The pure hell of managing your JPEGs

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Alex and Grace and Chris were joined by none other than TechCrunch’s own Mary Ann Azevedo, in her first-ever appearance on the show. She’s pretty much the best person and we’re stoked to have her on the pod.

And it was good that Mary Ann was on the show this week as she wrote about half the dang site. Which meant that we got to include all sorts of her work in the rundown. Here’s the agenda:

And that’s a wrap, for, well, at least the next 5 seconds.
Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#boston, #brazil, #brex, #design, #dropbox, #equity, #equity-podcast, #fintech, #flink, #fundings-exits, #grammarly, #latam, #latin-america, #noredink, #nubank, #playbook, #ramp, #startups

As edtech evolves, LatAm reskilling platforms raise millions to bring outcomes into the mix

As Latin America attracts record-breaking venture capital totals, education technology startups in the region are given new opportunities to grow. In the past week, Coderhouse, a live cohort-based learning platform, and Crehana, an on-demand skills development service for the enterprise, both announced financing rounds.

The back-to-back raises are a reminder that edtech’s relevance in LatAm isn’t just growing in classrooms, but also within organizations across LatAm. It’s a sign that both consumers and employers believe in the importance of reskilling in today’s new, ever-changing future of work.

Broad but better

Coderhouse, founded in 2014 by Christian Patiño, is a platform for LatAm professionals to take live, online cohort-based courses in topics such as data, coding, design and marketing.

Patiño explained how the original online education platforms, also known as MOOCs, are “super accessible,” with low completion rates. The response to this then became boot camps, which he deems are “way more effective” but inaccessible due to low acceptance rates and high costs. With both sides of the spectrum in mind, he wants Coderhouse to sit somewhere in the middle, combining the affordability of MOOCs (massive open online course providers) and the engagement of bootcamps.

At $100 per course, Coderhouse offers small-group classes led by instructors and teacher assistants, with curriculum designed through partnerships with top companies.

The company announced this week that it has raised a $13.5 million Series A round led by Monashees, along with Reach Capital, David Velez from Nubank, Guillermo Rauch from Vercel, Hugo Barra (former head of VR at Facebook) and the founders of Loggi, Rappi, Wildlife Studios, Méliuz, MadeiraMadeira, Cornershop, Bitso, Casai, Clara, RunaHR and Belvo.

It’s Coderhouse’s first venture capital check after bootstrapping for years. Since 2019, Coderhouse has grown revenue 10x year over year, and has reached a $12 million run-rate. Now, with formal backing, the founders are focused on growing that total by offering more services in Latin America. Patiño said that 80% of their revenue comes from Argentina, and the capital resources will help them grow their 21,000 student base to other countries.

The startup serves a variety of students, including people who are looking for new jobs, people who want to get promoted within their current companies and entrepreneurs and freelancers who want to master a business-imperative skill such as marketing or copywriting. The broadness in early adopters could make it hard for the company to provide outcomes at scale — someone looking to be promoted has very different needs than someone who is looking for a new job — but for now, it’s helping the early-stage company find its voice.

The round was the first LatAm investment for Reach Capital, a U.S.-based edtech firm. Partner Esteban Sosnik explained how Coderhouse’s strategy is a response to LatAm’s talent bottleneck, as digital momentum in the region continues and roles change. He believes the broadness of Coderhouse’s offering makes it “tough to define one definition for outcomes.”

Sosnik thinks that graduation rates are a good proxy for impact and student satisfaction. So far, 90% of users who pay for Coderhouse graduate from their course, and of that cohort, 80% of students claim that salaries increase post-graduation. Down the road, he could see Coderhouse offering more data on the long-term economic impact of how taking a course can impact job trajectory two to four years down the line.

Coderhouse UX. Image Credits: Coderhouse

The company has no filters that limit students from taking courses, so it maintains quality by rigorous vetting of teachers. The founder estimates that only 8% of teachers are accepted to teach on Coderhouse’s platform, resulting in nearly 2,000 active teachers with the company today.

A challenge for the startup will be scaling its teacher assistant [TA] to student ratio. Right now, there are 20 students to one TA, and Patiño wants to introduce more peer-to-peer work and grading to limit how labor intensive a class is for instructors.

As Coderhouse figures out how to be an affordable bootcamp for aspiring and current employees, Crehana is finding its stride in going straight to the companies that employ them.

Centralize it all

Crehana is a one-stop shop for employers to retrain their employees. Where it goes niche in clientele focus, it goes broad in services: It wants to do the “entire value chain” of learning, from assessing skill gaps to offering content to address weak spots to tracking progress. Right now, there are more than 400 instructors/mentors that teach over 700 courses across 100,000 techniques and competencies needed for jobs.

Crehana announced today that it has raised a $70 million Series B just months after a $13 million Series A extension round. Per CEO Diego Olcese, the round will lead to “aggressively scaling” an offering that now accounts for half of Crehana’s revenue: Crehana for Business.

Crehana for Business is an enterprise solution packaged for a specific company looking to up-skill a portion of their staff. Crehana will continue to offer individual seats on its learning platform, but Crehana for Business illustrates what Olcese sees as the future: the centralization of education as a focus within companies.

“We’re building this so companies can understand the end-to-end process of employee development in the company, from the onboarding process to when an employee gets promoted in their job,” he said. “We are centralizing that management for HR teams.”

Diego Olcese, founder of Crehana. Image Credits: Crehana

It’s a big bet, one that Udemy has been working on for years. The San Francisco-based platform launched an enterprise product that now has over 7,000 customers, hitting near $200 million in annual recurring revenue. Crehana didn’t disclose specifics around revenue, but did say that it had 10x year over year growth in Crehana for Business, with the overall business hitting 4x year over year growth; both metrics are between 2019 to 2020.

Olcese said that Crehana’s biggest difference from Udemy is in how it handles content. Crehana produces, designs and publishes all content on its site, and selects which teachers will instruct on which topics. Comparatively, Udemy has a more open marketplace that allows anyone to start teaching after their identity is verified.

Crehana’s hands-on content strategy makes sense, but is hard to scale; and content isn’t competitive forever. This tension is why the company thinks its future looks more like Crehana for Business, which uses content as part of a broader infrastructure on how employees are skilled, instead of looking like a content provider.

As it works toward becoming an education infrastructure layer, Crehana is experimenting with technology that would allow companies to create their own content that isn’t just localized to geography, but is tuned into personalities, management structures and more.

As for if it ever wants to become a company that would help Nubank, a LatAm fintech darling valued at $30 billion, create its own mini-university to train and up-skill employees, the founder was clear: “It’ll be better than a university,” he said.

The Venn diagram in between them both

Generally speaking, Crehana and Coderhouse’s pair of financings show that investors see LatAm’s digital transformation having a fundamental, long-tail impact on edtech adoption within regional companies. The question then becomes, which is the best way to serve a newly hungry group of learners, and what is the easiest answer for employers’ biggest stresses: unqualified candidates.

The two companies differ in strategy. Coderhouse, for example, believes in delivering education en masse and through affordable chunks. By using cohort-based methodology, the startup helps consumers work on specific skills that can help in a variety of different scenarios, from promotions to finding new jobs. Meanwhile, Crehana believes that going in-house with institutions could be the sweet spot needed to make true change. It is focusing on localized content as an initial moat, but long-term it thinks that employers need a simple way to track employees as they learn, retain and engage with new skills. The company may look more like a learning infrastructure than a content provider.

While the strategies look different in sales, both build off of current strides in edtech, not limited to but including the ability to learn online, the understanding that lifelong learning is a key competitive advantage for professionals.

#coderhouse, #crehana, #edtech, #education, #latam, #nubank, #startups, #tc

Acrew Capital, Jeff Bezos back Colombia-based proptech La Haus’ $100M debt, equity round

La Haus, which has developed an online real estate marketplace operating in Mexico and Colombia, has secured $100 million in additional funding, including $50 million in equity and $50 million in debt financing.

The new capital was obtained as an extension to the company’s Series B, the first tranche of which closed in January. With the latest infusion, Medellin, Colombia-based La Haus has now secured $135 million total for the round and over $158 million in funding since its 2017 inception.

San Francisco Bay Area venture firms Acrew Capital and Renegade Partners co-led the round, which also included participation from Jeff Bezos’ Bezos Expeditions, Endeavor Catalyst, Moore Strategic Ventures, Marc Benioff’s TIME Ventures, Rappi’s Simon Borrero, Maluma, and Gabriel Gilinski. Existing backers who put money in this round include Greenspring Associates, Kaszek, NFX, Spencer Rascoff’s 75 & Sunny Ventures, Hadi Partovi and NuBank’s David Velez. 

Jerónimo Uribe (CEO), Rodrigo Sánchez-Ríos (president), Tomás Uribe (chief growth officer) and Santiago Garcia (CTO) founded the company after Jerónimo and Tomas met Sánchez-Ríos at Stanford University. Prior to La Haus they started and ran Jaguar Capital, a Colombian real estate development company with over $350 million of completed retail and residential projects. 

The company declined to reveal at what valuation the extension was raised, with Sánchez-Ríos saying only that it was “a significant increase” from January.

The Series B extension follows impressive growth for the startup, which saw the number of transactions conducted on its Mexico portal climb by nearly 10x in the second quarter of 2021 compared to the 2020 second quarter. With over 500 homes selling on its platform (via lahaus.com and lahaus.mx) the company is “the market leader in selling new housing in Spanish-speaking Latam by an order of magnitude,” its execs claim.  La Haus expects to have facilitated more than $1 billion in annualized gross sales by the end of the year. 

The startup was founded with the mission of making it easier for people to buy homes and helping “solve LatAm’s extreme housing inequality.” Its end goal is to accelerate access to new housing by both generating and curating supply and demand and then matching it with its technology, noted Sánchez-Ríos. 

“In the last six months, our chief product officer has built a product that allows this to happen 100% digitally,” he said. “Before it would take a lot of time, people involved and visits. We want to provide people looking for a home a similar experience as to people looking for their next flight at delta.com.”

