Fintech Investment Latin America 2019

Thiago Paiva
FINTECHMARKETINLATINAMERICA2019:
Investmentanddeals
By Thiago Paiva

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
○ Debt Financing Deals
5. Merger & Acquisitions
6. Final Thoughts
7. Resources
○ Fintech Radars
Index

Thiago Paiva
Intro
First of all, thanks for reading this material! My name is Thiago Paiva and I'm a fintech entrepreneur, investor,
and columnist. 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 birth
of the first fintech unicorns in the region, as well as IPOs from Stone (NASDAQ) and Pagseguro (NYSE) in the US.
My goal with this report is to shed some light to the fintech ecosystem in Latin America that has been
under-appreciated for a long time despite its huge potential.
Finally, if you like this material, please, share it!
Thiago Oliveira de Paiva

Thiago Paiva
The Author I'm a ﬁntech entrepreneur, investor, and columnist! I have been actively engaged
in the Latin American ecosystem since 2010. During this period, I have evaluated
2,600+ and invested in 60+ startups from 9 different countries while working at
Wayra Brazil and Startupbootcamp Fintech Mexico. I studied Fintech at MIT and
Business with Concentration in Finance at UCLA.
I write about ﬁntech in Latin America in international and regional publications
and also develop reports analyzing the ecosystem.
I'm currently a Product Manager at Oyster Financial, a Neobank for SMEs in
Latin America, leading its marketplace initiative. I'm also a TechCrunch
contributor.

Thiago Paiva
FINTECH ECOSYSTEM

Thiago Paiva
The fintech ecosystem in Latin America has been 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 of banks;
● Poor financial infrastructure excludes people from accessing basic financial services such as
payments and credit, leading to a high level of informal economy ;
● 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 weak efforts to digitalize;
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.
Under these circumstances, fintechs are starting to draw more and more attention from customers and
investors.
Fintech Ecosystem in Latin America
Source: The Mobile Economy Latin America and the Caribbean 2018

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 Chile (112) trying to
establish themselves as the third largest ecosystem.
377 Updated May/18
110 Updated Mar/18
112 Updated Aug/19

Thiago Paiva
Highlighted Fintechs in the Region

Thiago Paiva
Fintech Adoption
Source: https://fintechauscensus.ey.com/2019/Documents/ey-global-fintech-adoption-index-2019.pdf
Consumer Fintech Adoption Index - EY
Average
64%
Latin America is one of the regions with fastest
fintech adoption, according to EY Consumer
Adoption Index 2019.
It had 3 countries in the Top 10 (Colombia, Peru,
and Mexico) and all of the largest economies
above the average, 64%, of the 27 researched
countries.

Thiago Paiva
Most Funded Fintechs
● BR - Nubank (US$ 820M): The largest neobank outside of China with more than 20M customers, worthing US$ 10 billion;
● BR - Quinto Andar (US$ 335M): An unicorn proptech that facilitates the rent of properties by offering financial services;
● BR - Creditas (US$ 314M): A secured online loan to consumers;
● AR - Ualá (US$ 194M): Neobank for personal accounts;
● MX - Clip (US$ 160M): A card payment provider similar to Square;
● MX - Konfio (US$ 143M): An unsecured online loans to SMEs;
● BR - Neon (US$ 121M): A neobank with personal and business account;
● BR - Loft (US$ 88M): Is a proptech that facilitates the purchase and sale of properties;
● BR - GuiaBolso (US$ 66M): PFM and lending, similar to Mint;
● AR - Technisys (US$ 64M): Digital transformation;
● MX - Credijusto (US$ 53M): A secured online loans to SMEs;
● BR - WEEL (US$ 44.5M): Online factoring;
● AR - Ripio (US$ 44.4M): Bitcoin wallet and exchange;
● BR - ContaAzul (US$ 37M): SMEs financial management;
● BR - Ebanx (US$ 30M): An unicorn online payment processor;
Source: Crunchbase and startup press releases
* Only equity deals were considered

Thiago Paiva
Emerging Trends
Source: https://techcrunch.com/2019/12/05/a-look-at-latin-americas-emerging-fintech-trends/
● Financial services for the gig economy
● Rethinking insurance
● Providing basic financial services to MSMEs
● Everyone wants to be a bank (Banking-as-a-Service)
● Proptech meets fintech
Although the fintech ecosystem in the region was impulsed by startups in payment (Stone,
Pagseguro, Clip), neobank (Nubank, Ualá, Neon), and lending (Creditas, Konfio, Credijusto), we're
starting to see some other emerging trends. Find them below:
(if you want to know more, check my TechCrunch article: "A look at Latin America’s Emerging Fintech Trends")

