INSUBCONTINENT EXCLUSIVE:
Sophia Wood is a principal at Magma Partners, a Latin America-focused seed-stage VC firm with offices in Latin America, Asia and the U.S
Sophia is also the co-founder of LatAm List, an English-language Latin American tech news source. More posts by this contributorDecember has
been a strong month for Brazilian startups, bringing a big IPO and a new unicorn for local companies
Tech-driven investment firm XP Investimentos went public on the U.S
Stock Exchange in mid-December, raising $1.81 billion in the fourth-largest IPO of 2019
XP’s stock price jumped 30% on its first day of trading, from $27 per share to $34.50. XP was founded in 2001 to provide brokerage
training classes to Brazilians to help them invest in the international stock market
Today, it is a full-service brokerage firm, providing fund management and distribution to more than 1.5 million customers in
Brazil. Notably, XP has outlined a strategy for beating Brazilian banks, among the most profitable in the world, in its 354-page report to
Brazil’s banking market is highly concentrated, with the top five players dominating 93% of market share
This concentration has led to significant inefficiencies that XP tries to disrupt by offering a variety of financial products through an
accessible online platform. The heavy bureaucracy of these banks will prevent them from innovating quickly enough to compete with newer
institutions like XP, whose debt products are attractive to frustrated Brazilian customers
The inefficiency of the Brazilian financial system has opened opportunities for companies like XP, or neobank Nubank, to rapidly attract
customers who are disgruntled with the traditional system. Gaming startup Wildlife becomes a unicornBrazil has seen a new unicorn emerge
almost every month this year, and December was no exception
Gaming startup Wildlife raised a $60 million Series A round led by U.S.-investor Benchmark Capital at a $1.3 billion valuation to become the
country’s eleventh unicorn
This round was big even for Silicon Valley standards, and it is uncommon for startups even in markets like the U.S
or Europe to hit a $1 billion-plus valuation in such an early round. Wildlife has created more than 60 games since 2011, including Zooba
and Tennis Clash, which have both reached global acclaim
Founded by brothers Victor and Arthur Lazarte, Wildlife operates on a freemium model that only charges users for in-app purchases
They plan to use the funding to double their employee base and grow to $2 billion in 2020, continuing the 80% yearly growth they have seen
since 2011. Mexico’s lender Konfio receives $100 million from SoftBankKonfio provides small business loans in Mexico through an online
platform to help SMEs gain liquidity and grow their operations
These small businesses are often overlooked by banks in Mexico and Latin America, which do not know how to price risk for businesses that
process less than $10 million per year. Konfio recently raised $100 million from SoftBank’s Innovation Fund, the third investment that
SoftBank has made into Mexico since launching the fund
The capital will go toward financing working capital loans, as well as creating new products for Konfio’s customers
Today, Konfio’s loans average around $12,000, while banks still struggle to loan less than $40,000
The tech-driven platform allows Konfio to disburse loans within 24 hours without requiring collateral.Small business lending is a tremendous
opportunity in Latin America, where banks are among the most profitable and the least competitive in the world
Brazil’s Creditas and Colombia’s OmniBnk are among the other startups providing innovative products that calculate risk more effectively
than banks in Latin America’s complex lending environment.The Albo team has raised $26.4 million to scale its leading neobank.Albo,
Mexico’s leading neobank, raises $19 millionIn an extension of a Series A round, Mexico’s albo raised a further $19 million from Valar
Ventures to bring their newest round to $26.4 million in total
Albo previously raised $7.4 million from Mountain Nazca, Omidyar Network and Greyhound Capital in January 2019
Albo’s mission is to provide banking services to unbanked and underbanked clients in Mexico
More than half of albo’s customers claim that albo was their first-ever bank account. Founded by Angel Sahagun in 2016, albo quickly
became Mexico’s largest neobank, serving more than 200,000 customers and sending out thousands of new cards every day
The investment from Valar Ventures, founded by Peter Thiel (also an investor in N26 and TransferWise), is a vote of confidence for this
Albo has also previously received investment from Arkfund, Magma Partners and Mexican angels. Albo plans to use the capital to develop new