It has done that by embedding its software to developers’ new projects so that it can bring that digital experience to its users. 

“They are able to view the projects on our sites, we match them and then they can see in real time which units of a particular tower are available, and then select, sign and pay for everything digitally,” Sánchez-Río said.

Image credit: La Haus

The need for new housing in the region and other emerging markets in general is acute, they believe. And the pace of building new homes is slow because small and mid-sized developers – who are responsible for building the majority of new homes in Latin America – are cash constrained. At the same time, mortgages are mostly not affordable for consumers, with banks extending only a fraction of the credit to individuals compared to the U.S., and often at far worse terms. 

What La Haus is planning to do with its new capital – particularly the debt portion – is go beyond selling homes via its marketplace to helping extend financing to both developers and potential buyers.It plans to take the proprietary data it has been able to glean from the thousands of real estate transactions conducted on it platform to extend capital to developers and consumers “more quickly, with much lower risk and at better terms.”

Already, what the startup has accomplished is notable. Being able to purchase a home 100% digitally is not that easy even in the U.S. Pulling that off in Latin America – which has historically trailed behind in digital adoption – is no easy feat. By year’s end, La Haus intends to be in every major metropolitan area in Mexico and Colombia. 

Its ultimate goal is to be able to help new, sustainable homes “to be built faster, alleviating the inequality caused by lack of access to inventory.”

To Acrew Capital’s Lauren Kolodny, La Haus is building a solution specific to the issues of Latin America’s housing market, rather than importing business models – such as iBuying – from the U.S.

“For many people in the United States home equity is their largest asset. In Latin America, however, consumers have been challenged with an impenetrable real estate market stacked against consumers,” she wrote via email. “La Haus is removing barriers to home ownership that stifles millions of people from achieving financial security. Specifically, Latin America has no centralized MLS, very costly interest rates, no transactional transparency, and few online informational tools.”

La Haus, Kolodny added, is breaking down these barriers by consolidating listings online, offering pricing transparency and educating consumers about their financing options.

Acrew first invested in the startup in its $10 million Series A and has been impressed with its growth over time.

“They have a unique focus on new housing — a massive industry worldwide, but especially in emerging markets where new housing is so necessary,” Kolodny said. “The management team…knows real estate in Latin America better than anyone we’ve met.”

For its part, the La Haus team is excited to put its new capital to work. As Sánchez-Río put it, “$50 million goes a lot further in Mexico and Colombia than in the U.S.”

“We are going to be very aggressive in Mexico and Colombia, and plan to go from four to at least 12 markets by the end of the year,” Jeronimo told TechCrunch. “We’re also excited to roll out our financing solution to developers and buyers.”

#acrew-capital, #bezos-expeditions, #colombia, #cto, #david-velez, #finance, #funding, #fundings-exits, #greenspring-associates, #hadi-partovi, #jeff-bezos, #la-haus, #latin-america, #lauren-kolodny, #marc-benioff, #medellin, #mexico, #moore-strategic-ventures, #nubank, #proptech, #real-estate, #recent-funding, #renegade-partners, #retail, #stanford-university, #startup, #startups, #time-ventures, #venture-capital

Blossom Capital lures Alex Lim from Silicon Valley to join the European tech boom

Alex Lim, a British-born VC based in the Bay Area who invested in Hopin, UiPath, Discord, and many other unicorns has decided to up sticks and leave Sand Hill Road behind for Blossom Capital in London. Blossom is fast making a name for itself both in Europe and internationally, having invested in breakout hits like Tines, Duffel, and Checkout.com.

Lim, the youngest-ever Partner promotion at IVP, leaves after six years to take on the role of Managing Partner at Blossom. Blossom founder Ophelia Brown will remain as Co-Managing Partner.

Despite being born in the UK, Lim has spent his entire adult life in the US, so brings an interesting mix of UK/European culture, combined with West Coast savvy.

“Alex is an exceptional investor and adored by anyone he works with,” said Blossom founder Ophelia Brown. “He builds strong personal connections and is relentlessly committed to founders, which makes him a perfect fit for our team at Blossom. He shares our ethos and approach, which is to put founders at the center of everything we do. Alex brings with him both an incredible level of knowledge and expertise in building technology businesses, as well as a strong network in the US, which our companies will benefit from immensely.”

Lim started his career in investment banking at Credit Suisse, and became IVP’s youngest Partner in its 41-year history.

He told me: “I was promoted last October, to partner. I was the youngest partner in the history of the firm. I’ve been making European investments for a couple of years now, and that’s how I met Ophelia.”

He told me that Blossom would be heading more towards Series A investing in the future: “I think it’s the right strategy for Europe. A European Series A fund is like a very attractive market in my perspective, and it’s a little bit underserved by the venture community. There are great companies out there. Opportunity is very fragmented across cities. So I think there’s a lot of opportunity for our style of investing, getting out on the road and meeting entrepreneurs in person.”

He admitted “it’s a big step to take on a new managing partner. So we’re entering a new chapter.”

He added that Europe is now ripe for bigger companies and investors: “There’s been a big change over the last 12 months. Some of the outcomes that you’ve seen over the last few months have been just on a different level to what the European is experience has been before, with huge companies emerging like UIPath and Wise.”

Blossom Capital has also appointed Tatiana Chopova, formerly of McKinsey and Company, Insead and ALPInvest, as Operating Partner, and Kim Goddard as Talent Partner, following his roles in talent acquisition at NuBank, Atlassian and Funding Circle. 

#artificial-intelligence, #atlassian, #companies, #credit-suisse, #europe, #finance, #funding-circle, #investment-banking, #london, #managing-partner, #nubank, #ophelia-brown, #software, #tc, #uipath, #united-kingdom, #united-states, #west-coast

Tiger Global leads $42M Series B in Nigerian credit-led neobank FairMoney

Neobanks have led the charge as regards venture capital funding for consumer fintech startups. But while they have collectively dominated the fintech space, they don’t operate a monolithic model.

There are five distinct models, and the one adopted by Nubank, the $30 billion behemoth, is the credit-led model. Neobanks operating this model start by offering credit via cards or on an app and subsequently offer bank accounts as a gateway to other services.

Nigerian fintech startup FairMoney operates this model. Today, it is announcing a $42 million Series B raise to diversify its offerings and expand to “become the financial hub for its users.” 

Tiger Global Management led the round. Existing investors from the company’s previous rounds, DST Partners, Flourish Ventures, Newfund, and Speedinvest, participated. The investment comes after FairMoney raised €10 million Series A two years ago and €1.2 million seed in 2018.

Founded in 2017 by Laurin Hainy, Matthieu Gendreau, and Nicolas Berthozat, FairMoney started as an online lender that provides instant loans and bill payments to customers in Nigeria.

When CEO Hainy spoke to TechCrunch in February, the company was six months into its expansion to India. One of the highlights of that discussion was FairMoney’s impressive numbers in 2020. Last year, the company disbursed a total loan volume of $93 million to over 1.3 million users who made more than 6.5 million loan applications

The company also made some progress on the India front, processing more than 500,000 loan applications from over 100,000 unique users.

So what has changed since then? For one, Hainy says FairMoney ticked one of the goals which was acquiring a microfinance bank license. The license allows FairMoney to operate as a financial service provider in Nigeria.

“We have received our MFB banking license which now enables us to open current accounts for our users, and we’re doing that on quite a big scale,” Hainy said to TechCrunch. “We opened accounts for our repeated and new customers, which I think is quite a unique company strategy because we don’t need to burn millions of dollars of customer acquisition cost on users like other competitors. I think all of that has enabled us to become sort of the largest digital bank in Nigeria.”

Quite the claim but behind it are figures to back it up. Of the company’s current 3.5 million registered users, 1.3 million are unique bank account holders. The company says it is projecting to disburse $300 million worth of loans to them this year. How will it finance that? By raising bonds. FairMoney’s loan book is grown by its capital markets activity and has convinced some investment banks to invest a substantial amount in its unlisted bond

The credit-led neobank offers loans to individuals from ₦1,500 (~$3) to ₦500,000 (~$1,000) ranging from days to six months. Small business loans have become a prominent service most digital banks have begun to offer in Nigeria’s retail sector, and FairMoney sees an opportunity there. Hainy states that from now on, the company will start servicing loans to registered SMEs in Nigeria. In the works also is the issuance of cards. However, unlike the credit cards operated by Nubank, FairMoney is shipping debit cards, the more prevalent one in the Nigerian market.

“The ambition is that by the end of the year, the customer has the full-fledged banking experience from P2P transfers and lending to debit cards and current accounts. In addition to that, we are working on a number of additional services from savings products, stock trading, and crypto-trading products potentially depending on where regulation is heading,” Hainy added

But while most African companies, after completing a Series B raise, think about expansion, it’s a different case for FairMoney. Hainy calls this a ‘focus round’ and says FairMoney wants to consolidate its position in Nigeria and India; therefore, it is not considering any expansion to other markets.

“We feel that with India and Nigeria, we have tons of work to do and tons of problems to solve. We are doubling down on the Nigerian opportunity, which is building out more banking services and becoming one of the commercial banks in the country. And then India by building a large credit book there,” the CEO combined.

African fintech startups have attracted a lot of capital this year and they continue to do so. So far, the continent has seen three nine-figure raises, all from fintech companies Flutterwave, TymeBank and Chipper Cash. There’s also one reportedly in the works from OPay.

Nigerian fintechs are leading the crop as exciting startups keep coming from the country week in week out, gaining access to capital at an astonishing rate.

It is not news that while local investors are cutting checks at pre-seed and seed levels, and sometimes Series A, international investors control the continent’s latter stages. TymeBank cited U.K. and Philippines venture capital firms as investors. For Chipper Cash, it was SVB Capital, Ribbit, and Bezos Expeditions, while Avenir Growth Capital and Tiger Global invested in Flutterwave.

