Technology

Latin America is becoming the land of fintechs

In 2019, the VC investment in startups of the region focused on banking and financial services grew 130% over the previous year

Softbank Logo at The entrance to the office in Tokyo, Japan
Japanese conglomerate Softbank led large investments in Latin American fintechs in 2019. Photo: Shutterstock
  • Brazilian fintechs were the ones that received most of the contributions, with a total of $1.34 billion, or 70% of the total last year, followed by Mexico ($396 million), Argentina ($152 million) and Colombia ($21 million);
  • According to KPMG, Brazilian startups alone attracted $526.2 million in investments last quarter.

Two reports disclosed this week confirmed what venture capital funds and investors had known for a while now: Latin America is becoming the land of fintechs. The region saw the investments in this type of startups grow 130% last year, to $2.66 billion, according to the consultancy Finnovating. Brazilian fintechs were the ones that received most of the contributions, with a total of $1.34 billion, or 70% of the total last year, followed by Mexico ($396 million), Argentina ($152 million) and Colombia ($21 million).

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KPMG in its turn highlighted that 2019’s fourth quarter investments in the segment were particularly strong in Brazil, with sizable deals by EBANX, VTEX ($140 million) and Neon ($94 million). “A strengthening economy in Brazil, combined with ongoing government reforms and low, (forBrazil), interest rates, and increasing interest from global VC investors helped propel the country to a record high level of VC investment in 2019,”stated KPMG. Also according to KPMG, Brazilian startups alone attracted $526.2 million in investments last quarter.

Fintech was also a top priority for VC investors in other areas of Latin America in 2019’s fourth quarter, said KPMG. In Argentina, Ualá raised $150 million in a deal led by Asia-based Tencent and Softbank. The Japanese conglomerate also led a $100 million contribution to the Mexican fintech Konfío last year.

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Of course that in absolute number of fintechs Latin America is not on the top of the list (US and China, are), but the place where these startups seems to have the chance of doing a real revolution in terms of credit, payments and a series of banking and financial services is here.

The region’s success in this segment can be explained by the combination of a challenge and a quality: on the one hand, the low proportion of people with access to credit and a banking account, on the other, the passion and high adhesion of Latin Americans to new technologies.

In the report, Raphael Vianna, KPMG’s head of Deal Advisory and Strategy Analytics in Brazil, said that after a hot year for the Brazillians startups, “2020 is looking very bright for the VC market, with areas like healthtech, education, and agtech well positioned to attract investor attention”.