products, including savings and credit services, in the coming year
Mexico will likely be a battleground for Latin American neobanks in 2020, as Klar, Nubank and potentially Argentina’s Uala will begin to
grow in the region’s second-largest market
While there is room for several competitive neobanks to thrive in Mexico, this industry will be one to watch in 2020.News and Notes: Mercado
Credito, Mimic, Rebel and RappiGoldman Sachs loaned $125 million to MercadoLibre to continue developing their credit product, MercadoCredito
MercadoLibre will use the capital to triple its $100 million debt facility for small business loans in Mexico
To date, MercadoCredito has loaned more than $610 million to 270,000 businesses around the region in Mexico, Brazil and
Argentina. Brazilian cloud-kitchen startup Mimic raised $9 million in a seed round led by Monashees to develop a more efficient food
Mimic will exclusively manage the logistics of “dark kitchens,” which exist only for delivery and have no sit-down facilities, saving
time and money for clients
Mimic will use the investment to grow its team.An early-stage online lending startup in Brazil, Rebel, recently raised $10 million from
Monashees and Fintech Collective to provide unsecured loans to middle-class Brazilians at affordable rates
Rebel has lowered rates to around 2.9% per month, compared to 40-400% at Brazil’s largest banks
The startup uses a proprietary algorithm to calculate risk for clients and provide loans rapidly through its online platform. Colombia’s
Rappi recently announced an expansion into Ecuador, where it has rapidly reached 100,000 users between Quito and Guayaquil, the country’s
Rappi is now active in nine countries and more than 50 cities in Latin America. 2019: A Year in ReviewGiven the arrival of the SoftBank
Innovation Fund, Latin American startup investment in 2019 will likely more than double the $2 billion invested in 2018
Here are a few of the highlights we saw this year:Record-breaking rounds and Brazilian unicorns: In 2019, Rappi raised $1 billion from
SoftBank, beating iFood’s previous record-breaking $500 million from Naspers in 2018
Brazil got at least six new unicorns — Nubank, QuintoAndar, Gympass, Wildlife, Loggi and EBANX — most of whom raised funding from
international investors. Asian investment in Latin American fintechs: Nubank received $400 million-plus in 2019 from investors that
included TCV, Tencent, Sequoia, Dragoneer and Ribbit Capital
Argentina’s Uala received $150 million from SoftBank and Tencent in November 2019
SoftBank has been investing in Brazilian and Mexican fintechs including Creditas, Konfio and Clip, throughout the year. U.S
investors take an interest in LatAm: Many U.S
investors made their first Latin American investments in 2019, including Valar Ventures (albo), Bezos Expeditions (NotCo), SixThirty Cyber
(Kriptos) and Homebrew (Habi)
This year has also seen large funds like a16z, Sequoia, Accel and others making earlier-stage investments in Latin America, rather than
This change demonstrates that U.S
funds are becoming more familiar and involved with the Latin American ecosystem, helping early-stage companies grow rather than focusing on
international scale-ups as they have in the past.The Cornershop acquisition: Chilean-Mexican delivery startup, Cornershop, was acquired by
Walmart in late 2018 for $225 million, but the deal was blocked by the Mexican government
Four months after the block, Cornershop announced that Uber would take a 51% share of the company for $450 million, representing a 4x growth
in valuation since the previous acquisition deal
The Mexican and Chilean governments still have to approve the Uber deal, so all eyes will be on Cornershop through the start of 2020. The
start of the battle for Latin America’s super-app: In China, two companies dominate the mobile market, handling payments, communications,
ridesharing, delivery and more within a single app
Events in 2019, such as Rappi’s $1 billion round and the merger between Mexico’s Grin and Brazil’s Yellow, suggest that Latin America
may be heading in the same direction toward a few apps that integrate dozens of features
Colombia’s Rappi and Brazil’s Movile are strong competitors for the role, but the rise of a regional super-app still remains far in the
future for Latin America.Latin America’s startup and investment ecosystem has likely more than doubled this year as compared to 2019
As international investors like SoftBank, Andreessen Horowitz, Sequoia, Accel, Tencent and others are taking more bets on the region, more
startups than ever have scaled and reached unicorn status
These startups will continue to scale in 2020, taking on a regional presence to provide services to Latin America’s 650 million