In FairMoney, Tiger Global has made a return to the continent. Per public knowledge, it is the first time the U.S. hedge fund is investing in two African startups in a year after backing Flutterwave in March. “We are excited to partner with FairMoney as they build a better financial hub for customers in Nigeria and India,” Scott Shleifer, partner at Tiger Global, said in a statement. “We were impressed by the team and the strong growth to date and look forward to supporting FairMoney as they continue to scale.”

Hainy calls the investment a great industry signaling for the continent. He believes Tiger Global decided to back FairMoney because the company has been able to scale tremendously and shown that it can operate banking and lending while running a profitable business when most of its counterparts are not.

“I think what most people have been discussing is the question of sustainability. How long can digital banks operate as financial service providers while making losses? So I think that’s another great signal for the market that we’ve actually managed to do that in a profitable manner, providing upside for our shareholders and also showing our clients that they can actually bank on us in the future,” Hainy added.

And to achieve its goal to become a financial hub for its customers’ banking needs, the CEO said the company is embarking on a hiring spree for top talent. “We are hiring worldwide, and there are 150 open positions out there right now that we’re trying to fill with strong talent to help us build the financial app for Nigerians.”

#africa, #digital-bank, #fairmoney, #finance, #funding, #india, #neobank, #nigeria, #nubank, #online-lending, #tc, #tiger-global-management

Extra Crunch roundup: TC Mobility recaps, Nubank EC-1, farewell to browser cookies

What, exactly, are investors looking for?

Early-stage founders, usually first-timers, often tie themselves in knots as they try to project the qualities they hope investors are seeking. In reality, few entrepreneurs have the acting skills required to convince someone that they’re patient, dedicated or hard-working.

Johan Brenner, general partner at Creandum, was an early backer of Klarna, Spotify and several other European startups. Over the last two decades, he’s identified five key traits shared by people who create billion-dollar companies.


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“A true unicorn founder doesn’t need to have all of those capabilities on Day One,” says Brenner, “but they should already be thinking big while executing small and demonstrating that they understand how to scale a company.”

Drawing from observations gleaned from working with founders like Spotify’s Daniel Ek, Sebastian Siemiatkowski from Klarna, and iZettle’s Jacob de Geer and Magnus Nilsson, Brenner explains where “VC FOMO” comes from and how it drives dealmaking.

We’re running a series of posts that recap conversations from last week’s virtual TC Mobility conference, including an interview with Refraction AI’s Matthew Johnson, a look at how autonomous delivery startups are navigating the regulatory and competitive landscape, and much more. There are many more recaps to come; click here to find them all.

Thanks very much for reading Extra Crunch!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

How contrarian hires and a pitch deck started Nubank’s $30 billion fintech empire

Image Credits: Nigel Sussman

Founded in 2013 and based in São Paulo, Brazil, Nubank serves more than 34 million customers, making it Latin America’s largest neobank.

Reporter Marcella McCarthy spoke to CEO David Velez to learn about his efforts to connect with consumers and overcome entrenched opposition from established players who were friendly with regulators.

In the first of a series of stories for Nubank’s EC-1, she interviewed Velez about his early fundraising efforts. For a balanced perspective, she also spoke to early Nubank investors at Sequoia and Kaszek Ventures, Latin America’s largest venture fund, to find out why they funded the startup while it was still pre-product.

“There are people you come across in life that within the first hour of meeting with them, you know you want to work with them,” said Doug Leone, a global managing partner at Sequoia who’d recruited Velez after he graduated from grad school at Stanford.

Marcella also interviewed members of Nubank’s founding team to better understand why they decided to take a chance on a startup that faced such long odds of success.

“I left banking to make a fifth of my salary, and back then, about $5,000 in equity,” said Vitor Olivier, Nubank’s VP of operations and platforms.

“Financially, it didn’t really make sense, so I really had to believe that it was really going to work, and that it would be big.”

Despite flat growth, ride-hailing colossus Didi’s US IPO could reach $70B

Image Credits: Didi

In his last dispatch before a week’s vacation, Alex Wilhelm waded through the numbers in Didi’s SEC filing. The big takeaways?

“While Didi managed an impressive GTV recovery in China, its aggregate numbers are flatter, and recent quarterly trends are not incredibly attractive,” he writes.

However, “Didi is not as unprofitable as we might have anticipated. That’s a nice surprise. But the company’s regular business has never made money, and it’s losing more lately than historically, which is also pretty rough.”

What’s driving the rise of robotaxis in China with AutoX, Momenta and WeRide

AutoX, Momenta and WeRide took the stage at TC Sessions: Mobility 2021 to discuss the state of robotaxi startups in China and their relationships with local governments in the country.

They also talked about overseas expansion — a common trajectory for China’s top autonomous vehicle startups — and shed light on the challenges and opportunities for foreign AV companies eyeing the massive Chinese market.

The air taxi market prepares to take flight

Image Credits: Bryce Durbin

“As in any disruptive industry, the forecast may be cloudier than the rosy picture painted by passionate founders and investors,” Aria Alamalhodaei writes. “A quick peek at comments and posts on LinkedIn reveals squabbles among industry insiders and analysts about when this emerging technology will truly take off and which companies will come out ahead.”

But while some electric vertical take-off and landing (eVTOL) companies have no revenue yet to speak of — and may not for the foreseeable future — valuations are skyrocketing.

“Electric air mobility is gaining elevation,” she writes. “But there’s going to be some turbulence ahead.”

The demise of browser cookies could create a Golden Age of digital marketing

Though some may say the doomsday clock is ticking toward catastrophe for digital marketing, Apple’s iOS 14.5 update, which does away with automatic opt-ins for data collection, and Google’s plan to phase out third-party cookies do not signal a death knell for digital advertisers.

“With a few changes to short-term strategy — and a longer-term plan that takes into account the fact that people are awakening to the value of their online data — advertisers can form a new type of relationship with consumers,” Permission.io CTO Hunter Jensen writes in a guest column. “It can be built upon trust and open exchange of value.”

If offered the right incentives, Jensen predicts, “consumers will happily consent to data collection because advertisers will be offering them something they value in return.”

How autonomous delivery startups are navigating policy, partnerships and post-pandemic operations

Nuro second gen R2 delivery vehicle

Image Credits: Nuro

We kicked off this year’s TC Sessions: Mobility with a talk featuring three leading players in the field of autonomous delivery. Gatik co-founder and chief engineer Apeksha Kumavat, Nuro head of operations Amy Jones Satrom, and Starship Technologies co-founder and CTO Ahti Heinla joined us to discuss their companies’ unique approaches to the category.

The trio discussed government regulation on autonomous driving, partnerships with big corporations like Walmart and Domino’s, and the ongoing impact the pandemic has had on interest in the space.

Waabi’s Raquel Urtasun explains why it was the right time to launch an AV technology startup

Image Credits: Waabi via Natalia Dola

Raquel Urtasun, the former chief scientist at Uber ATG, is the founder and CEO of Waabi, an autonomous vehicle startup that came out of stealth mode last week. The Toronto-based company, which will focus on trucking, raised an impressive $83.5 million in a Series A round led by Khosla Ventures.

Urtasun joined Mobility 2021 to talk about her new venture, the challenges facing the self-driving vehicle industry and how her approach to AI can be used to advance the commercialization of AVs.

#artificial-intelligence, #av, #didi, #ec-techcrunch-tc-mobility, #entrepreneurship, #extra-crunch-roundup, #finance, #fintech, #klarna, #nubank, #robotaxi, #spotify, #startups, #tc, #transportation, #venture-capital

The Nubank EC-1

Brazil is a country riven with economic contradictions. It has one of the largest and most profitable banking industries in Latin America, and is among the world’s most developed financial markets. Financial transactions that would take days to process in the United States through ACH happen instantaneously in Brazil. This sophistication, however, masks a backward state of affairs plagued by appalling customer service, exorbitant fees and lack of banking access for many.

The country’s financial system is volatile and often leaves its citizens with few or no alternatives. According to an HBS case study, “in December 2018 the interest rate in Brazil for corporate loans was 52.3%, for consumer loans it was 120.0% and for credit card indebtedness it was 272.42%.” Those rates are many multiples higher compared to figures in neighboring countries.

Brazil’s banking system is a massive market, and one ill-served by incumbents. If someone could thread the needle of product development, strategy and political horse trading required to build a bank in a country where it is nearly impossible for foreigners to own or invest in a bank, it would be one of the great startup and economic success stories of this century.

Nubank is on its way to realizing that objective. Its story is one of unmitigated success, even by the standards of our EC-1 series on high-flying companies and their hard-learned lessons. Just last week, this Brazilian credit card and banking fintech raised a $750 million round led by Berkshire Hathaway at a $30 billion valuation, becoming one of the most valuable startups in the world. It has 40 million users across Brazil, as well as Mexico and Colombia.

Yet, it’s a startup with a CEO and co-founder who isn’t Brazilian, didn’t speak the local language of Portuguese, hadn’t started a company before, and didn’t really know a lot about banking to begin with. This is a story of how raw execution, a “faster, faster” mentality and a fanaticism for making customer experience as enjoyable as a trip to Disney World can completely change the history of an industry — and country — forever.

Our lead writer for this EC-1 is Marcella McCarthy. McCarthy, who spent significant time in Brazil growing up and is trilingual in English, Spanish and Portuguese, has been covering the LatAm and Miami ecosystems for TechCrunch with an eye to the disruption underway in these interconnected regions. The lead editor for this package was Danny Crichton, the assistant editor was Ram Iyer, the copy editor was Richard Dal Porto, and illustrations were drawn by Nigel Sussman.

Nubank had no say in the content of this analysis and did not get advance access to it. McCarthy has no financial ties to Nubank or other conflicts of interest to disclose.

The Nubank EC-1 comprises four main articles numbering 9,200 words and a reading time of 37 minutes. Here’s what’s in the bank:

We’re always iterating on the EC-1 format. If you have questions, comments or ideas, please send an email to TechCrunch Managing Editor Danny Crichton at danny@techcrunch.com.

