.

Rafael Stark: Well I think if you’re starting I start to that you’re the first one to launch it well of the kind you know, maybe oberg can be example of that maybe are b b you know you can’t be launch fast. You know and and don’t worry too much about quality of the product you know because you have to be fast and watch fast and scale fast before people start to copy you. But when you launch in a market that is read already. There’s a lot of competitors. You cannot be. Just a little bit better. You know because if if you put yourself in the shoes of the consumer if you have ah you know the biggest private bank in Brazil versus start making I not that ah bank that people don’t know you know and if you create just just think just a little bit better. People would prefer the. The big ba the big bank the big brand you know because it’s Mark Trustcoll ah but once you create a product that has a much higher quality. There’s a huge difference and people can see it. They are willing to take the the try and on. Give you a try. So and then they follow if your product delivers what it should be delivered as a good product. Good quality. People will love your product and if your company. Yeah, if your customers love your product. They willing that you have success.

Rafael Stark: Is much higher versus you create a super basic product or you know so I I leave this myself because we start starting with super a little money you know before like 2000 the end of 2021 we leave it with $2000000 like 2019 to 18 and into when we lived 3 years with $2,000,000 oh super little money so we always invest in product and technology. We didn’t invest in marketing in other areas much no um, and and this helps. Like keep investing the products and making it better every single month you know every single quarter every single year helps. Ah, we scale a lot and and today we less quarter. We did $3000000000 in tippv in one single quarter.

Alejandro Cremades: And now in terms of the um capital racing Efforts I know that you guys have raised quite a bit of money. How much capital have you guys raised to data and what has been the experience of raising that money.

Rafael Stark: Building.

Rafael Stark: Yeah, as a mentioned like in the past three years we raised like $2000000 and in the end of 2021 december we raise our series $13000000 and 3 tri offs later. We resources be ah, three four months later we resources be that we raise $45000000 so total historically like $61,000,000.

Alejandro Cremades: But that’s interesting because typically you would leave at least 18 to twenty four months in between 1 financing cycle and the next. So why in this case just three months after you guys raised the series b.

Rafael Stark: Basically I think our heres a was too Late. You know we we were numbers revenue Tippv way bigger that normally us use a compass that raise a series usually because I have a super hard time raising money. Ah, and because I was talking to the the Covid Ne list are Sir B Ribi They are amazing investors and we were talking for more than one a year and we keep growing every single month. So Once we receive the term sheet for this resume.

Rafael Stark: We three months later we triple our numbers in tri mos. We triple our numbers in trimos and they say hey she’re skiing a lot. You know we’re talking for our 1 year already and you you receive your term sheet and trimos you triple the numbers. You know we I don’t know exactly what they think but I think they. Probably think hey we are thinking too much over think about you guys you know and they and and they put a termshut on our Cb so we basically we received the term shit off our seriesb in the day that I I was signing the the a equity round of the series. A. The same day so because I the term sheet so the process do did just everything closing was like tree tree farmout and then way I went. Okay today were going to sign the documents of the Thursday closing I received the term sheet of series in the same day so was super amazing.

Alejandro Cremades: Wow. And and how is it to raise money from people like Jeb Besos

Rafael Stark: We raised from business expedition is his funds because as as I I had a hard time to raise from like ah our series, especially with the brazilian best funds they didt listen our thees. So I started raising from angels and started bringing some super amazing founders as angels so during the I bring like the bri armstro the show of coinbase I slag the founder of so. Ah, slack soar stewars the founder of slack Sergio Ceo of the local um dealing from figma Ryan from flexport. Ah. Resetly joy from arabbn b this show for bi b there’s a lot of names. Probably forget some of them.

Alejandro Cremades: And how how do you do it? How do you do that? I mean this sounds like the oscars of the venture world I mean how how we were you able to get old I mean those those those investors too I mean those are the best ones because they have that background operational Expertise they’ve been there. They know exactly the journey. I Always say that the best investors are the ones that have been founders in the past or that are founders themselves. So what? how were you able to really get those big names.

