By Jeff Kauflin, Maria Abreu and Antoine Gara
David Vélez set out to kill off the fat fees and lousy service of Brazil’s big banks. The operation succeeded beyond his wildest dreams: Today, his no-fee Nubank is the most valuable digital bank in the world, with 35 million customers—and he’s gunning for more.
In the summer of 2012, David Vélez moved to São Paulo with a newly minted Stanford MBA and a plum job as a Sequoia Capital partner. Douglas Leone, the head of Sequoia, had recruited the then-30-year-old Colombian to stake the venture capital powerhouse’s claim in Brazil—a youthful, resource-rich country of 200 million that had grown 4% a year for a decade to become the world’s seventh-largest economy. But on October 1, Leone called Vélez with bad news: After considering the uninspired pitches from Brazilian entrepreneurs and hearing that top-ranked University of São Paulo had produced just 42 computer science graduates the prior year, he was pulling the plug. Sequoia’s Brazilian adventure was over.
“It was the day before my birthday and it was a bit of a shock,” Vélez admits. Still, he had always wanted to launch his own startup and saw opportunity in the very dearth of Brazilian innovators that had turned his VC compatriots off. “You want to position yourself on the side of the market where there’s scarcity,” Vélez explains. “In the U.S., there’s an oversupply of good entrepreneurs. Somebody with my experience and background is a commodity. In Latin America, there was significant scarcity.”
Before long, he had a target: Brazil’s big and—to hear Brazilians tell it—bulletproof banks. Yet as Vélez saw it, the banks, with their notoriously high fees, poor service and seeming obliviousness to new technology, were sitting ducks. And they were. Less than a decade after its founding, Vélez’s São Paulo–based Nubank has 35 million customers and is valued at $25 billion. Vélez, who is Nubank’s CEO, retains a 23% stake that Forbes values at $5.2 billion. “What’s happening in Brazil is nothing short of a real revolution. And it’s waking up the incumbent banks, who have had the going really easy for a long time,” says Nigel Morris, the cofounder of Capital One and a Nubank investor.
“David is going to build a $100 billion–plus financial powerhouse in Latin America,” predicts TCV partner Woody Marshall, another one of the investors who have poured a total of $1.2 billion into Nubank. Among the billionaire-backed firms betting on Vélez: Yuri Milner’s DST Global, Peter Thiel’s Founders Fund, Chase Coleman’s Tiger Global—and yes, Leone and Sequoia.
Equally impressive, Vélez built his fintech juggernaut while previously booming Brazil suffered through recession, corruption scandals and Covid-19. And he did so despite warnings from Brazilians that the banking establishment would block him—or worse. “ ‘They’re going to kill you,’ ” Vélez says one…