#banking, #brazil, #credit-card, #david-velez, #ec-brazil, #ec-fintech, #ec-latin-america-and-caribbean, #ec-1, #finance, #latin-america, #nubank, #nubank-ec-1, #startups

How contrarian hires and a pitch deck started Nubank’s $30 billion fintech empire

For most startups, the hardest early challenge is identifying a market and a product to serve it. That wasn’t the case for Nubank CEO David Velez, who understood the massive potential for success if he could break into Latin America’s most valuable economy with even a moderately modern banking offering.

Instead, the challenge was how to rebuild the concept of a bank in a country where banking is widely hated, all while the incumbents heavily entrenched with the state worked to block every move.

Nubank knew its market and geography, and through tenacious fundraising, inventive marketing and product development, and a series of contrarian hires, Velez and his team stripped bare the morass of Brazilian banking to build one of the world’s great fintech companies.

The challenge was how to rebuild the concept of a bank in a country where banking is widely hated, all while the incumbents heavily entrenched with the state worked to block every move.

In the first part of this EC-1, I’ll look at how Velez brought his skills and experience to bear on this market, how Nubank was founded in 2013, and how the team brought a Californian rather than Brazilian vibe to their first office on — no joke — California Street, in a neighborhood called Brooklin in the city of São Paulo.

The makings of an entrepreneur

The idea of being his own boss was ingrained in Velez from his earliest days in Colombia, where he grew up in an entrepreneurial family, with a father who owned a button factory. “I heard from my dad over and over again that you need to start your own company,” Velez said.

But years would pass and Velez still had no idea what he wanted to do. To “kill time,” and also to surround himself with entrepreneurial energy, Velez attended Stanford University — partially financed by the sale of some livestock — and then worked as an analyst at Goldman Sachs and Morgan Stanley before switching to venture capital at General Atlantic and Sequoia.

#banking, #brazil, #credit-card, #david-velez, #ec-brazil, #ec-fintech, #ec-latin-america-and-caribbean, #ec-1, #finance, #fintech, #nubank, #nubank-ec-1, #online-bank, #online-banking, #startups, #tc

One woman’s drive to make a neobank as magical as Disney

As we mentioned in part 1 of this EC-1, David Velez had two key co-founding roles he needed to fill to get started building Nubank. For one, he needed a CTO to lead the engineering side of the business, as Velez didn’t have an engineering background.

Edward Wible, an American computer science graduate who spent most of his career in private equity, would take that responsibility. He didn’t bring years of coding experience, but he had qualities that Velez considered more important: A strong belief in the potential of the product and an equally intense commitment to working on it.

Given the occasionally hostile reaction of most incumbent banks to their customers in Brazil, Nubank’s starkly contrasting openness and transparency has garnered a huge following.

That left an even more important role to fill — one that was much harder to define. This other co-founder would need to blend knowledge of the Brazilian market and local savvy with expertise in banking, all while embodying a Silicon Valley ethos of focusing on customers. This person would also have to work in São Paulo for minimal wages out of a small office with just one bathroom, all in the belief that their equity (both stock and sweat) would one day be worth it.

Velez would eventually stumble upon Cristina Junqueira, who was qualified to do all this, and much, much more.

“Once someone said I was the glue of the operation, and that someone else was the brains. And I said, ‘No, I’m the glue and the brains, and I bet my brain is even better than his,”’ Junqueira said.

Junqueira didn’t just lead Nubank’s drive into the Brazilian market, she also upended age-old notions of what it means to be a 21st-century bank. Her inspiration was nothing short of Disney, and her mission was to create a bank as popular as the magical kingdom itself.

A bank. As popular as Disney. Sounds like a fairy tale, frankly.

Raised to be a doer

Unlike her co-founders Velez and Wible, Junqueira grew up in Nubank’s home market of Brazil. The eldest of four sisters, she remembers her parents — both dentists — always assiduously working to maintain their practice.

Their work ethic trickled down, but so did responsibility. As the oldest at home, she was forced to grow up quickly and take on responsibilities from an early age. “I remember being 11 years old and doing grocery shopping for the month,” she said. “I did everything very young.”

#brazil, #credit-card, #cristina-junquiera, #david-velez, #ec-brazil, #ec-fintech, #ec-latin-america-and-caribbean, #ec-1, #finance, #fintech, #nubank, #nubank-ec-1, #online-banking, #startups, #tc

How Nubank’s CX strategy made it one of the most loved digital banks

As we saw in parts 1 and 2 of this EC-1, by mid-2013, Nubank CEO David Velez had most of what he needed to get started. He’d brought on two co-founders, assembled ambitious engineering and operations teams, raised $2 million in seed funding from Sequoia and Kaszek, rented a tiny office in São Paulo, and was armed with a mission to deliver the kind of banking services that customers in a market as large and lucrative as Brazil’s should expect.

Despite being named Nubank, however, the startup couldn’t actually be a bank: Brazil’s laws made it illegal at the time for a foreigner-run company to operate a bank. That restriction required the team to develop an inventive product strategy to find a foothold in the market while they waited for a license directly from the country’s president.

Nubank was so adamant about differentiating itself from other banks that it chose Barney purple for its brand color and first credit card.

Nubank therefore pursued a credit card as its first offering, but it had to race against a clock counting quickly down to zero. At the time, Brazil didn’t have ownership restrictions on this product segment like it did with banking, but new rules were coming into force in just a few months in May 2014 that would block a company like Nubank from launching.

The company needed to execute rapidly over the next eight months if it wanted to be grandfathered into the existing regulations. The speed of operations was frantic to say the least, and the company would go on to work even faster, ultimately propelling itself into the stratosphere of fintech startups.

Full faith in credit

It’s easy to assume that the name Nubank refers to “new bank,” but that’s not really what the founders were going for. The word “nu” in Portuguese means “naked,” and Velez and his team wanted the name to reflect their vision: To build a 21st-Century bank without any of the shackles imposed by the traditional banks in Brazil.

The team wanted to offer services to as many people as possible, as there is a huge wealth gap in Brazil, where the minimum wage is around $200 a month.

Launching with just a credit card was both a strategic and practical business decision. Credit cards were widely used in the country, and everyone understood how they worked. Additionally, you could only use credit cards to shop online in Brazil, because debit cards weren’t accepted.

#brazil, #credit-card, #david-velez, #ec-brazil, #ec-fintech, #ec-latin-america-and-caribbean, #ec-1, #finance, #fintech, #nubank, #nubank-ec-1, #online-banking, #startups, #tc

Which Nubank will own the financial revolution?

Nubank’s first office, on California Street in the Brooklin neighborhood of São Paulo, makes for a great beginning to the company’s story. It wasn’t a Silicon Valley garage, but this tiny, one-bathroom rented house, where 30 people worked insane hours to push out the company’s debut credit card, lends just as well to an image of entrepreneurial spirit and drive.

As Nubank continues to make international waves, more and more VC investors are taking a look at the Brazilian ecosystem and could potentially fund other upstarts in the years to come.

But as Nubank’s story continued, the team eventually had to move out of that early office, and the next several offices, too. Eventually Nubank had to relocate to an eight-story building in São Paulo, which houses a large part of the company’s now 3,000-person team.

The startup reached decacorn status in far less than a decade, and it is growing faster than ever. When I interviewed CEO David Velez back in January to discuss Nubank’s $400 million Series G, he said, “We’ve gone from 12 million customers in 2019 to 34 million solely based on word of mouth.” By September last year, the company was onboarding 41,000 new customers per day.

In the five months since our interview, Nubank has managed to rope in a whopping 6 million customers to reach 40 million. It’s now valued at $30 billion.

Nubank’s present day headquarters in São Paulo, Brazil. Image Credits: NELSON ALMEIDA/AFP / Getty Images

Getting there hasn’t been easy. The company’s three co-founders, Velez, Edward Wible and Cristina Junqueira, had to make key strategic decisions about how to scale themselves to retain the company’s lead in the neobanking market. That lead is getting tougher to sustain every day. Nubank’s proliferating offerings and broader geographical remit has painted a massive target on its back, and a wide number of competitors have cropped up to run on the paths it pioneered.

Like most Disney films, a fairy-tale ending seems in order, but it’ll take a few more rotations of the film wheel to get to the ending.

Early mistakes and ingredients for success

For the co-founding trio, it became increasingly clear that Nubank’s growing scale demanded critical strategic decisions on how to bring order to the company.

By 2018, the company had thousands of employees, millions of customers, and they still didn’t have a head of HR. Growth until then had been somewhat unstructured. According to Junqueira, waiting so long to hire a head of HR was one of their early mistakes, because it stunted their ability to grow. “[Good] people continue to be our biggest bottleneck,” she says.

#brazil, #credit-card, #ec-brazil, #ec-fintech, #ec-latin-america-and-caribbean, #ec-1, #finance, #fintech, #nubank, #nubank-ec-1, #online-banking, #startups, #tc

Fintech all-star Nubank raises a $750M mega round

In 2013, Colombian businessman David Velez decided to reinvent the Brazilian banking system. He didn’t speak Portuguese, nor was he an engineer or a banker, but he did have the conviction that the system was broken and that he could fix it. And as a former Sequoia VC, he also had access to capital.

His gut instinct and market analysis were right. Today, Nubank announced a $750 million extension to its Series G (which rang in at $400 million this past January), bringing the round to a total of $1.15 billion and their valuation to $30 billion — $5 billion more than when we covered them in January.

The extension funding was led by Berkshire Hathaway, which put in $500 million, and a number of other investors.

Velez and his team decided now was a good time to raise again, because, “We saw a great opportunity in terms of growth rate and we’re very tiny when compared to the incumbents,” he told TechCrunch.”

Nubank is the biggest digital bank in the world by number of customers: 40 million. The company started as a tech company in Brazil that offered only a fee-free credit card with a line of credit of R$50 (about USD$10). 

It now offers a variety of financial products, including a digital bank account, a debit card, insurance, P2P payment via Pix (the Brazilian equivalent of Zelle), 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 one of the few bureaucracies in the country that is actually quite skillful, but the 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. 