Thiago Paiva
Since 2011, venture capital investment
in Latin America has boomed,
achieving more than 150% average
compound annual growth. In 2019,
according to Crunchbase data, the
region reached US$ 4.2 billion raised in
430 equity deals; a 213% increase from
the previous year.
Fintech is the leading segment in the
region with a total of US$ 2.94 B raised
(US$ 2.22 B in equity and US$ 720.2 M
in debt).
Investments in Latin America
Source: Data from LAVCA (2011-2018) and Crunchbase (2019)

Thiago Paiva
Total Investments in the Region
Latin American ﬁntechs raised a total of US$ 2.94 B (US$ 2.22 B in equity and US$ 720.2 M in debt) in 147
deals in 2019, with 26 not disclosing the amount invested. In the Q4 alone, there were US$ 1.089 B in 22 deals.
The amounts includes the Softbank equity investment in Banco Inter (BIDI4.SA) (a listed challenger bank) of US$ 331.7 M.
Source: proprietary data from deals

Thiago Paiva
Number of Equity Investments per Country
Source: proprietary data from deals
In 2019, Brazil led the investments in
the region with 45.5% of all the deals in
the region.
Mexico secured its second spot while
Colombia is positioning itself as the
third most dynamic ﬁntech country in
the region.

Thiago Paiva
Volume of Equity Investments per Country
Considering the volume of investments, the
Brazilian ﬁntechs captured an impressive
72.2% of all the disclosed investments in the
region while Mexico remained in the second
position with 16.8%. Although Colombia had
more deals, Argentina was able to raise a few
large rounds, which enabled it to get the third
place.
Source: proprietary data

Thiago Paiva
Volume of Equity Investments per Month
Although the year started with a good amount of deals, the volume invested was not signiﬁcant
compared to the rest of the year. Q2 and Q3 were the most important quarters of the year with most
of the activity but also concentrating 73% of all the volume invested, with July saw the most
investment, with US$ 733.9 M.

Thiago Paiva
Equity Investment by Industry Segment
Lending (consumer and business) is still a relevant ﬁntech segment in Latin America with a little
over 30% of all deals on a total of US$ 519 M in equity investment. Even so, Digital Banking became
the hottest segment attracting the largest share of the investors money, 54.3%, on total of US$ 1.058 B.
Another trending segment is Mortgage and Real Estate attracting US$ 269.5 M.

Thiago Paiva
Equity Investment by Industry Segment - 4Q
2019
In the Q4, Digital Banking dominated the VCs interest, attracting 67.5% of all money invested in the quarter. We also
saw many Mortgage and Real Estate deals with small value, this is probably the reverberation of the large investments
of Loft, Flat, and QuintoAndar generating entrepreneurs and investors interest in this market.

Thiago Paiva
US$ 96 Million
(BR - Nov 19)
US$ 150 Million
(AR - Jun 19)
Largest Deals in 2019
US$ 100 Million
(MX - May 19)
US$ 231 Million
(BR - Jun 19)
US$ 400 Million
(BR - Jul 19)
US$ 331.7 Million
Listed Company
(BR - Jul 19)
US$ 250 Million
(BR - Sep 19)
Source: proprietary data. Selected investors in the round
US$ 100 Million
(MX - Dec 19)

Thiago Paiva
TOP 10 Deals - Comparative Chart
Last year was we saw many mega-rounds (over US$ 100 M), Nubank, QuintoAndar, Creditas, Ualá, Clip,
and Konﬁo all raised mega-rounds with Neon almost reaching that mark. Another mega-round was the
Softbank investment in the listed company Banco Inter.

Thiago Paiva
TOP 10 Deals - Share of Equity Investments
Venture Capital is a power-law business where usually a few deals concentrate a large share of the total.
We can clearly see this happening in 2019 ﬁntech deals, where the TOP 10 deals accumulated 67% of the
total volume of equity investments of the total 134 deals.

Thiago Paiva
GROWTH-STAGE
Highlighted VCs Actively Investing
Local Foreigners
BRAZIL
MEXICO
CHILE
EARLY-STAGE
ARGENTINA

Thiago Paiva
Here are the most active equity investors (with exception of accelerators) in 2019. Eight investors had 4 or
more investments in ﬁntech; Five are regional funds and three are global funds.
Most Active Equity Investors (1 of 2)
7
7
Investors Disclosed Deals
8

Thiago Paiva
6
Most Active Equity Investors (2 of 2)
6
6
6
4
* Mountain Nazca participated in 2 rounds of investment in Albo in 2019
4

Thiago Paiva
Debt Financing Deals
On the debt side, although Brazil had almost half of all deals, Mexico led the debt financing in the region with
US$ 400 M, 51.9% of all amount in debt financing. Goldman Sachs is positioning it as the most relevant debt
finance investor in the region, investing a total of US$ 475 M in 2019. Although there are many investors
interested in investing in larger rounds, fintechs are having problems to raise rounds smaller than US$ 50 M.

