Nu ($NU) – M&A – June 29, 2024
Buying Hyperplane:
Nu made an interesting acquisition of a USA-based firm called Hyperplane. This is a 2-year-old company with $6 million in venture funding to date. The acquisition is likely very small (actual terms not disclosed) and will not be directly material to results. So why do we care? Glad you asked.
Hyperplane is a data intelligence platform with a series of foundational models that assist clients in building and powering highly customized and personalized financial services. It helps banking clients train and deploy custom models with their own, secured first party data at impressive scale. With Hyperplane, customers can tap into its managed infrastructure to build more relevant, light-weight products. Its models span use cases like interface, risk, collections and marketing.
For Nu, this will simply deepen the granularity of its existing suite. It will allow Nu to nudge customers with promotions; it will allow Nu to dynamically toggle home screen presentations, based on a customer’s individual preferences; it will allow Nu to gain an even better sense of what its consumers want and when. It will help in many, many ways. Nu is already ushering in a “new era of faster, personal finance products.” This merely builds on that.
Nu has made great efforts to position itself to ingest and handle large swaths of data for AI-based leveraging. Thanks to this, it will immediately be able to take advantage of Hyperplane’s model-building prowess. And? Hyperplane will get an immediate injection of data, to accelerate the model seasoning specifically for Nu product improvement. Hyperplane will “power core machine learning capabilities” to extend the consumer experience lead that Nu already enjoys in its markets.
Two other Potential Areas for Value Creation:
It’s clear that Hyperplane will be a tool to improve Nu’s consumer-facing suite. Still, Hyperplane was born as a business-to-business company to enable legacy and next-gen financial institutions to modernize their banking cores. Will Nu look to package and license these tools itself to sell to competition? It’s possible. I candidly hope they don’t decide to do this. The firm’s consumer experience lead in its geographies is massive. I don’t think the added revenue opportunity tied to this potential licensing is worth potentially eroding its competitive edge.
Secondly, it’s interesting to note that Hyperplane is based in Silicon Valley. There are 63 million people of Latin American descent in the United States. That’s more than a quarter of the population of Brazil. Nu could partner or secure needed licensing to jump-start a business for under-served customers. Partnering is the realistic avenue, but who knows if they can figure out how to get a charter here. Competition in the U.S. is much more fierce; regulation is more strict; but the opportunity could still be a compelling one as Nu inevitably expands beyond its 3 nation footprint.
