Investors show money to Latin American fintech companies

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Welcome to The Interchange, where you’ll find fintech news and trends this week. To receive this in your mailbox, subscribe here.

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Greetings from Austin, Texas, where the temperature has been over 100 degrees for several days and we are trying our best not to melt.

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The global financial boom in 2021 was unlike anything most of us have ever seen before. While countries around the world have seen a surge in venture capital investment, Latin America in particular has seen a significant surge in dollars invested. Unsurprisingly – with so many people in the region unbanked or unbanked, and digital penetration finally gaining momentum – fintech startups have been one of the biggest recipients of this capital.

The trend continued into the first quarter of 2022, according to SHOPAssociation of Private Equity in Latin America, which found that startups in the region as a whole raised $2.8 billion from 190 transactions in that three-month period ending March 31. showed the data and represent an increase of 67% compared to the $1.7 billion raised in the first quarter of 2021. It is also up 375% from the $582 million raised in the first quarter of 2020.

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Notably, fintech startups long away the largest recipients of venture capital funding in the first quarter of 2022, with 43% of the dollars raised, or $1.2 billion, going into this category. This is up from 16% in the first quarter of 2021. At the same time, investments in fintech accounted for 30% of all transactions in the second quarter, compared to 25% in the first quarter of 2021.

Image credits: SHOP

Carlos Ramos de la Vega, director of venture capital at LAVCA, told TechCrunch: “We continue to see the cross-pollination of business models in the sector: payment platforms increasingly include BNPL alternatives, lending platforms become full-service digital banks. , the challenger banks have expanded their product portfolio to include embedded lending products and working capital instruments.”

Now, as the global VC downturn continues, it is noteworthy that Latin American fintech companies continue to attract large rounds of investment in the second quarter of this year. For example, Ecuador received its first unicorn last week when payment infrastructure startup Kushki raised $100 million at a $1.5 billion valuation. And Mexico City-based digital bank Klar received $70 million in equity funding in a General Atlantic-led round that valued the company at about $500 million. I first wrote about Klar back in September 2019 when he was aiming to be the “Mexican chime”. You can read about how his model developed here.

Does all this mean that Latin America is an exception? Not necessary. But it signals that the appetite of investors in the region remains.

Weekly news

Now we all know that insurance companies have failed in the public markets.. And last week, I covered a significant wave of layoffs in the sector. Therefore, it is very interesting that the space startup not only continues to raise capital and increase its value, but also also The company is reportedly actively working to become positive in terms of cash flow.

I wrote about Branch, a Columbus, Ohio-based home and auto insurance package startup that raised $147 million in Series C funding at a post-investment valuation of $1.05 billion. I first heard/wrote about Branch in the summer of 2020, and it was wild to see the company steadily grow its business.

With the latest news, I wanted to go into detail about what sets Branch apart from other struggling insurtechs. CEO and co-founder Steve Lekas ​​told me in an interview, “We’re at the point where we’re selling more products than most before us. I think what we did is what everyone thought they invested in from the very beginning.” To find out more, read my history on the topic of June 8.

Kyle Wiggers and TC’s Devin Koldevi talk about Apple’s biggest move yet in financial services today — becoming a formidable player in the increasingly crowded “buy now, pay later” (BNPL) space. This article covered the news to begin with. This one took a look at how Apple does own lending. And this one took a closer look at how other BNPL providers react to news. And ICYMI, a week before that, Square announced that it would start to support Apple Tap to Pay technology later this year. It was a partnership of MagicCube founder Sam Shawka. predicted despite the hype that Apple will kill Square. In his opinion, this partnership only increases the need provide an equivalent payment acceptance solution for Android.

In addition, last week two major players announced major moves related to crypto.. I looked at how PayPal users can (finally) transfer cryptocurrency from their accounts. to other wallets and exchanges. “This move shows that we are working in the long term,” one of the leaders told me in an interview. And Anita Ramaswamy, who was at the Consensus conference in what is now Austin, Texas, announced a new partnership between American Express and cryptocurrency management platform and wallet provider Abra. The card will allow users to make transactions in US dollars. to receive rewards in cryptocurrency on your purchases through the Amex network. Amex users have been waiting for an announcement like this for some time, as its competitors Visa and Mastercard have already launched their own cryptocurrency-rewarded credit cards thanks to partnerships with digital asset companies.

It feels like no more than a couple of weeks could pass without hitting the headlines again. This time a digital mortgage lender sue a former executive who claims she was fired for a variety of reasons, one of which includes expressing concerns that the company and its CEO, Vishal Garg, misled investors when they tried to go public through SPAC.

Other interesting readings:

Banks and tech giants are losing qualified staff to flexible fintech companies

Bolt Facing Difficulty Cuts Costs, Lowers Growth Targets

Out of money 20/20 Europe

‘Mood is very gloomy’: Once-popular fintech sector faces IPO delays and consolidation

Stripe co-founder strikes back at competitors who accuse the company of unfair competition

Insurtech Outlier branch closes at $147M at $1.05B valuation

Image credits: Branch/CEO Steve Lekas


Seen on TechCrunch

Backed by millions, SecureSave is Suze Orman’s not-so-surprise startup debut.

Fruitful comes out of hiding with $33 million in funding and an app that aims to fuel healthy financial habits.

Ivella is the latest fintech company focused on couples banking, but with a twist.

Backbase raises its first $128 million in funding at a $2.6 billion valuation for tools that help banks engage

And elsewhere

PayShepherd Receives $3M in Funding to Upgrade Contractor Billing Systems

That’s all for this week! Now excuse me while I go to the pool with my family to try and cool off. Enjoy the rest of your weekend and thanks for reading. To borrow from my colleague and dear friend Natasha Mascarenhas, you can support me by sending this newsletter to a friend or follow me on twitter.

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