Lux Capital’s $4M for AI Fintech Magie

Lux Capital led a seed round in which Brazil fintech Magie raised $4 million, signalling the firm’s inaugural investment in Brazil

The company is developing An AI-powered financial assistant, which has raised $5.1 million. The present product enables users to transfer money and pay bills via WhatsApp.

For Lux partner Brandon Reeves and cofounder Luiz Ramalho, Magie is a more comprehensive investment in Brazil’s emerging fintech sector, which has been significantly stimulated by the enormous success of Nubank, a Brazilian neobank that conducted a blockbuster IPO in 2021.

On a recent trip to Sao Paulo, Reeves, who has been at the forefront of many of Lux’s international investments, particularly Sakana AI, the firm’s first Japanese bet, observed for the first time how rapidly Brazilians were “generally early adopters of new financial products.”

He referred to Pix, an immediate payments platform the country’s central bank implemented in 2020. Abecs, a Brazilian association for financial services, reported that by 2023, Pix had processed nearly 42 billion payments, surpassing the combined costs of credit and debit cards.

Pix facilitated Magie. In September of last year, Ramalho, a native of Rio de Janeiro, recognized that Pix presented a significant opportunity. It connected the majority of Brazilians to a shared network, which Ramalho could capitalize on. They developed Magie as an AI chatbot in WhatsApp that enables users to send or receive money in collaboration with cofounder João Camargo.

Magie has acquired over 12,000 users since its inception in April; however, the company has yet to monetize them. Ramalho stated, “Our initial objective is to construct a product with a high retention level.”

However, Ramalho’s ultimate objective is for Magie to become a more comprehensive financial assistant and an equalizer. He envisions the possibility of charging a premium subscription fee, enabling Magie to assist users in making financial decisions, such as selecting a bank and the type of loan to take out. He will face competition from the institutions: Morgan Stanley implemented its AI-powered financial assistant in June.

However, Ramalho is adamant that Magie will be a more egalitarian instrument, devoid of any vested interest in the services of any particular bank. “The banks are subject to a certain conflict of interest,” he stated. “The banks may not necessarily desire for their customers to be presented with the most exceptional offers from each bank.”