While Brazil remains Nubank’s primary market, the company also offers services in Colombia and Mexico (services launched in Mexico in 2018). The company still only offers the credit card in both countries.

“The momentum we’re seeing in Mexico is terrific. Our Mexican credit card net promoter score (NPS) is 93, which is the highest we’ve had in Nubank history. In Brazil the highest we’ve had was 88,” Velez said.

The company has been on a hiring spree in the last few months, and brought on two heavyweight executives. Matt Swann replaced Ed Wible (the original CTO and co-founder). Wible continues to be an important player in the company, but more in a software developer capacity. Swann previously served as CTO at Bookings.com and StubHub, and as CIO of the Global Consumer Bank at Citi, so he brings years of experience of scaling tech businesses, which is what Nubank is focused on now, though Velez wouldn’t confirm which countries are next.

The other major hire, Arturo Nunez, fills the new role of chief marketing officer. Nunez was head of marketing for Apple Latin America, amongst other roles with Nike and the NBA. 

It may sound a little odd for a tech company not to have had a head of marketing, but Nubank takes pride in having a $0 cost of acquisition (CAC). Instead of spending money on marketing, they spend it on customer service and then rely on word of mouth to get the word out.

Since we last spoke with Velez in January regarding the $400 million Series G, the company went from having 34 million customers to now having 40 million in a span of roughly 6 months. The funds will be used to grow the business, including hiring more people.

“We’ve seen the entire market go digital, especially people who never thought they would,” Velez said. “There is really now an avalanche of all backgrounds [of people] who are getting into digital banking.”

#banking, #berkshire-hathaway, #bradesco, #brazil, #colombia, #credit-cards, #cto, #david-velez, #digital-banking, #engineer, #finance, #financial-services, #funding, #itau-unibanco, #life-insurance, #mexico, #nubank, #p2p, #santander, #tc

Jeeves emerges from stealth with $131M in debt and equity and a16z as a lead investor

Jeeves, which is building an “all-in-one expense management platform” for global startups, is emerging from stealth today with $131 million in total funding, including $31 million in equity and $100 million in debt financing. 

The $31 million in equity consists of a new $26 million Series A and a previously unannounced $5 million seed round.

Andreessen Horowitz (a16z) led the Series A funding, which also included participation from YC Continuity Fund, Jaguar Ventures, Urban Innovation Fund, Uncorrelated Ventures, Clocktower Ventures, Stanford University, 9 Yards Capital and BlockFi Ventures.

A high-profile group of angel investors also put money in the round, including NFL wide receiver Larry Fitzgerald and the founders of five LatAm unicorns — Nubank CEO David Velez, Kavak CEO Carlos Garcia, Rappi co-founder Sebastian Mejia, Bitso CEO Daniel Vogel and Loft CEO Florian Hagenbuch. Justo’s Ricardo Weder also participated in this round and Plaid co-founder William Hockey put money in the $5 million seed funding that closed in 2020 after the company completed the YC Summer 2020 batch.

The “fully remote” Jeeves describes itself as the first “cross country, cross currency” expense management platform. The startup’s offering is currently live in Mexico — its largest market — as well as Colombia, Canada and the U.S., and is currently beta testing in Brazil and Chile. 

Dileep Thazhmon and Sherwin Gandhi founded Jeeves last year under the premise that startups have traditionally had to rely on financial infrastructure that is local and country-specific. For example, a company with employees in Mexico and Colombia would require multiple vendors to cover its finance function in each country — a corporate card in Mexico and one in Colombia and another vendor for cross-border payments.

Image Credits: Left to right: Jeeves co-founders Dileep Thazhmon and Sherwin Gandhi

Jeeves claims that by using its platform, any company can spin up their finance function “in minutes” and get access to 30 days of credit on a true corporate card, noncard payment rails, as well as cross-border payments. Customers can also pay back in multiple currencies, reducing FX (foreign transaction) fees.

“We’re building an all-in-one expense management platform for startups in LatAm and global markets — cash, corporate cards, cross-border — all run on our own infrastructure,” Thazhmon said. 

“We’re really building two things — an infrastructure layer that sits across banking institutions in different countries. And then on top of that, we’re building the customer-, or end user-facing app,” he added. “What gives us the ability to launch in countries much quicker is that we own part of that stack ourselves, versus what most fintechs would do, which is plug into a third-party provider in that region.” 

Image Credits: Jeeves

Indeed, the company has seen rapid early growth. Since launching its private beta last October, Jeeves says it has grown its transaction volume (GTV) by 200x and increased revenue by 900% (albeit from a small base). In May alone, Jeeves says it processed more transaction volume than the entire year to date, and more than doubled its customer base. It says that “hundreds of companies,” including Bitso, Belvo, Justo, Runa, Worky, Zinboe, RobinFood and Muncher, “actively” use Jeeves to manage their local and international spend. On top of that, it says, the startup has a waitlist of more than 5,000 companies — which is part of why the company sought to raise debt and equity.

The shift to remote work globally due to the COVID-19 pandemic has played a large role in why Jeeves has seen so much demand, according to Thazhmon.

“Every company is now becoming a global company, and the service to employees in two different countries requires two different systems,” he said. “And then someone’s got to reconcile that system at the end of the month. This has been a big reason why we’re growing so fast.”

One of Jeeves’ biggest accomplishments so far, Thazhmon said, has been receiving approval to issue cards from its own credit BIN (bank identification number) in Mexico. It can also run SPEI payments directly on its infrastructure. (SPEI is a system developed and operated by Banco de México that allows the general public to make electronic payments.)

“This gives us a lot of flexibility and allows us to offer a truly unique product to our customers,” said Thazhmon, who previously co-founded PowerInbox, a
Battery Ventures-backed MarTech company that he says grew to $40 million in annual revenue in three years.

Jeeves says it will use the fresh capital to onboard new companies to the platform from its waitlist, scale its infrastructure to cover more countries and currencies as well as do some hiring and expand its product line.

A16z General Partner Angela Strange, who is joining Jeeves’ board as part of the investment, is extremely bullish on the startup’s potential.

Strange says she met Thazhmon about a year ago and was immediately intrigued.

“Not only were they working to provide the financial operating system within a country, starting in Mexico, they were designing their software platform to scale across multiple countries,” she said. “Finally — a multicountry/currency expense management & payouts platform, where increasingly companies have employees and operations in multiple countries from the start and can use a single company to manage their financials.”

Strange, who has been investing in Latin America for the past few years, notes that most companies in the region are unable to get a corporate credit card.

“That’s only the tip of the iceberg,” she told TechCrunch. “It’s cumbersome for companies to make bank to bank payouts, handle wires, and they usually also have expenses in the U.S. (and often other countries) so there is also FX. And they manage multiple bank accounts. Not only is paying hard, reconciliation on the backend takes weeks.”

As such, Strange said, with every country having their own bank transfer system, rules around who can issue a credit card, approved payment processors, currencies and bank accounts — payments and expense management across countries can be complex.

Jeeves, according to Strange, “gets as close to the networks/payment rails as possible” since it has its own issuing credit BIN versus needing to connect through legacy players.

Providing an orchestration layer on top of all the rails gives Jeeves the ability “to handle all the payment and reconciliation complexity” so “their customers don’t have to think about it,” she added.

 

#a16z, #andreessen-horowitz, #andressen-horowitz, #angela-strange, #apps, #bank, #banking, #bitso, #brazil, #canada, #chile, #clocktower-ventures, #colombia, #credit-card, #daniel-vogel, #david-velez, #expense-management, #finance, #financial-infrastructure, #financial-services, #funding, #fundings-exits, #jaguar-ventures, #jeeves, #latin-america, #mexico, #money, #national-football-league, #nfl, #nubank, #online-payments, #operating-system, #payment-card, #payments, #profile, #rappi, #recent-funding, #runa, #software-platform, #stanford-university, #startup, #startups, #tc, #uncorrelated-ventures, #united-states, #urban-innovation-fund, #venture-capital, #william-hockey

Belvo, LatAm’s answer to Plaid, raises $43M to scale its API for financial services

Belvo, a Latin American startup which has built an open finance API platform, announced today it has raised $43 million in a Series A round of funding.

A mix of Silicon Valley and Latin American-based VC firms and angels participated in the financing including Future Positive, Kibo Ventures, FJ Labs, Kaszek, MAYA Capital, Venture Friends, Rappi co-founder and president Sebastián Mejía (Rappi), Harsh Sinha, CTO of Wise (formerly Transferwise) and Nubank CEO and founder David Vélez.

Citing Crunchbase data, Belvo believes the round represents the largest series A ever raised by a Latin American fintech. In May 2020, Belvo raised a $10 million seed round co-led by Silicon Valley’s Founders Fund and Argentina’s Kaszek.

Belvo aims to work with leading fintechs in Latin America, spanning across verticals like the neobanks, credit providers and personal finance products Latin Americans use every day.

The startup’s goal with its developer-first API platform that can be used to access and interpret end-user financial data is to build better, more efficient and more inclusive financial products in Latin America. Developers of popular neobank apps, credit providers and personal finance tools use Belvo’s API to connect bank accounts to their apps to unlock the power of open banking.

As TechCrunch Senior Editor Alex Wilhelm explained in this piece last year, Belvo might be considered similar to U.S.-based Plaid, but more attuned to the Latin American market so it can take in a more diverse set of data to better meet the needs of the various markets it serves. 

So while Belvo’s goals are “similar to the overarching goal[s] of Plaid,” co-founder and co-CEO Pablo Viguera told TechCrunch that Belvo is not merely building a banking API business hoping to connect apps to financial accounts. Instead, Belvo wants to build a finance API, which takes in more information than is normally collected by such systems. Latin America is massively underbanked and unbanked so the more data from more sources, the better.

“In essence, we’re pushing for similar outcomes [as Plaid] in terms of when you think about open banking or open finance,” Viguera said. “We’re working to democratize access to financial data and empower end users to port that data, and share that data with whoever they want.”

