There is no such thing as official credit information in Brazil. Either your record is clean or dirty. For the institutions in charge of the rapidly growing loan market, the only options are to try to do expensive background checks or, more often, just deny the newly middle-class citizen the offer. And in Brazil, one of the largest and most tech-hungry countries in the world, there has until recently been no interest from Silicon Valley and little culture of entrepreneurship.

All of that is changing, quickly, because of a clever little software firm called Crivo. The company Daniel Turini runs with long-time partners Marcos Rochlitz and Paulo César Soares da Silva licenses software that allows companies to retrieve, aggregate and evaluate credit data from a large number of public sources in a matter of seconds. They are both minimising risk and improving access to credit for Brazilians, and the market they have created for the software is growing quickly. It will soon grow outside the borders of the country, especially when the growth equity deal with one of the 10 American funds that has approached them – just a few months after Silicon Valley showed up in São Paulo – comes through. “The Brazilian economy is hot,” says Turini, sitting in his office in a relatively humble part of the sprawling megalopolis. “And we are in the storm.”

This is true, but understated. Crivo is actually outperforming the national economy by quite a bit. Brazil grew by 7% last year, whereas Crivo has more than doubled its revenues in the past two years. In 2010, the company grew from 45 to 120 employees and took in revenues of $16m. That’s not a bad return on the $200,000 the three men managed to scrounge together 10 years ago.

The story Turini tells sounds as if it could have been written to fit the mould of the bold and successful 21st-century tech start- up. Two high-school buddies and dropouts from the country’s largest computer-science programme made a living in the 90s selling back-office and database solutions to dotcom companies. Then the bubble burst. Clients dried up, and one company they were working for, SCI, was not receptive to an idea they had developed with new collaborator Soares on credit information. That company was being sold to the Americans anyway. “So we decided to found our own company,” Turini says. “We had a little bit of money and we built a beautiful business plan. We were going to break even in one year. This did not work out. In the end, it took four years to break even. By 2001, we were broke.

“Even now, it is hard to get growth capital in Brazil. But then, one year after the dotcom crash and in the middle of the Russian financial crisis, no one was going to give us any money. So we sold our houses, sold our cars, and got money together.

“Well, I didn’t sell my car,” Turini corrects himself, laughing. “It was basically worthless, so I kept it, but they sold their cars, and we sold our houses.”

Their ownership structure and business plan were the same then as they are today. From the start they went about developing software to quickly assemble and evaluate information to create ad-hoc credit ratings based on the information that banks, insurance companies, retailers and healthcare providers have legal access to.

It was slow going to get big companies to come around to the idea of using a sleek computer programme to tell them who to give credit to. “Usually companies start us off in an area of their operations where they think we can’t do much damage,” Turini says. “Then when we’ve proved ourselves there, they move us into the centre of what they do. Even though we’ve had a lot of success recently, it takes something like six months or a year to be trusted by new clients.”

Indeed, the service the software offers is deceptively simple.

It goes through hundreds of information sources and comes back with an analysis in a few seconds. Crivo charges a few cents for each check run. “We end up with lots of information that can be sorted lots of different ways, but lots of companies just want a simple green, yellow or red decision,” says Turini. “But very importantly, we are able to tell people why they did or did not receive approval for a certain deal. This is new in Brazil.” Crivo’s software now runs in some of the country’s biggest banks, including Itaú Unibanco and Banco Bradesco – the two largest private-sector banks – most middle-sized banks, many insurance companies and now retailers and healthcare companies.

Few would deny that now is the moment to assure Brazil’s loan book expands quickly and safely. Since 2002, the amount of credit in the economy has doubled. But it is still far behind developed Latin American countries such as Chile and ages behind the developed world. The reason for this rapid growth is simple: for the first time in a generation, credit is actually available to ordinary Brazilians. Decades of crisis and hyperinflation, then sky-high interest rates, meant credit had been virtually non- existent for the majority of the population.

For the first time stable enough to be trusted, the Brazilian economy has lifted tens of millions of people out of poverty. These are now taking out their first loans on businesses, houses, cars, even items as simple as refrigerators. A country with huge potential is quickly catching up in a key area and is in dire need of services to make sure it happens quickly and safely.

“A common misperception is that we are mainly trying to reduce risk,” Turini says. “But that’s a relatively small part of it. Mostly we want to increase sales. The typical bank in Brazil has a 40% rejection rate and a 7% bad-debt rate, and what we do is reduce this 40% rejection rate to 7% and the bad-debt rate to 5%. It’s much more about selling more than about reducing risk. We had one insurance company with a 60% rejection rate and we reduced it to a 20% rejection rate.”

