LATAM Fintech | 2021 #18
ARTICLE
Latin America (Latam)’s fintech industry is booming, fueled by the region’s large population of unbanked, rising demand for online banking tools, and a surge in venture capital (VC) investment into the region.
In 2016, Latam financial services companies secured just US$300 million in investment, according to Crunchbase data, a number that soared to US$1.5 billion in 2019, and to US$2 billion in 2020.
And that growth in VC financing continued this year, as adoption of digital tools increased during COVID-19. Research released in October 2020 by Americas Market Intelligence in partnership with Mastercard found that over 40 million people in Latam were added to the banking ecosystem over the previous five months.
INTERVIEW
Matt Swann, head of technology at Nubank, gave an exclusive interview to Canaltech on how the company uses data to create new experiences and increase credit.
nubank spent two years developing the artificial intelligence project that led to the credit increase of 26 million customers, which was announced in July and will be gradually implemented until June of next year, with a total increase of R$ billion distributed to the entire audience.
NOW, ON TO THE SUMMARY OF THE LATEST NEWS IN LATAM
NEWS HIGHLIGHTS
How do Brazilians pay online? A regulatory landscape that frequently undergoes changes, a highly disruptive fintech scene, a mobile-first population: these are only some of the characteristics that make Brazil such an interesting – and challenging – country to sell to.
Read more of this insightful article by The Paypers on 3 things to know about the current payment scenario in Brazil.
INDUSTRY HIGHLIGHTS
⭐️ Nubank will add a stock trading functionality to its app that will allow users to buy and sell shares. Before this implementation is in place, it is hiring an army of digital influencers with more than 92 million followers to reinforce financial education among its users. Link here.
⭐️Born in Medellin, Colombia, David Vélez was just 12 when he made his first investment, buying a cow with his birthday money and funds from a summer job. Link here.
⭐️ Mexico's Deputy Finance Minister Gabriel Yorio said that the revocation of the banking license of Bank Accendo was an isolated situation and did not pose a threat to the country's banking and financial system. Link here.
⭐️ Nu has almost 700 vacancies open in the technology area. Link here.
⭐️ Chilean wellness and insurance platform Betterfly announced the acquisition of Kunder Group and Xerpay for an undisclosed amount. Link here.
⭐️ MELI Kaszek Pioneer Corp (MEKA), a SPAC created by Mercado Libre (Nasdaq:MELI) and Kaszek, completed its IPO, raising $287M in a highly sought after capital raise that was several times oversubscribed. Link here.
BRAZIL
“Today we added a new unicorn 🦄 to the SoftBank Group International Latin America Fund! Welcome Swile, a French🇫🇷 startup led by Loïc Soubeyrand that is disrupting the employee benefits market as they expand globally to Brazil🇧🇷 and the rest of #LatAm.” Marcel Claure (CEO Softbank) on LinkedIn.
Up next, Swile also has ambitious international goals. Brazil is by far the biggest market when it comes to employee benefits. With the acquisition of Vee Benefícios, Swile now has 120 employees in São Paulo and it wants to turn Brazil into its main market.
By 2022, Swile wants to hire 500 employees — the company will double in size. There will be more international expansions as well. Mexico looks like another promising market, for instance. Even if those international bets take time to pay off, Swile is still just getting started in its home market. It still has a tiny market share and a lot of room for growth.
WhatsApp, Instagram, and Facebook apps weren’t the only ones that ran into problems this week.
Nubank started receiving complaints from users trying to do online banking at 11 am, and the peak of complaints on the DownDetector website was at 1 pm.
The failure in the bank’s online system continued into the afternoon and was confirmed by Nubank in a note to UOL:
“We verified that part of our customer base found fluctuations in the app on today’s date. We regret what happened and we inform you that the operations have already been normalized”.
👉 Read more here.
CHILE
Chile is about to approve its first regulatory framework for fintechs. From a resolution by the Ministry of Finance in 2016, which authorized non-banking entities to operate payment services, until September this year, when the so-called “Fintech Law” reached the Lower House of Congress, Chile saw its ecosystem grow and reach 176 financial services startups.
In its first step towards regulating the ongoing fintech revolution, Latin America‘s fifth-largest economy makes room for open banking and expands the role of the Central Bank.
But there are also sensitive points that can hamper financial innovation in the region’s most banked country, where 73% of the population has a bank account and 12.4 million credit cards (little more than one card for each adult) are active.
MEXICO
Just six months after raising $3.3 million in seed funding, Mexico City-based Higo announced it has raised $23 million in a Series A round led by Accel.
Tiger Global Management also participated in the financing, along with existing backers Haystack, Homebrew, Audacious, Susa Ventures, and J Ventures.
A number of angel investors also put money in the round, including Stripe COO Claire Hughes-Johnson and Cristina Cordova, former head of partnerships at Stripe.
Put simply, Higo is out to transform B2B payments for SMBs (small and medium-sized businesses) in Latin America, starting with its home country.
COLOMBIA
Colombian startup Ontop announced its second round of investment of 2021: a $20 million Series A led by Tiger and Point72 Ventures. SoftBank’s SB Opportunity fund also participated.
With this round, Ontop has raised a total investment of $26 million during its first year of existence.
Its founders are Santiago Aparicio and Julián Torres, who previously created the startup Fitpal. Jaime Avella, the founder of Gentemóvil, is Ontop’s third founder.
If you are a fintech startup and have over 100 questions send me an email, maybe I can answer a few.