The company operates under the premise that just because a significant number of the region’s population is underbanked doesn’t mean that they aren’t still financially active. Belvo’s goal is to link all sorts of accounts together. For example, Viguera told TechCrunch that some gig-economy companies in Latin America are issuing their own cards that allow workers to cash out at small local shops. In time, all those transactions are data that could be linked up using Belvo, casting a far wider net than what we’re used to domestically.

The company’s work to connect banks and non-banks together is key to the company’s goal of allowing “any fintech or any developer to access and interpret user financial data,” according to Viguera.

Viguera and co-CEO Oriol Tintoré founded in May of 2019, and was part of Y Combinator’s Winter 2020 batch. Since launching its platform last year, the company says it has built a customer base of over 60 companies across Mexico, Brazil and Colombia, handling millions of monthly API calls. 

This is important because as Alex noted last year, similar to other players in the API-space, Belvo charges for each API call that its customers use (in this sense, it has a model similar to Twilio’s). 

Image Credits: Co-founders and co-CEOs Oriol Tintore and Pablo Viguera / Belvo

Also, over the past year, Belvo says it expanded its API coverage to over 40 financial institutions, which gives companies the ability to connect to over 90% of personal and business bank accounts in LatAm, as well as to tax authorities (such as the SAT in Mexico) and gig economy platforms.

“Essentially we take unstructured financial data , which an individual might have outside of a bank such as integrations we have with gig economy platforms such as Uber and Rappi. We can take a driver’s information from their Uber app, which is kind of built like a bank app and turn it into meaningful bank-like info which third parties can leverage to make assessments as if it’s data coming from a bank,” Viguera explained.

The startup plans to use its new capital to scale its product offering, continue expanding its geographic footprint and double its current headcount of 70. Specifically, Belvo plans to hire more than 50 engineers in Mexico and Brazil by year’s end. It currently has offices in Mexico City, São Paulo, and Barcelona. The company also aims to  launch its bank-to-bank payment initiation offering in Mexico and Brazil.

Belvo currently operates in Mexico, Colombia and Brazil. 

But it’s seeing “a lot of opportunity” in other markets in Latin America, especially in Chile, Peru and Argentina, Viguera told TechCrunch. “In due course, we will look to pursue expansion there.” 

Fred Blackford, founding partner of Future Positive, believes Belvo represents a “truly transformational opportunity for the region’s financial sector.”

Nicolás Szekasy, co-founder and managing partner of Kaszek, noted that demand for financial services in Latin America is growing at an exponential rate .

“Belvo is developing the infrastructure that will enable both the larger institutions and the emerging generation of younger players to successfully deploy their solutions,” he said. “ Oriol, Pablo, and the Belvo team have been leading the development of a sophisticated platform that resolves very complex technical challenges, and the company’s exponential growth reflects how it is delivering a product that fits perfectly with the requirements of the market.” 

#alex-wilhelm, #api, #argentina, #bank, #banking, #barcelona, #belvo, #brazil, #ceo, #chile, #co-ceo, #colombia, #cto, #david-velez, #driver, #editor, #finance, #financial-services, #fj-labs, #founders-fund, #funding, #fundings-exits, #kaszek, #kibo-ventures, #latin-america, #mexico, #mexico-city, #nubank, #online-food-ordering, #open-banking, #open-finance, #peru, #rappi, #recent-funding, #sao-paulo, #startup, #startups, #tc, #technology, #twilio, #uber, #vc, #venture-capital, #wise, #y-combinator

Meet Justos, the new Brazilian insurtech that just got backing from the CEOs of 7 unicorns

Here in the U.S. the concept of using driver’s data to decide the cost of auto insurance premiums is not a new one.

But in markets like Brazil, the idea is still considered relatively novel. A new startup called Justos claims it will be the first Brazilian insurer to use drivers’ data to reward those who drive safely by offering “fairer” prices.

And now Justos has raised about $2.8 million in a seed round led by Kaszek, one of the largest and most active VC firms in Latin America. Big Bets also participated in the round along with the CEOs of seven unicorns including Assaf Wand, CEO and co-founder of Hippo Insurance; David Velez, founder and CEO of Nubank; Carlos Garcia, founder and CEO Kavak; Sergio Furio, founder and CEO of Creditas; Patrick Sigris, founder of iFood and Fritz Lanman, CEO of ClassPass. Senior executives from Robinhood, Stripe, Wise, Carta and Capital One also put money in the round.

Serial entrepreneurs Dhaval Chadha, Jorge Soto Moreno and Antonio Molins co-founded Justos, having most recently worked at various Silicon Valley-based companies including ClassPass, Netflix and Airbnb.

“While we have been friends for a while, it was a coincidence that all three of us were thinking about building something new in Latin America,” Chadha said. “We spent two months studying possible paths, talking to people and investors in the United States, Brazil and Mexico, until we came up with the idea of creating an insurance company that can modernize the sector, starting with auto insurance.”

Ultimately, the trio decided that the auto insurance market would be an ideal sector considering that in Brazil, an estimated more than 70% of cars are not insured. 

The process to get insurance in the country, by any accounts, is a slow one. It takes up to 72 hours to receive initial coverage and two weeks to receive the final insurance policy. Insurers also take their time in resolving claims related to car damages and loss due to accidents, the entrepreneurs say. They also charge that pricing is often not fair or transparent.

Justos aims to improve the whole auto insurance process in Brazil by measuring the way people drive to help price their insurance policies. Similar to Root here in the U.S., Justos intends to collect users’ data through their mobile phones so that it can “more accurately and assertively price different types of risk.” This way, the startup claims it can offer plans  that are up to 30% cheaper than traditional plans, and grant discounts each month, according to the driving patterns of the previous month of each customer. 

“We measure how safely people drive using the sensors on their cell phones,” Chadha said. “This allows us to offer cheaper insurance to users who drive well, thereby reducing biases that are inherent in the pricing models used by traditional insurance companies.”

Justos also plans to use artificial intelligence and computerized vision to analyze and process claims more quickly and machine learning for image analysis and to create bots that help accelerate claims processing. 

“We are building a design driven, mobile first and customer experience that aims to revolutionize insurance in Brazil, similar to what Nubank did with banking,” Chadha told TechCrunch. “We will be eliminating any hidden fees, a lot of the small text and insurance specific jargon that is very confusing for customers.”

Justos will offer its product directly to its customers as well as through distribution channels like banks and brokers.

“By going direct to consumer, we are able to acquire users cheaper than our competitors and give back the savings to our users in the form of cheaper prices,” Chadha said.

Customers will be able to buy insurance through Justos’ app, website, or even WhatsApp. For now, the company is only adding potential customers to a waitlist but plans to begin selling policies later this year..

During the pandemic, the auto insurance sector in Brazil declined by 1%, according to Chadha, who believes that indicates “there is latent demand rearing to go once things open up again.”

Justos has a social good component as well. Justos intends to cap its profits and give any leftover revenue back to nonprofit organizations.

The company also has an ambitious goal: to help make insurance become universally accessible around the world and the roads safer in general.

“People will face everyday risks with a greater sense of safety and adventure. Road accidents will reduce drastically as a result of incentives for safer driving, and the streets will be safer,” Chadha said. “People, rather than profits, will become the focus of the insurance industry.”

Justos plans to use its new capital to set up operations, such as forming partnerships with reinsurers and an insurance company for fronting, since it is starting as an MGA (managing general agent).

It’s also working on building out its products such as apps, its back end and internal operations tools as well as designing all its processes for underwriting, claims and finance. Justos’ data science team is also building out its own pricing model. 

The startup will be focused on Brazil, with plans to eventually expand within Latin America, then Iberia and Asia.

Kaszek’s Andy Young said his firm was impressed by the team’s previous experience and passion for what they’re building.

“It’s a huge space, ripe for innovation and this is the type of team that can take it to the next level,” Young told TechCrunch. “The team has taken an approach to building an insurance platform that blends being consumer centric and data driven to produce something that is not only cheaper and rewards safety but as the brand implies in Portuguese, is fairer.”

#airbnb, #apps, #artificial-intelligence, #asia, #assaf-wand, #auto-insurance, #banking, #brazil, #cell-phones, #ceo, #classpass, #creditas, #david-velez, #driver, #finance, #founder, #fritz-lanman, #funding, #fundings-exits, #hippo-insurance, #ifood, #insurance, #insurance-policies, #insurtech, #kaszek, #latin-america, #machine-learning, #mexico, #mobile-phones, #netflix, #nubank, #recent-funding, #silicon-valley, #startup, #startups, #united-states, #venture-capital

This $250 million growth fund will divert half its profits to historically black colleges and universities

There’s been a lot of talk about racial equality in the year since George Floyd was murdered in Minneapolis, but achieving it is far easier said than done given the current state of affairs. Consider: according to the U.S. Government Accountability Office, historically Black colleges and universities have $15,000 on average in endowment per student, while comparable non-HBCUs have $410,000 on average in endowment per student.

That matters, a lot. While higher learning institutions are almost universally focused on diversifying their student base, HBCUs are largely responsible for the nation’s Black middle class, and the larger the endowment, the stronger the school and its ability to support its educators, researchers, and in the case of public HBCUs, its public service mission. Venture capitalist Jamison Hill says that his own father, who attended North Carolina A&T State University in Greensboro, has long maintained that “if it weren’t for that experience, there’s no way he could have gone on to get a high-paying job, where he met my mother, who laid the foundation for the success of our family.”

Hill, who most recently spent more than six years with Bain Capital Ventures, is now doing something to protect that legacy, along with a kind of dream team that features Laura Weidman Powers, who has cofounded or led numerous impact-focused startups and nonprofits, including Code2040; and Luci Fonseca, who helped establish the Institute for Black Economic Mobility at McKinsey & Co. and has focused on impact investing at Salesforce Ventures, among her other roles.

All three have joined the four-year-old venture firm Base10 Partners to invest a new, $250 million growth-stage fund — the firm’s first later-stage vehicle — and fully half the profits from that fund will be directed to HBCUs to create student scholarships and support university endowments.

