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Fintech Investment Report - Latin America 1H2019 (Last updated: 01 Aug 2019)


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This is a report analyzing the fintech investments in Latin America in the first half of 2019. The goal of this report is to shed light on the fintech environment in the region as well as explore the industry segments and countries most relevant.

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Fintech Investment Report - Latin America 1H2019 (Last updated: 01 Aug 2019)

  1. 1. Thiago Paiva FINTECHMARKETINLATINAMERICA1H2019: Investmentanddeals By Thiago Paiva
  2. 2. Thiago Paiva 1. Intro 2. The Author 3. Fintech Ecosystem 4. Investments ○ Total Investments in the Region ○ Investments per Country ○ Investments per Month ○ Investments per Industry Segment ○ Main Investments Rounds ○ Most Active Investors in Fintech 5. Merger & Acquisitions 6. Final Thoughts 7. Resources Index
  3. 3. Thiago Paiva First of all, thanks for reading this material! My name is Thiago Paiva and I've been working with startups and innovation for the past 9 years in Brazil, Mexico, US, and Singapore. I have invested and accelerated more than 60 startups from which more than 20 were fintech startups from 8 different countries while working at Wayra in Brazil and Startupbootcamp Fintech in Mexico. Since I started to invest in fintechs, in 2013, the market radically changed. In less than 6 years, we saw the born of the first fintech unicorns in the region as well as IPOs from Stone (NASDAQ) and Pagseguro (NYSE) in the US. Since beginning of this year, I started writing a monthly snapshot of the fintech ecosystem in Latin America at Iupana (Link to my post about June/19). Therefore, I decided to structure and analyze all the information gathered to create this material that I hope will be helpful not only to the Latin American fintech community but also to shed some light to this region that has so much potential to investors and entrepreneurs from all over the world. Finally, I appreciate if you share this material! Thiago Oliveira de Paiva Intro
  4. 4. Thiago Paiva ● 9 years of experience working with startups and innovation ● Evaluated more 2,500 startups and invested in more than 60 startups through acceleration programs in distinguished global startup accelerators (Startupbootcamp and Wayra) ● Led the design and implementation of two startup acceleration processes and one scale program ● Fintech expert who worked with more than 25 fintechs from 9 different countries ● Cofounder of Liquia Digital Assets, an investment platform for investing globally. ● Studied Fintech at MIT and Business with Concentration in Finance at UCLA The Author
  5. 5. Thiago Paiva FINTECH ECOSYSTEM
  6. 6. Thiago Paiva The fintech ecosystem in Latin America is growing quite strongly through the past few years, drawing attention from reputable investors such as Andreessen Horowitz, Sequoia Capital, and SoftBank. In Latin America, I believe we have an interesting combination that creates a perfect setup for fintechs to thrive and prosper. Just to highlight some of the main issues: ● People in the region suffered many financial crises, making them very skeptical on banks; ● The high level of informal economy excludes people from accessing basic financial services such as payments and credit; ● Half of it's 640 million population is unbanked; ● In most countries, there is an oligopoly of financial institutions, leading to poor customer support, abusive and hidden fees, and low digital effort; On the other side, Latin America has 68% of smartphone penetration with a highly connected population, looking for solutions beyond the traditional financial systems to solve their problems. With that setup in place, fintechs are starting to draw more and more attention of customers and investors. Fintech Ecosystem in Latin America Source: The Mobile Economy Latin America and the Caribbean 2018
  7. 7. Thiago Paiva 124 Updated Mar/19 394 Updated Jun/19 Number of Fintechs per Country Source: IDB-Fintech Latin America 2018 , and Fintech Radars from Finnovista According to IDB, Latin America has around 1166 fintechs. Brazil (377) and Mexico (394) are leading in number of fintechs, with Mexico having a few more but with Brazilian data a little outdated. The other countries in the region are way behind with Colombia (124) and Argentina (110) trying to establish themselves as the third largest ecosystem. 377 Updated May/18 110 Updated Mar/18 75 Updated Dec/17
  8. 8. Thiago Paiva Fintech Radar - Mexico Source: Finnovista Fintech Radar Mexico 2019
  9. 9. Thiago Paiva Fintech Radar - Brazil Source: Finnovista Fintech Radar Brazil 2018
  10. 10. Thiago Paiva Fintech Radar - Colombia Source: Finnovista Fintech Radar Colombia 2019
  11. 11. Thiago Paiva Fintech Radar - Argentina Source: Finnovista Fintech Radar Argentina 2018
  12. 12. Thiago Paiva Fintech Radar - Chile Source: Finnovista Fintech Radar Chile 2017
  13. 13. Thiago Paiva INVESTMENTS
  14. 14. Thiago Paiva Since 2018, venture capital investment in Latin America has boomed, with 2018 reporting a record breaking US$ 1.976 billion raised in 463 deals, a 73% increase from 2017. And fintech has increased year after year its relevance. This year started with the amazing new of the US$ 5 billion investment fund focused on the region by Softbank, which definitely draw attention from many other international investors to what is happening in the region. With that, we're looking for another record breaking year, and the numbers from the first 6 months of just the fintech sector (which is the focus of this report) confirm that tendence, with a total of US$ 826.7 M (US$ 630.3 M in equity and US$ 196.4 M in debt). Investments in Latin America Source: LAVCA Industry Data and proprietary data