Rafael Stark: Yeah, yeah, basically first start bank has like super growth you know so we have numbers. We’re scalating. We were were doing something that um, we’re skinny so have numbers helps a lot. You know. And second thing. Yeah I’m always the founder that I asked I love trust advice I I was to have to like to have mentors and learn. You know so I just tried to hey to talk to other fathers and hey this is what I’m doing what you think about that. Could could you give me some advice and the founders kind of like me and okay, this guy is is kind of nice and he’s doing something grodes his his skin a lot and then I asked them to to introduce introduce me Chuck and other follows. No and so and and and. Some of those founders think hey Stark is interesting and and their valueation is low. So why not investing you know? Ah, but if he ah laki he he leads our series a he helps a lot to bring some of those founders. He has super good connections. And we did that Yc so I think a little bit helps. What did ycycombinator and lockki special lockie brings like half of the founders because I mentioned hey I want to bring founders I love to have founders.

Rafael Stark: As investor because I can’t call them the a ask advice and after praise r b um I I wanted to bring business because I knew that he invests so I try once a fail I tried twice fail third time fail and if in the r b I try again and this time I got. To his family off the be expedition and they review our numbers and the and and they create the memor on of for business and he likes and side to us and I’m pretty excited to have you know a guy that born in.

Alejandro Cremades: That’s amazing.

Rafael Stark: Koa is a middle of nowhere in Brazil like has all of these founders and music founders as as as investors you know as partners I would never imagine this reality you know.

Alejandro Cremades: And no kidding No kidding now now I know that you’ve talked in places like Wip summit and you’ve talked about the importance tool of profitability. So tell us what are your thoughts you know around profitability when it comes to hyperg growth.

Rafael Stark: Totally I think usually the mounttra Finte like startups in geralo actually is scale increase revenue so usually startups burn no Matter. Um. Raise a lot and burn a lot to like scale that revenue. Ah, but I think they forgot something about think about operational efficiency you know because it’s super important to okay, it’s good to raise Respond. It’s good to burn and invest online operations should grow. But it’s good to spend those money. Super nice. Smart way you know just is not spent to spend So as we start with super little money. Ah, we have to invest a lot in your personal efficiency like automation. Because we did not have money to hire a lot of engineers and a lot of folks so we invest a lot um automation to to reduce costs because before raise a lot of money we have to Zap balance between create features investor of product to increase revenue and invest. Time to reduce costs and out Automation. So What’s balancing increase revenue reduce costs you know so we are always investing this this this balance and I think this helps a lot to and and.

Rafael Stark: Myself I I always thinking have a small quantity of people but remarkable people. Good people versus hire a lot of people. So I think is the first mistake of startups is to okay, raise a lot of money and start hiring a lot. You know? ah. Probably companies in ours. Our size are would have like 300 people fact one hundred people one thousand people you know we are sixty and we were starting to process a billion a month with like 20 people. You know.

Alejandro Cremades: Yeah, and that that’s so true though. Raha I think that you’re absolutely right on because you know when it comes to success. You know people are talking about and I think that you nailed that they’re talking about money raise they’re talking about the amount of employees that they have.

Rafael Stark: So we because.

Alejandro Cremades: I Honestly think that the real metric for success is revenue per employee.

Rafael Stark: Total Ah actually actually know right right? per play will would give you like the efficiency of the company currently right? because I agree with you that companies think that metrics of success is their amount of employees.

Alejandro Cremades: Yeah, yeah.

Rafael Stark: You know they have it are how much they raise it I think it’stic associate ah success because if you raise a lot of money and you don’t have used it for that to just you you you have a high dilution. It’s not good for you having a high dilution. You know I’m today super sensitive about dilution.

Alejandro Cremades: Yeah, so.

Rafael Stark: Ah, think you have to raise enough money the minimum money that you need you know because you can raise later in a better valuation and you can control better the dilution and employees. Ah people are Amazing. You know and and so. Yeah, business is about to group up people together to solve a problem but have a lot of people can brings a lot of troubles you know, ah and their noise. There’s alignment problems. People’s problems usually ego.