Thiago Paiva
Merger & Acquisitions

Thiago Paiva
Last year, there were only 13 M&A deals in ﬁntech. Most of them
had the amount undisclosed but most likely weren't large exits.
The only major deal was the long awaited XP Investimentos IPO,
the Brazilian digital broker was listed in NASDAQ, raising US$ 1.96
billion at a US$ 14.9 billion valuation.
As the market matures and more money is invested, we should
expect to see more deals. Nubank and Creditas both mentioned that
they are looking for acquisitions that could fuel their growths.
Merger & Acquisitions

Thiago Paiva
Fintech Exits
Acquired by Neon
Undisclosed amount (Sep 19)
Acquired by Carrefour
Undisclosed amount (Oct 19)
Acquired by Kushki Pagos
Undisclosed amount (Aug 19)
Acquired by Yonder Media Mobile
IPO - NASDAQ:XP (Dec 19)
Market Cap US$ 14.9B
Acquired by Rappi
Undisclosed amount (Feb 19)
* Spun-off its e-wallet, now called Mibo

Thiago Paiva
Fintech Exits
Acquired by Foxbit
Undisclosed amount (Nov 19)
Acquired by Advent
51% for US$ 725M (Jan 19)
Acquired by Polygon Fintech
Undisclosed amount (May 19)
Acquired by Omni
US$ 24.4 M (May 19)
Acquired by Grin
Undisclosed amount (Jun 19)
Acquired by Capital Tech

Thiago Paiva
Fintech Exits
Acquired by Creditas

Thiago Paiva
Final Thoughts
Fintech in the region is booming! Latin American fintechs attracted over US$ 2 billion on equity investment in
2019, overcoming the previous year total venture capital investment in the region. The success of Stone, Nubank
and other fintechs is attracting attention from global investors that are eager to invest in the potential of the
region.
Softbank started the year commiting a US$ 5 billion fund for the region, and started to deploy this capital quite
fast. With so many mega-rounds, some local investors are worried about high valuations and excess cash in the
market. I don't think that is the case, we're still far away from other more developed regions and even compared
regions such as Southeast Asia.
Brazil is still the leading market in the region but Mexico is quickly gaining relevance. Following them, Colombia
is trying to positioning itself as the third fintech market in the region, Rappi success case helped foster an
entrepreneurial culture and attract investors interest.
Following a global trend, the most relevant segment is digital banking with Nubank, Neon, and Ualá as the
leading players. Lending and Payments are still quite relevant, however, Mortgage & Real Estate is a relevant
emerging trend that is attracting high profile investors to the region.
Continue in the next slide

Thiago Paiva
Final Thoughts
Of course, Latin America has still a long way to go to compete with the main fintech hubs in the world. Although
moving in the right direction, banking and fintech regulation in the region is evolving at slower pace than Europe
and Asia.
The lack of technical talent such as developers and product managers is a key challenges fintechs face, leading
many of them to import talent and even a few to structure teams outside of the region.
This in-flow of foreign talent and investors is bringing a stronger startup culture as well as the state of the art
techniques. This combination is helping strengthening the local ecosystem.
The lack of more relevant exits was a low-light of 2019, with XP Investimentos IPO been the only major deal.
Despite that, 2020 has all the ingredients to have a more active M&A environment with well-funded fintechs
looking to aggressively expand regionally.
Despite of the challenges, the region is at a turning point now! We have never seen so much capital and talent
invested in creating amazing companies, trying to become the next Nubank!
Do you agree with me? I would love to hear your opinion! Send me a message at thiago.o.paiva@gmail.com
Share this Report

Thiago Paiva
Materials by the Author
● Report:
○ Banking and Fintech Market in Latin America 2019
○ Fintech Investment Report Latin America 1H2019
○ Fintech Investment Report Latin America 3Q2019
○ Fintech Market in Singapore 2018
● Iupana Monthly Column :
○ Fintech Snapshot of the Latin American Market
● TechCrunch Article:
○ The Emergence of Super Apps in Latin America
○ The Battle to Become the Mexican Nubank Just Started
○ A Look at Latin America's Emerging Fintech Trends

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 2019
● ALLVP - Early Stage VCs Active in Latin America
● Crunchbase
● EY Fintech Adoption Index 2019

Thiago Paiva
Fintech Radar - Mexico
Source: Finnovista Fintech Radar Mexico 2019

Thiago Paiva
Fintech Radar - Brazil
Source: Finnovista Fintech Radar Brazil 2018

Thiago Paiva
Fintech Radar - Colombia
Source: Finnovista Fintech Radar Colombia 2019

Thiago Paiva
Fintech Radar - Argentina
Source: Finnovista Fintech Radar Argentina 2018

Thiago Paiva
Fintech Radar - Chile
Source: Finnovista Fintech Radar Chile 2019

Thiago Paiva
THANKSFORREADING!
Please, don't be shy and share this material!
@ThiagoPaivaFollow me at:

Fintech Investment Latin America 2019

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