Fintech Powerhouse Nubank Buys U.S. Software Firm Cognitect

Nu Pagamentos SA, a seven-year-old company that’s grown into the world’s biggest standalone digital bank, purchased a U.S. software consulting firm in its first acquisition outside of Brazil.

Chief Executive Officer David Velez said his company, known as Nubank and backed by Tencent Holdings Ltd., bought Durham, North Carolina-based Cognitect Inc. He didn’t disclose terms. Velez said in an interview that Nubank already uses Cognitect services.

“At our current scale, there’s so much at stake that we thought we needed a different level of access to one of our most important technology partners,“ said Edward Wible, Nubank’s chief technology officer and co-founder.

Valued at $10.4 billion in a 2019 fundraising, Nubank has about 26 million clients -- roughly the same amount of active customers Banco Santander SA had in Brazil in March -- and has grown even during the pandemic. Over the past three months, Nubank brought in as much in deposits as it did in the previous year, Velez said. Among rivals, Russia’s Tinkoff Bank has 10 million clients, while U.K.’s Revolut Ltd. has 12 million, their websites show.

Read more: Brazil’s Nubank valued at $10.4 billion in new fundraising

Success in offering Brazilians a no-fee, paperwork-free credit card has led the firm to increase its product lines and seek expansion outside its home country. Nubank now offers savings accounts, debit cards and loans, as well as products for small and mid-size companies, with offices in Argentina, Berlin and Mexico.

Nubank uses Cognitect’s programming and database tools, Wible said. The firms began working together in 2014. Cognitect has about 20 employees, who will join Nubank. Chief technology officer Rich Hickey and President Stuart Halloway will also become Nubank partners.

“As we grew, we felt we lacked the mentors to guide our more-senior engineers, which we will now have after the acquisition,” Wible said. Cognitect’s Clojure programming language will remain open source, he said, and customers of the firm’s Datomic database won’t see disruptions.

Cognitect is Nubank’s second acquisition. In January, the firm purchased Plataformatec, a Brazilian software company. Nubank has a workforce of more than 2,700, with about 600 engineers.

Nubank has amassed $820 million in equity fundraisings. Velez said it isn’t planning other fundraising rounds this year, and doesn’t expect to announce other acquisitions or an initial public offering any time soon.

The Cognitect deal gives Nubank an edge in hiring American engineers now that so much of the world has embraced working from home, Wible said.

“Opening up the U.S. talent market for us will be a huge move,” said Wible, an American who has lived in Brazil for seven years.

©2020 Bloomberg L.P.

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