Alejandro Cremades: No yeah, so.

Rafael Stark: You know is this is one of the bad parts. Ah and and a fit by having a a small group that people can focus So a metric of success in the end of the Way. Success is create a huge business that serves society and create a huge value for for society for your customers now I think this is success. And you can metric that by like revenue profit profitability some metrics that you can measure like the the impact or the value generate by but by Company. No.

Alejandro Cremades: I.

Alejandro Cremades: So now let’s go. Let’s go here back to stark. So imagine you go to sleep tonight Rafael and you wake up in a world where the vision of stark is fully realized what does that world look like.

Rafael Stark: We just acquire Gp Morgan Kidding kidding Any kidding guys are not whos ah.

Alejandro Cremades: I I love it I Love it. So that’s how amazing yeah, all right? So so so why do you expand you know what? what else would it look like.

Rafael Stark: No I think like at weistic I think um, the the idea behind this the Chikrita One of the biggest and good banks in in the world. You know should be a reference in the world for like picture be banking I think. Pretty nice and and solid plan to achieve.

Alejandro Cremades: And you’ve also now been branching into different directions also with Stark Infra so you have stark bank and now Stark Infra so tell us about this too. Okay.

Rafael Stark: So star inference dark bank is a store similar to Amazon and Aws. So basically you already need to keep growing Amazon needs a cloud and and computer processing capatability. So they create another company. Ews to serve that because they need it. Ah and if you look stark made we are a finishish solution Brazil and we need connection to the central bank to process all the payments and receivables that we’re doing. We need to connection to Mastercard to issue our cards. So and and of course when when you started I finishes to you can out hey central bank give me a license. No you you you have to start parking with banks other banks other finished institution and they’re pretty badned. You know. So all the operation problems historically that we had was with partner banks because they have failure a lot of failures you know and so you are to to give to our customers. The excellence that we want. With say to once we got our license with the central bank in October Two Thousand and twenty to create ah starking from so create the api you connect to the central bank create api you can match your Mastercard but in a way that we can open later for for other companies that we open this ear sure that another help us use it.

Rafael Stark: And start make use this those disservice in the same way that any company can could use it. You know so we can feel the pain choose our our ownproduct so we have this culture in start make where we force it our team our developers, everything to to use start paint products. Should feel the pain to use these those products because this helps us improve the products to our customers have a way better experience using them.

Alejandro Cremades: Got it now. Imagine you know you had the opportunity of having a chat with your younger self you know grabbing that younger rough file that you know perhaps is still you know in college you know, wondering about how to create you know? ah. Solutions. You know that will cover certain parol that you’re encountering you know and and and put ah put up. You know, covering that gap into the future that you’re living into and and let’s say you had the opportunity of having a chat with that younger rapfael and and and giving that younger Rafael. 1 piece of advice before launching a business. What would that be and why given what you know now.

Rafael Stark: It’s a complex question and because like ah usually I think people would try to give advice you avoid mistakes. But I think mistakes are super important because because of those mistakes you become the person that you you are right now you know. Um, so I could back to to reference say hey start stock make in 2013. You know, no bank start in this year and but rapel but was not very ready for that I think I I would problem say jurafa hey. Think it’s important to have a mentor because you’re going to che upgrade faster your knowledge your your skills versus because rough figure I figure out a lot of things by myself along you know, but it just takes more time versus have like. Founders mentors that good advice and you learn faster I think I would probably beg your fancy that have fine try to find a good mentor.

Alejandro Cremades: I Love it So rafale for the people that are listening. What is the best way for them to reach out and say hi. That’s right to you or to the company. What? yeah.

Rafael Stark: To me I’m super Yeah I’m super open by you guys can message me on linkeding you guys can email me my my may is super like rafaa at starping dot Com rafa with f not Ph with have so. Just maybe your some mesh alone on linking.

Alejandro Cremades: Amazing! Well hey rahael thank you so much for being on the deal maker show today. It has been an on earth to have you with us.

Rafael Stark: Thank you for the invite is an honor to be here and thank you for having me.

* * *
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