  15. 15. Thiago Paiva Total Investments in the Region Latin American fintechs raised a total of US$ 826.7 M (US$ 630.3 M in equity and US$ 196.4 M in debt) in 51 investments in the first six months of 2019. From the 49 equity investments, 14 didn't have their amount disclosed, which amounts obviously weren't considered into the analysis. Source: proprietary data from deals
  16. 16. Thiago Paiva Number of Investments per Country Source: proprietary data from deals Brazil is clearly leading the investments in the region of more than 50% of all the deals in the region. Mexico secured it's second spot while Colombia and Chile appeared in third place.
  17. 17. Thiago Paiva Volume of Investments per Country Considering the volume of investments, the Brazilian fintechs were able to capture 64.5% of all the disclosed investments in the region while Mexico stay strong in the second position with 24.4%. Argentina was able to spot a third place. A few large deals in Brazil (Creditas - US$ 231 M), Mexico (Clip - US$ 100 M), and Argentina (Technisys - US$ 50 M) disproportionally weight on the comparison. Source: proprietary data
  18. 18. Thiago Paiva Volume of Investments per Month March was the month with more number of deals, 10 deals in total, but the month with most investment volume (US$ 292.5M) was June, with more than the double of the second month, all due to the massive round Creditas received from Softbank and other investors. Source: proprietary data
  19. 19. Thiago Paiva Investment by Industry Segment Lending is definitely the hottest fintech segment in Latin America now, amounting to 19 deals (14 consumer and 5 business) in a total of more than US$ 330 M invested. Followed by Payments & Remittances with US$ 184.1 M. We're seeing a shift as most of the early fintechs in the market were more focused in payments (Stone, PagSeguro, Moip, Mercado Pago…). Source: proprietary data
  20. 20. Thiago Paiva US$ 12.5 Million (CO - Jun 19) Main Deals US$ 100 Million (MX - May 19) US$ 70 Million (BR - Mar 19) US$ 50 Million (AR - Apr 19) US$ 231 Million (BR - Jun 19) US$ 30 Million (BR - Apr 19) Source: proprietary data US$ 20 Million (BR - Jun 19) US$ 20 Million (BR - Jan 19)
  21. 21. Thiago Paiva Main Deals - Comparative Chart 231,000,000.00 Source: proprietary data When put the 10 largest deals in a chart, it's interesting to observe that venture capital deals work in a power law distribution, with the Creditas deal more than double the size of the second largest one.
  22. 22. Thiago Paiva Most Active Investors by Number of Deals 4 3 3 3 3 3 2
  23. 23. Thiago Paiva Merger & Acquisitions
  24. 24. Thiago Paiva In general, Latin America has lacked M&A deals for a while, and this has been the biggest complain of investors: "Latin America doesn't have exits". However, since last year, we saw a couple of successful exits that is changing the mind of most investors. The IPOs of the Brazilian fintechs PagSeguro and Stone which achieved valuations on the size of billions. Also, the 99 acquisition by Didi for a US$ 1 billion showed that the ecosystem is getting mature enough to not only have exits but unicorn-sized exits. While last year was an amazing year for M&As, this is still warming up with only 4 deals made and no one with the size we saw last year. Merger & Acquisitions Source: LAVCA Industry Data
  25. 25. Thiago Paiva Merger & Acquisitions Undisclosed (MX - May 19) Undisclosed (MX - Feb 19) Undisclosed (MX - Jun 19) US$ 24.4 Million (BR - May 19) Source: proprietary data POLYGON FINTECH Acquired by Acquired by Acquired by Merged with
  26. 26. Thiago Paiva FINAL THOUGHTS
  27. 27. Thiago Paiva While the ecosystem in the region is maturing quite fast, most investment is still concentrated in Brazil with growing opportunities in Mexico and Colombia. Although Mexico has a large number of fintechs, it has still a much less mature ecosystem as Brazil. We can observe that on the number and size of deals, also the exits in the market are very few and small. I expect that to change in soon as the fintechs mature and more investors see opportunity in that market. Colombia is starting to bring attention from investors as it has a somehow large market that is growing, however, fintechs in the region still face a challenge to fundraise as the VC market is not structured there. Final Thoughts
  28. 28. Thiago Paiva Final Thoughts Also, a trend that is emerging is funds from Brazil and Mexico to start to invest in outside their boundaries, I'm expecting to see more and more deals like that in the future. I'm also starting to see some fintechs such as Nubank and Uala starting to expend in the region, tendence I believe will intensify. Finally, I'm quite bullish about the prospects of fintechs in the region, especially with the announcement of the Softbank US$ 5 billion fund focused on the region, which will shed more light on the region for international investors. This will bring more money to the fintechs to grow and compete with the incumbents. Do you agree with me? I would love to hear your opinion! Send me a message at @ThiagoPaivaFollow me at:
  29. 29. Thiago Paiva RESOURCES
  30. 30. Thiago Paiva Resources ● IDB Report - Financial Latin America 2018: Growth and Consolidation ● LAVCA Report - Latin America Startup Heatmap ● GSMA Intelligence Report - The Mobile Economy Latin America and the caribbean 2018 ● Finnovista Fintech Radar Mexico 2019 ● Finnovista Fintech Radar Brazil 2018 ● Finnovista Fintech Radar Colombia 2019 ● Finnovista Fintech Radar Argentina 2018 ● Finnovista Fintech Radar Chile 2017 ● ALLVP - Early Stage VCs Active in Latin America ● Startup Biz Model Blog ● Iupana - LatAm Fintech Snapshot
  31. 31. Thiago Paiva THANKSFORREADING! Please, don't be shy and share this material!