It’s a brilliant play on the part of Base10, a Bay Area outfit that closed its second early-stage fund last year with $250 million in capital commitments. Called the Advancement Initiative, the fund has already managed to work checks into eight high-fliers — Attentive, Nubank, Brex, Plaid, Aurora Solar, Wealthsimple, CircleCI, and KeepTruckin.

In each case, the fund participated in heavily oversubscribed rounds, but given its mission, the companies’ founding teams made room for its capital, as did other investors. (As an added sweetener, Base10 has promised to create scholarships in the name of each of these portfolio companies to fund the education of HBCU STEM students. Think: The Plaid Scholarship, The Brex Scholarship, and so forth.)

A fresh take on how the venture world can help close the racial inequality gap in the U.S., it could conceivably prove even more effective than other initiatives, including that of LPs who are increasingly pushing VCs to diversify their investing ranks.

The fund could be particularly impactful if it inspires copycat efforts. HBCUs confer nearly half of all STEM degrees for African-American students, says Base10, yet all 107 HBCU endowments combined are equal to just 7% of Stanford’s roughly $30 billion endowment.

So how will it work? For now, says Hill, the idea is to operate the fund as any growth-stage fund, meaning the overarching criteria is to back companies with the potential to produce outsize returns, no matter the skin color of their founders. Ultimately, however — “our hope is that this is not one and done,” says Hill — the idea is to drive change even further by layering in requirements about who can receive a check from the outfit.

As for the fund’s returns, some will flow directly back to particular HBCUs because they are limited partners in the Advancement Initiative fund, including the private university Howard University in Washington, D.C. and Florida A&M University in Tallahassee, Florida.

Indeed, while the fund’s LPs also include earlier Base10 backers, along with organizations that serve minority communities and impact- and mission-oriented foundations, the Advancement Initiative was particularly focused on “removing any barriers to HBCUs investing,” says Weidman Powers, adding that it invited them to invest with “no fees, no minimums, no real closing date.”

The rest of the returns being set aside from HBCUs will be poured into a donor-advised fund that’s focused on increasing financial inclusion for the many institutions that do not currently have endowments large enough to support a private market strategy.

Given the late-stage of the companies it is backing — and the buzzy deals into which it’s getting — it’s likely, too, there will be profits.

“We’ve found that a lot of companies are very willing to have a conversation with us,” says Fonseca, who says the idea is to plug between $10 million an $20 million into each of the fund’s portfolio companies. “The toughest part is just getting in front of the CEO,” she adds. “Once we get in front of that person and we tell that story, we tell them the vision, they’re immediately sold.”

#attentive, #aurora-solar, #bain-capital-ventures, #base10-partners, #brex, #code2040, #laura-weidman-powers, #nubank, #tc, #venture-capital

The LatAm funding boom continues as Kaszek raises $1B across a duo of funds

Long before SoftBank launched its $2 billion Innovation Fund in Latin America, and before Andreessen Horowitz began actively investing in the region, Sao Paulo-based Kaszek has been putting money into promising startups since 2011, helping spawn nine unicorns along the way.

And now, the early-stage VC firm is announcing its largest fund closures to date: Kaszek Ventures V, a $475 million early-stage fund, believed to be the largest vehicle of its kind ever raised in the region, and Kaszek Ventures Opportunity II, a $525 million for later-stage investments.

Over the years, Kaszek has backed 91 companies, which the firm says collectively have raised over $10 billion in capital. 

MercadoLibre co-founder Hernán Kazah and the company’s ex-CFO, Nicolas Szekasy, founded Kaszek a decade ago after leaving LatAm’s answer to Amazon. Fun fact: the firm’s name comes from a combination of their two last names: Ka-Szek. Rounding out the team are Nicolas Berman, former VP at MercadoLibre, Santiago Fossatti, Andy Young and Mariana Donangelo.

Kaszek founded its first fund in 2011, raising $95 million, an impressive sum at that time. Funds II and III closed in 2014 and 2017, raising $135 million and $200 million, respectively. By 2019, Kaszek had closed on its fourth fund, raising $375 million and its first Opportunity Fund, reserving $225 million for later-stage investing in existing portfolio companies.

It’s notable that in its fifth fund, Kaszek is reserving more of its new capital to fund later-stage investments – a testament to its faith in its current portfolio. Both funds, according to Kaszek, were “several times oversubscribed” with demand coming globally from university endowments, global foundations, technology funds and several tech entrepreneurs.

Silicon Valley-based Sequoia Capital has been an LP since day one via Sequoia Heritage, its community investment office. Also, Connecticut-based Wesleyan University is an LP with Chief Investment Officer Anne Martin describing the founding team as “internet pioneers.”

In recent years, there has been an explosion of global investor interest in Latin American startups. The region’s startup scene is seeing a surge of fundraises, with new unicorns emerging with increasing regularity. And Kaszek has been at the heart of it all.

“We have been at the epicenter of the technology ecosystem in Latin America since 1999, first with MercadoLibre and now with Kaszek, and have witnessed firsthand the extraordinary  evolution that the sector has experienced since its infancy,” said managing partner and co-founder Kazah. “When MercadoLibre started, the internet penetration was less than 3% and it was mostly dial-up connections. Today, more than two decades later, technology secular trends are stronger than ever before as we are experiencing an acceleration towards digitalization.”

Kaszek has not yet backed any companies out of its newest investment vehicles, but plans to put money in 20 to 30 companies out of its early-stage fund, with check sizes ranging from $500,000 to $25 million, according to Kazah. Its Opportunity Fund investments will be more concentrated with the firm likely backing 10 to 15 companies with check sizes ranging from $10 million to $35 million. The firm is industry agnostic, with Kazah saying it considers “any industry where technology is playing a transformational role.”

General partner and co-founder Szekasy says that In the firm’s first funds, Kaszek mostly backed first-time entrepreneurs. But in its last early-stage fund, it began backing more teams led by repeat entrepreneurs or by founders spawned out of some of the region’s more successful startups. As many VC firms do, Kaszek describes its investment strategy as providing more than capital, but also becoming partners with the founders of its portfolio companies. For example, Creditas founder and CEO Sergio Furio describes the firm as “the co-founder I did not have.”

While the firm declined to comment on performance, a source with firsthand knowledge of its metrics over the years tells TechCrunch that it’s quite impressive with MOICS ranging from 19.2 for Fund I, 10.5 for Fund II, 4.9 for Fund III and 2.6 for Fund IV.

The firm’s active portfolio currently consists of 71 companies. Kaszek was one of the earliest investors in Brazilian neobank Nubank, just one of 9 unicorns it has helped build over the years. Other unicorns it’s backed include MadeiraMadeira, PedidosYa, proptech startup QuintoAndar, Gympass, Loggi, Creditas, Kavak and Bitso.

The firm’s investments have largely concentrated in Brazil and Mexico (the two startup hotspots of the region) and Colombia but the firm has also backed startups based in other countries in the region such as DigitalHouse (which was formed in Argentina), NotCo (originally founded in Chile) and Kushki (launched first in Ecuador). It has people on the ground in its home base of Brazil as well as Mexico, the United States, Argentina and Uruguay. 

“We have always believed that the strong secular technology trends that we were seeing 20 years ago, evident in the US and a little later in China, were going to happen in Latin America,” Kazah told TechCrunch. “…Everything we predicted back then was going to happen, happened. Maybe it happened later, but it was also much larger and more comprehensive than what we had initially imagined. That is typically what happens with innovations, they take off later than you think, but fly much higher than you ever imagined.” 

#amazon, #andreessen-horowitz, #argentina, #brazil, #business, #ceo, #cfo, #chile, #china, #co-founder, #colombia, #companies, #connecticut, #creditas, #economy, #ecuador, #entrepreneurship, #funding, #fundings-exits, #hernan-kazah, #internet-penetration, #kaszek, #kaszek-ventures, #latin-america, #mercadolibre, #mexico, #nubank, #private-equity, #quintoandar, #sequoia-capital, #silicon-valley, #softbank, #startup, #startup-company, #startups, #tc, #united-states, #uruguay, #venture-capital, #vp

Sequoia leads $5M pre-seed in Egypt’s 1-month-old digital bank Telda

Egypt has a population of over 100 million people. The country has a high mobile and internet penetration necessary for a young and tech-savvy population with 61% below 30. But despite its youthful population, two out of every three individuals are currently unbanked in Egypt. It’s the same situation in MENA, where only 40% of the population have access to a bank account.

Digital banks have enormous potential in the region. Today, a newly launched one, Telda is announcing a $5 million pre-seed round to digitize how Egyptians save, send, and spend money.

Two weeks ago, we reported that Egyptian e-commerce fulfillment startup Flextock had raised the largest pre-seed in MENA. But that has changed today with Telda’s fundraise surpassing that record with a considerable margin in both MENA and Africa (Autochek’s $3.4 million) for now.

Telda was launched last month by CEO Ahmed Sabbah and CTO Youssef Sholqamy. Before Telda, Sabbah was the co-founder and CTO of Egypt’s ride-hailing company Swvl, and Sholqamy, a former senior engineer in Uber’s infrastructure team. Sabbah said he and his co-founder had been looking at the fintech space at their former workplaces. However, after his experience using N26 while visiting a friend in Berlin in 2015, his eyes opened to the possibilities of digital banking in Egypt.

“I was fond of the idea, and it was coming from a huge pain of payments we had in Egypt and the region. And for me, I was kind of like waiting for this to happen in Egypt, or if not, I thought I’ll tap into the opportunity someday,” he told TechCrunch. “Youcef and I have been like watching out the space for a while when the first digital bank started like six years ago, and watching how they grew in markets where we think banking is more mature than this region. So imagine an opportunity in a region like Egypt where banking is even way, way less mature.”

The North African country is one of the highest consumer spending markets in Africa. Its private consumption accounts for nearly 85% of its nominal GDP, and only 4% of its overall GDP is cashless. In essence, Egypt is heavily cash reliant, and card usage in the country is very much in its infancy. Disheartened by the non-customer-centric banking experiences, Telda was launched to provide an alternative.

