Argentina’s Ualá became the most recent Latin American fintech to receive a growth-stage funding ($150 million) from Asian investors, Tencent and Softbank.
This marks Tencent’s second round of investment in Ualá, the first coming in April 2019. Tencent also invested $180M in Brazil’s leading neobank, Nubank in 2018. With Ualá, Tencent and Softbank will join a team of investors including Soros, Goldman Sachs, Endeavor, Monashees, Ribbit Capital, and Jefferies LLC, who have backed Ualá since it was founded in 2016. Ualá has provided over 1.3M accounts for unbanked and under-banked Argentine customers in the past two years and recently launched new products for lending and savings.
Ualá was not the only neobank celebrating a significant round this month; Brazil’s Neon raised a $94M Series B round from Banco Votorantim and General Atlantic just one week earlier. Neon offers a fully-digital bank card to almost 2M customers across Brazil, mostly concentrated in Rio de Janeiro and São Paulo. The round will enable Neon to expand beyond Brazil’s biggest cities and double its user base in 2020.
Neon has raised $121M to date, with previous investors Quona Capital, Propel Venture Partners, Omidyar Network, and Monashees, also joining their most recent round. The two-year-old startup has been expanding its product offerings to include credit, investment, and most recently, a personal lending line in July 2019.
Neon’s products are helping to bring banking services to a famously complex and competitive market in Brazil. Brazil’s largest neobank, Nubank, is valued at $10B+, has 10M customers in Brazil and Mexico, and is now the most-downloaded neobank in the world. Brazil’s banking sector is one of the most lucrative in the world, with credit card interest rates reaching triple digits, whereas Nubank and competitors offer more US-style rates, putting Brazilian banks on the defensive against disruptors like Nubank and Neon who will drive competition.
With strong funding from Asia, Brazilian, and US-based backers, these neobanks are gaining traction across the region to provide banking services to the 50% of Latin America’s population that is still excluded from traditional financial institutions.
Softbank invests $140M in VTEX
VTEX, a Brazilian cloud e-commerce platform for large companies, joined the growing list of Softbank’s Brazilian portfolio companies, including QuintoAndar, MadeiraMadeira, Creditas, Buser, Gympass, and Loggi. The Japanese investor is supporting VTEX with a $140M investment to help the startup expand internationally and develop new products.
VTEX already has 14 offices in Latin America, Europe, and the US, and serves over 2500 global clients including Ambev, Nestle, North Face, Coca Cola, and General Electric. VTEX’s solution involves a comprehensive digital commerce platform including order management, B2B marketplaces, web and in-store points of commerce, and customer service. As the back-end for some of the world’s largest companies, VTEX provides an enormous opportunity for integration with other marketplaces and platforms.
LinkedIn expands to Mexico
Mexico is Latin America’s second-largest market after Brazil for many US tech companies like Uber and Facebook. In November 2019, both LinkedIn and Stripe announced their intention to expand into the Mexican market with offices and operations. Over 13 million of Linkedin’s 92 million total clients are in Mexico, making this country a logical place for Linkedin’s second Latin America office. Linkedin opened their first Latin America offices in São Paulo in 2013.
The Mexican office will open in July 2020 and will help LinkedIn produce more Spanish-language content, as well as bring users closer to large clients like BBVA and Aeromexico.
Notable Rounds and Acquisitions from November
- Brazilian bank Itaú acquired growth-hacking and digital consulting startup, Zup, for a $140M deal that will be disbursed over four years. Zup will help the bank improve and develop digital channels for customer acquisition and management. Although Itaú now owns 51% of Zup, the two companies will continue to operate separately and under different brands for the foreseeable future. Acquisitions of this size are still very rare in Latin America and provide liquidity into the startup ecosystem that can promote the development of a more dynamic environment for tech companies.
- MUY Tech, a Colombia cloud kitchen startup, raised $15M this month to expand into Mexico and Brazil. MUY uses AI technology to predict food trends and create less waste, allowing users to order personalized meals from MUY’s physical restaurants or through a mobile app. The startup currently serves more than 200,000 meals per month, according to founder Jose Calderon, who previously exited Domicilios to Delivery Hero. Mexican investor ALLVP led the round with support from previous investor Seeya.
- Brazilian mobility startup Kovi raised a $30M Series B led by Global Founders Capital and Quona Capital, with support from previous investors Monashees, Maya Capital, Kevin Efrusy, Y Combinator, Broadhaven Ventures, Justin Mateen, and ONEVC. Kovi rents cars to drivers that work for rideshare companies like Uber, Didi, or Cabify to make quality vehicles available to these potential gig-economy workers. They will use this investment to grow the team and fleet, as well as exploring new geographies.
- Mexico’s virtual supermarket, Justo, raised $10M in a seed round from Foundation Capital to continue growing in the local market. Justo is the first grocery store in Mexico with no physical branches, using a D2C model that has been increasing in popularity in Latin America. The startup was founded by Ricardo Weder, the former president of Cabify, earlier in 2019 to disrupt the wasteful grocery industry.
- Brazil’s identity verification startup, idwall, raised $10M from Qualcomm Ventures to continue developing facial recognition software that helps large companies like Loggi, 99, and OLX to verify the identity of their employees and customers.
Looking ahead to December, Latin American financial institutions are on the lookout for a shaky future based on the recent unrest in countries like Chile, Bolivia, Ecuador, and Colombia. This instability might provide a competitive edge for fintech startups who can use real-time data to adapt more quickly to the changing situation.
What to watch next? International investors have not pulled out of the region despite recent political turmoil and many are willing to wait out this period to support their startups. While we may not have access to Q4 2019 for a few months, it will be interesting to see if growth and investment have been rocked by the changes of the past two months. Certainly the status quo for the traditional players in Latin America is rapidly changing, potentially leaving room for startups to take over more market share and compete for disgruntled customers.