Over half of all funding raised in the country since 2015 has come from WealthTech companies
- There has been a concentration of FinTech investment in Brazil within the WealthTech and Marketplace Lending subsectors since 2015, with nearly 75% of capital raised invested in one of these subsectors.
- WealthTech companies in the country accounted for over 50% of all FinTech funding in the country between 2015 and 2019, with investment in the main challenger banks in the region, Nubank and Neon, accounting for 47.7% of total capital raised since 2015.
- Marketplace Lending companies also attracted a healthy amount of investment collecting 24% of total FinTech funding. Consumers in Brazil face interest rates as high as 50% on loans and credit cards from traditional banks. FinTech companies in the space are able to offer more competitive rates and improved borrower experiences, targeting the large population in the country who would be unable to access credit otherwise.
WealthTech and Marketplace Lending companies account for over half of the top 10 deals completed in Brazil in 2019
- The top 10 FinTech deals in Brazil in 2019 have collectively raised over $1.5bn which is equal to 94.2% of the total capital raised in the country during the period. WealthTech and Marketplace Lending deals dominated the list with three deals each.
- The largest round of the period was raised by Nubank, one of the largest challenger banks in the world serving around 15m customers. The company raised $400m in a Series F round in July 2019 pushing the value of the company to over $10bn. TCV led the round with other investors also taking part including previous investor Tencent Holdings.
- Creditas, a digital platform providing secured consumer loans using credit scoring systems and borrowers’ assets as collateral, completed the largest round in the Marketplace Lending subsector. The company raised $231m in a Series D in Q3 2019, led by SoftBank, and will use the capital to expand its product portfolio and potentially enter into new lines of credit such as unsecured consumer lending and credit cards.
- The other category includes companies in Infrastructure & Enterprise Software (Contabilizei), Real Estate (QuintoAndar and Loft), and InsurTech (Pitzi).
FinTech investment in Brazil soars to a five year high in 2019
- FinTech companies in Brazil raised over $2.7bn across 197 transactions between 2015 and 2019, with 75.9% of this capital invested in transactions valued at $50m or over.
- Investment grew at a CAGR of 108% between 2015 and 2019, reaching a record of over $1.6bn. This growth can be put down to FinTech companies tapping into the large underbanked consumer market in the country, with nearly 40% of Brazilian adults remaining unbanked according to the World Bank. FinTech companies are able to offer these individuals an opportunity to skip traditional banking systems and access digital financial services instead.
- Capital invested in transactions valued at $50m or above has driven investment in the region, with 88.5% of capital raised in the record last year 2019 coming from transactions in this size range. Funding coming from transactions valued below $50m has been steadily increasing each year as Brazil’s investors back new startups entering the FinTech sector.
One in five FinTech deals in Brazil in 2019 were valued at $50m or over
- The FinTech landscape in Brazil has witnessed a shift over the past five years from investors predominantly backing smaller deals, towards participating in more later-stage transactions.
- Back in 2014, no deals were valued at $50m or over, and 77% of deals were valued below $5m. This has dropped significantly year-on-year with deals valued below $5m in 2019 accounting for only 51.5% of deals in the sector.
- The proportion of FinTech deals in Brazil valued at $50m or above has grown significantly over the past five years, from no deals in this size range back in 2015, to 20% of all deals in 2019 being of this magnitude.
- Average deal size has increased over 13-fold during the period from just $2.7m in 2015 to $36.9m in 2019, as we see the FinTech landscape in the country mature with investors backing more late-stage transactions raised by more well-established companies.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2020 FinTech Global