FinTech investment in Latin America reached record levels, with almost $600m raised in 2017

FinTech deal activity in the region increased by almost 20% last year

  • Latin American FinTech deal activity has been on an upward trend, increasing from 61 deals in 2014 to 89 deals last year, with funding growing 12.5x over the same period.
  • Investment in 2016 more than trebled from 2015’s levels driven mainly by the $188m in later-stage capital raised by Nubank, a Brazilian digital finance provider. In 2016, Nubank raised $52m series C round led by Founders Fund, $56m debt funding from Goldman Sachs and $80m series D financing led by DST Global. The capital was raised to fund increased hiring and new product development.
  • The growth in investment continued in 2017 when funding almost doubled to $571m, as increased deal flow and investor appetite pushed up FinTech investment in the region. Marketplace Lending and Payments & Remittances companies represented 56% of deals in the region last year with a third of these deals involving Brazilian companies.
  • Economic conditions in Brazil are forcing traditional banks to pull back from some services, leaving a void in the market which is being filled by FinTech companies. Additionally, compared to other countries in the region such as Mexico and Chile, the FinTech regulatory landscape for payments and lending is more established in Brazil, which has made Brazilian FinTech companies more attractive to investors.

Latin American FinTech investment surged in H2 2017, driven by larger deals

  • FinTech investment in Latin America fell by 39.4% between Q4 2016 and Q2 2017, although deal activity doubled during the same period.
  • Despite investment dipping below $60m in Q2 2017, the increase in deal activity was partly driven by NXTP Labs’ FinTech Accelerator which made 15 seed investments as part of its new accelerator cohort. The NXTP Labs Fintech Accelerator is a six-month program open to FinTech start-ups across Latin America.
  • However, investment surged in H2 2017, with over $430m raised by Latin American FinTech companies. In fact, Q4 2017 and Q3 2017 were the first and second strongest funding quarters on record, respectively, boosted by several larger deals.
  • Nubank continued its increased appetite for capital in Q3 and Q4, raising just shy of $220m in debt financing across two rounds from XP Investimentos, Goldman Sachs and Fortress Investment Group. Nubank issues credit cards to Brazilian consumers and the credit facility raised will help to expand its consumer credit portfolio.

The top 10 FinTech deals in Latin America raised more than $460m last year

  • The top 10 FinTech deals in Latin America collected $460.6m in 2017, 80.7% of the total capital raised by FinTech companies in the region last year.
  • Creditas, an online lending platform, raised $19m in series B and $50m in series C funding in Q1 and Q4, respectively. Creditas raised the most capital after Nubank last year and this funding will help Creditas expand access to credit to Brazilian consumers, through the origination of more collateralized loans.
  • Six of the top 10 deals in the region in 2017 involved Marketplace Lending companies while Brazilian companies raised almost 90% of the total capital invested in the top 10 FinTech deals in Latin America last year.
  • Ripio Credit Network, a P2P lending facilitator using blockchain technology, raised $37m in an initial coin offering in Q4; the only ICO in the region last year. Ripio has 130,000 registered users in Argentina and Brazil and is currently working on partnerships in Mexico, South Korea and Vietnam.

Brazil and Mexico have dominated FinTech deal activity in Latin America over the past four years

  • FinTech companies in Brazil and Mexico have completed the most deals in the region since 2014, but Mexico’s share of deals in Latin America has been falling. The proportion of deals involving Mexican FinTech companies fell from 37.7% in 2014 to just under 15% last year, as investors seek opportunities in less mature markets in the region.
  • Companies in other Latin American countries have increased their share of deal activity, reaching almost a quarter of all deals in 2017, up from 12% the previous year. This jump was mainly driven by Colombian companies, with 15 deals recorded in the country last year.
  • In Q3 2017 Sempli, an SME lending platform, raised $3.6m in series A funding from Velum Ventures, FOMIN, the Dutch Good Growth Fund, Grupo Generaciones, and XTP1. This was the largest deal in Colombia last year and Sempli plans to use the capital to finance its expansion plan in Colombia and strengthen its technology platform.

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. ©2018 FinTech Global

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