Warren Buffett’s Berkshire Hathaway Inc invested $500m in Brazil’s Nubank, boosting the fast-growing FinTech firm’s aim to expand across Latin America.
Nubank’s $750m new funding round is part of its series G fundraising round, which totalled $1.15bn. An initial part of the series G round was secured in January.
In addition, the credit card issuer and digital banking company raised a further $250m from a series of other investors. Other participants in the round included Sands Capital, Canada Pension Plan Investment Board, MSA Capital, Advent’s Sunley House Capital and Brazilian asset managers Verde Asset Management and Absoluto Partners.
The massive $750m new investment gives Nubank a $30bn valuation, up from $25bn at the time of its previous fundraising round of $400m in January this year. That would make the upstart bank worth just slightly less than Banco Santander Brasil SA, Brazil’s No. 3 bank, which has more than 2,000 branches.
Nubank plans to use the proceeds to fund its international expansion to Mexico and Colombia, launch new products and services and hire more employees.
The investment will also help Nubank attract global talent, such as the recent hires of Matt Swann, formerly of Amazon and Booking, as CTO and Arturo Nuñez, formerly of Apple and Nike, as chief marketing officer.
The neobank offers a variety of financial products, including a digital bank account, a debit card, insurance, P2P payment via Pix, loans, rewards, life insurance and an account and credit card for small business owners.
Nubank serves unbanked or underserviced citizens in Brazil — about 30% of the population — and this approach can be extremely profitable because there are many more clients available.
The banking system in Brazil is ripe for innovation as customer service remains unbearable, and banks charge exorbitant fees for any little transaction. Traditionally, the banking industry has been dominated by five major traditional banks: Itaú Unibanco, Banco do Brasil, Bradesco, Santander and Caixa Economica Federal.
Clearly, the arrival of such challenger banks will change the way the country gets access to financial services and Nubank seems to have the lead. Since its $400m Series F in July 2019, the company’s customer base has grown from 12 million to 40 million people, with more than 45,000 signups a day.
Commenting on the round, Nubank CEO David Vélez said, “Around 50% of the population in Latin America still does not have a bank account. Credit card penetration is, on average, 21%, while in the United States this number is over 70%. This new funding will help us to keep democratizing access to financial services across the region.”
In April, Nubank had initiated preparations for a US stock market listing which could come as early as this year.
The new funding round also shows the continued growth of LatAm based FinTechs as more than $7bn has been invested into Latin American financial services companies since 2016, according to Crunchbase data.
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