Telda

Image Credits: Telda

Like any digital bank globally, Telda enables customers to create a free account to send and receive money. And also a card to use online, in stores, make withdrawals and pay bills. But while the service is currently live, Telda cards are yet to be distributed to existing and new customers.

Telda affirmed that it is the first company to receive a license from the Central Bank of Egypt (CBE) under its new regulations to issue cards and onboard customers digitally. And by doing so, the one-month-old company has made major progress in a relatively short time, even though obtaining that license took lengthy dialogue with regulators.

“First movers will usually have to make all the effort with the regulators and with the bank and try to pave the way. So this was one of the hardest parts — convincing regulators to trust and regulate our banking business and to provide payment financial services to our consumers,” the CEO said. But because Telda’s proposition aligns with the CBE’s vision of digitizing payments in the country, it had little choice but to grant them the license.

A different issue the company has faced was finding a partner bank to provide these services. And to do that, Telda had to convince the bank that their services were complementary and wouldn’t entirely overlap.

“That means basically trying to be as much independent as possible from the infrastructure of the bank. This was quite crucial for us to be able to move right and as fast as a startup, not as slow and pretty much tied to the pace of the bank’s technology and operations,” he continued.

Due to the founders’ experience in Swvl and Uber, the importance of building a great team cannot be overemphasized. There’s barely any blueprint to look at in launching a digital bank in Egypt, so Telda is building how it knows best: hiring exceptional talent. According to the CEO, the team comprises Egyptians who returned to the North African country to build Telda after working for corporations like Facebook, Microsoft, Uber, Noon, and McKinsey.

MENA appears to be ripe for a digital banking experience. Per GSMA Intelligence, 280 million people in the region are mobile internet users, and growth is not slowing down. The frustration with traditional banks is particularly acute with the younger generation, who crave a simple, user-friendly, and transparent experience. Telda has been able to onboard an impressive list of investors, including Sequoia Capital, for this reason.

The giant US VC firm led the pre-seed round as Berlin-based Global Founders Capital (GFC) and emerging markets-focused fund Class 5 Global participated.

Although Sequoia has made a few Sub-Saharan African investments in startups like Healthlane and OPay, Telda is its first venture into North Africa and the wider GCC region. Eight years ago, the VC giant led an infamous seed investment in Latin American digital bank Nubank before it began to go full throttle. Now with more than 38 million customers, Nubank is the world’s largest digital bank with a valuation of $25 billion. Sequoia will be looking for a similar success story in Telda.

“There are many parallels between Brazil and Egypt. Both countries boast a large, young, talented, and tech-savvy population with a strong appetite to innovate,” said Sequoia Partner George Robson of the investment. “We are delighted to partner with Telda and earmark our first investment in the region.”

Telda intends to fast-track its card production and distribution with this new funding. The company said it currently has more than 30,000 signups already, with half of that already requesting cards. It also plans to capitalize on Sequoia’s name for hiring and expansion, the CEO continued.

I think hiring is key for us. We want to scale the team into a world-class team that’s willing to tap into the opportunity. What we aspire for is basically growing in Egypt, start to deliver cards for the early adopters, and we see ourselves reaching close to a million cards in our first year.”

Investments in Egypt have been growing in leaps and bounds over the past three years, accompanied by a growing, vibrant ecosystem. Egypt recorded the largest number of investment deals last year per Partech Africa. With 86 deals completed, the country contributed 24% to the total number of deals made on the continent

GFC partner Roel Janssen referring to the budding ecosystem in his statement, said: “We are highly impressed by Sabbah and Sholqamy and love their vision for building the region’s leading digital banking app, and we are proud to be part of their journey. It is GFC’s first investment in Egypt, and we see that Egypt has the potential to become an important hub in the global tech ecosystem.”

Class 5 global managing partner Youcef Oudjane said, Money has become a medium of self-expression — a form of identity — not solely a store of value. Telda has done a remarkable job of embedding their culture and values in the product, in both functionality and design.

#africa, #banking, #digital-banking, #egypt, #finance, #funding, #global-founders-capital, #mena, #money, #north-africa, #nubank, #sequoia-capital, #startups, #swvl, #tc

Payments, lending and neobanks rule fintechs in emerging markets, report says

Tech investments in emerging markets have been in full swing over the past couple of years and their ecosystems have thrived as a result. Some of these markets like Africa, Latin America, and India, have comprehensive reports by publications and firms on trends and investments in their individual regions. But there’s hardly a report to compare and contrast trends and investments between these regions and rightfully so. Such a task is Herculean.

Well, a report released today by data research organization Briter Bridges and global inclusive tech accelerator Catalyst Fund is punching above its weight to offer a holistic representation to the darling sector of these three markets: fintech.

The report “State of Fintech in Emerging Markets Report” has three objectives — to evaluate the investment, product, and inclusivity trends across emerging markets.

The team surveyed over 177 startups and 33 investors across Africa, Latin America, and India. Though this sample size used is minuscule, the key findings are quite impressive.

Let’s dive in.

Fintechs have raised $23B across the regions since 2017

There’s no stopping emerging markets’ favorite. The sector has continued to receive the largest share of investments year-on-year for the past five years.

More than 300 million unbanked African adults account for 17% of the world’s unbanked population. So it’s not difficult to see why in 2019, the continent witnessed five mega deals in Branch, Tala, World Remit, Interswitch, and OPay that amounted to a total of over $775 million. While this dropped last year to $362 million, companies like Flutterwave, TymeBank, Kuda have raised sizeable rounds during this period.

fintech funding five years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Latin America is home to a growing base of digital users, enabling regulation and reforms, and vibrant small businesses. And just like Africa, the percentage of unbanked people is high, 70%. Fintechs in the region have taken the opportunity to cater to their needs and have been compensated with mega-rounds, including NuBank, Neon, Konfio, and Clip. Collectively, fintech startups have raised $10 billion in the past five years.

In 2019 alone, Indian fintech startups raised a record of $4.8 billion, per the report. Then last year, the sector brought in $3 billion. Over the past five years, they have totaled $11.6 billion with notable names like CRED, Razorpay, Groww, BharatPe, among others.

Africa’s average seed rounds stand at $1M, India and Latin America average $3M

Per the report, early-stage deals have been increasing over the past five years totaling over $1.6 billion. Their average size, especially for seed rounds, has grown from $750,000 in 2017 to $1 million in 2020. For  Latin America, the average seed deal in the last five years was around $5.7 million while India did approximately $4.6 million. The report says the data for the latter was skewed because of CRED’s $30 million seed round.

Image Credits: Briter Bridges & Catalyst Fund

Latin America is IPO-hungry, India breeds unicorns while Africa is just getting started with M&A

Last year, Stripe’s acquisition of Paystack was the highlight of Africa’s M&As because of its size and the homegrown status of the Nigerian fintech startup. Other larger rounds include the $500 million acquisition of Wave by WorldRemit (which happens to be the largest from the continent) and the DPO Group buyout by Network International for $288 million.

Unlike the African fintech market that has noticed mega acquisition deals and many undisclosed seven-figure deals, the Latin American fintech market is a sucker for IPOs. Per the report, fintechs in the region have several $100 million rounds (Nubank, PagSeguro,  Creditas, BancoInter and Neon) but have sparse M&A activity. Some of the startups to have gone public recently include Arco Educacao, Stone Pagamentos, Mosaico, and Pagseguro

On the other, India has more than 25 billion-dollar companies and keeps adding yearly. Just last month, the country recorded more than eight. These unicorns include established companies like PayTm and new ones like CRED.

Payments, credit, and neobanks lead fintech activity

The report shows that payments companies are the crème de la crème for fintech investment across the three regions. Within that subset, B2B payments reign supreme. The next two funded fintech categories are credit and digital banking.

In Africa, payments startups have seen more investments than credit and neobanks. Flutterwave, Chipper Cash, Wave, Paystack, DPO come to mind.

most funded fintech categories emerging market

Image Credits: Briter Bridges & Catalyst Fund

Latin America most funded fintechs are neobanks. And it is the only region with all three product categories closely funded at $2-3 billion. Some of these companies include NuBank, Creditas, and dLocal.

India’s top-funded fintech startups are in payments. But it has notable representation in credit and neobanks, some of which have raised nine-figure rounds like Niyo, Lendingkart, and InCred.

Investors are enthused about the future of insurance, payments, and digital banks

From the handful of investors surveyed in the report on their view on future trends in fintech products 5 years from now, most of them chose insurance, payments, and digital banking models.

Investment platforms and embedded models are also areas of interest. They were less keen on agriculture and remittances while wealth tech platforms and neobanks were also lower in priority. How is it that digital banking and neo-banking are at two ends of the spectrum of investor choice? I can’t say for sure.

investors appetite in the coming years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Parts of the report talk about underserved consumers in these regions and how fintech startups are serving them. It also discusses whether these fintech startups promote financial inclusion and what features and products would get them to that point.

In all of this, the glaring fact, which is no news, is that Africa is lagging years behind Latin America and India. Talking with Briter Bridges director Dario Giuliani, he pointed out that he’d lean on five years. He added that what makes India a better market at this stage is because it is a country rather than a continent.

“It is easier to manage one country than 54 countries in Africa and 20 in Latin America,” he said to TechCrunch. “In Africa, we use the label ‘Africa,’ but we’re very much talking about 4-6 countries. Latin America is basically Brazil, Mexico, Argentina and Colombia who are seeing massive companies rise. India is one.”

One key detail the report mentions is that most fintechs across emerging markets are crossing over to different sectors like crop insurance, credit lines for distributors and vendors, KYC, e-commerce payment gateways, medical finance, and insurance. Guiliani says he expects this to continue.

#africa, #banking, #brazil, #briter-bridges, #catalyst-fund, #chipper-cash, #digital-banking, #dlocal, #finance, #financial-inclusion, #financial-technology, #fintech, #flutterwave, #india, #latin-america, #ma, #nubank, #online-lending, #payments, #paystack, #paytm, #startups, #stripe, #tc, #tymebank, #wave, #worldremit