Turini rattles off these kinds of statistics as if he is almost surprised himself at the opportunity he has stumbled onto. When asked about his competition, the outlook is equally pleasant: “No one. No one else in Brazil is doing what we are doing.”

It is not hard to see why. Even setting aside the fact that Crivo has the ideas and technical know-how, it is extremely difficult to do what they are doing in Brazil. Launching a new, potentially risky company here is not easy. Growth equity is virtually non-existent, interest rates for loans are very high and small companies have a very difficult time participating in the corporate bond market. And that is just on the financial side.

“In Brazil there is no entrepreneur culture,” says Turini. “Here, your family and friends will say: ‘You’re opening a company? Hmm...Why don’t you get a job? Why don’t you become a manager? It will be much easier for you.’

“Being broke was the reality of being an entrepreneur in Brazil. In the 1980s or 90s you could only be an entrepreneur if you were from a rich family or had some kind of politician backing you.”

This situation didn’t make sense in what is now the world’s seventh-largest economy, and it is changing rapidly, thanks to success stories like Crivo and the work of an NGO called Endeavor. The American organisation identifies start-ups with strong potential and provides assistance in the form of advice and connections to business leaders with know-how in the country. “I can honestly say there are two Crivos,” says Turini. “One before Endeavor [pre-2008] and one after. It’s been very good for us to have someone to talk to discuss things like HR and how to deal with growth. After all, we don’t have MBAs from Harvard. We are computer-science dropouts.”

Endeavor also helped Crivo gain exposure, along with a little old-fashioned press attention. Last year a specialist US website nominated the company for an award, and Turini credits this with attracting the attention of the California funds they are in talks with now. They were approached at the end of last year, when Silicon Valley first showed up in Brazil.

“It wasn’t until the late fourth quarter of last year that Silicon Valley arrived here,” he says. “I’m not sure why they decided to come just now. But there is a lot of internet opportunity in Brazil, it’s one of the biggest growth markets in Brazil, and the credit market – according to them – is seen as sexy.

“I suppose Brazil grew for long enough for them to finally take note. Some funds are setting up offices now, and Silicon Valley is here to stay. But still, there are no direct flights from San Francisco to São Paulo. You have to go through Atlanta or New York and it takes 20 hours.”

If Crivo gets an injection from one of its 10 North American suitors, the three partners already have a plan for expansion. First, they want to expand further into the retail and healthcare sectors. They want to develop more sophisticated software for small businesses. And of course, they will be expanding abroad. Their international clients are already clamouring for software that can be applied in their other countries of operation. Multinationals that are satisfied with results in Brazil want to apply the same processes around the world in similar countries.“There is a big demand in Eastern European countries, we see similar problems in China and India, and in Latin America things are very similar to Brazil,” Turini says. “Latin America we will go to, even independent of any money we can raise. About 70% of our portfolio is from global companies, and they are asking us to bring them Latin America-wide soon.”

This pressure to expand outstrips even Crivo’s own natural inclinations. “The best countries for us would be Chile, Argentina and Mexico, but probably very soon we will need to deploy our solution across all of Latin America for our clients,” says Turini. Within Brazil, it’s likely that the government will change the laws on credit information soon, allowing a flood of data to be made available within the next year or two. If and when this happens, Crivo will be perfectly placed to develop the technology to organise and evaluate it.

With stories like this, it’s not surprising that more and more people are looking into forming start-ups in Brazil, not only in technology, but also in construction, chemicals and other sectors. “The culture has started to change. There were a lot of different people looking at opportunities in the market and saying: ‘Okay, lets start a company. It will be hard in the beginning but we have a chance at success.’” The idea, hopefully, is that soon it won’t have to be as hard on people as it was on Turini, Rochlitz and Soares to try out a new idea. Brazilian capital markets are maturing quickly, thanks in part to efforts being made by the Brazilian government. There is certainly enough money flushing around in the economy that it should be able to be connected to smart new businesses. As for the culture, Turini sees it as his role to help change that, too.

“Success cases are building,” he says. “And students now are starting to look at being an entrepreneur as a viable option for them to grow. The universities are having courses on entrepreneurship. A lot of this is the influence of Endeavor in Brazil. They are talking to students and trying to make some of them entrepreneurs, to show them that it’s possible.

“For example, after this interview I’m going to a lunch with 32 American students from Columbia University. They are in Brazil looking at how to be an entrepreneur in Brazil. It’s now a viable option for someone to come and be an entrepreneur here.”