Welcome to The Interchange, a look at this week’s fintech news and trends. To get this in your inbox, subscribe here.
Greetings from Austin, Texas, where the temperatures have been above 100 degrees for days and we are doing our best not to melt.
The global funding wave in 2021 was unlike anything most of us have ever seen before. While countries around the world saw a surge in venture capital investment, Latin America in particular saw a massive surge in invested dollars. Unsurprisingly — with so many people in the region under- or under-banking and digital penetration finally taking off — fintech startups have been among the biggest recipients of that capital.
The trend continued into the first quarter of 2022, according to LAVCA, the Association for Private Capital Investment in Latin America, which found that startups in the region raised a total of $2.8 billion through 190 transactions during the three-month period that followed. ended on March 31. the fourth-largest quarter ever for investment in the region, the data shows, representing a 67% increase compared to the $1.7 billion raised in the first quarter of 2021. It was also 375% higher than the $582 million raised in the first quarter of 2020.
Fintech startups, in particular, were by far the largest recipients of venture capital funding in the first quarter of 2022, with 43% of dollars raised — or $1.2 billion — in the category. That’s an increase of 16% in the first quarter of 2021. Meanwhile, investments in fintechs accounted for 30% of all deals in the second quarter, compared to 25% in the first quarter of 2021.
Carlos Ramos de la Vega, venture capital director of LAVCA, told TechCrunch: “We have continued to see the cross-fertilization of business models within the industry: payment platforms are increasingly integrating BNPL alternatives, lending platforms have become full-service digital banks, challenger banks have expanded their product suite. expanded with embedded credit products and working capital facilities.”
With the global business slowing down, it is noteworthy that Latin American fintechs continue to make big rounds in the second quarter of this year. For example, last week Ecuador got its first unicorn when Kushki, a payment infrastructure startup, raised $100 million at a valuation of $1.5 billion. And Mexico City-based digital bank Klar has secured $70 million in equity financing in a round led by General Atlantic, which valued that company at about $500 million. I first wrote about Klar in September 2019, when it aspired to become the ‘Chime of Mexico’. You can read how the model has evolved here.
Does all this mean that LatAm is an outlier? Not necessary. But it does indicate that investor interest in the region continues.
Now we all know that insurtechs have taken a beating in the public markets. And last week I covered a major round of layoffs in the industry. So it’s especially interesting that a startup in the space is not only continuing to raise capital and raising valuations, but is also reportedly actively working to become cash flow positive.
I wrote about Branch, a Columbus, Ohio-based startup that offers bundled home and auto insurance, which raised $147 million in Series C financing at a $1.05 billion backward valuation. I first heard/wrote about Branch in the summer of 2020, and it was wild to watch the company grow steadily.
With the breaking news, I wanted to dig deeper into what sets Branch apart from the other struggling insurtechs out there. CEO and co-founder Steve Lekas told me in an interview, “Now we are at a scale where we sell more products than most of the products that came before us. I think the thing we made is the thing that everyone thought they were investing in to start with.” For more information, read my story on the topic from June 8th.
TC’s Kyle Wiggers and Devin Coldewey delved into Apple’s biggest leap into financial services yet: They became a formidable player in the increasingly crowded buy now, pay later (BNPL) space. This article covered the news to start with. This one took a look at how Apple makes its own loans. And this one took a closer look at how other BNPL providers are reacting to the news. And ICYMI, the week before, Square announced it would be supporting Apple’s Tap to Pay technology later this year. It was a collaboration that MagicCube founder Sam Shawki predicted, despite rumors that Apple would kill Square. According to him, that partnership only continues to increase the need to provide an equivalent payment acceptance solution for Android.
Also, in the past week, two major players announced major crypto-related moves. I looked at how PayPal users can (finally) transfer cryptocurrency from their accounts to other wallets and exchanges. “This move shows that we are doing this for the long term,” one executive told me in an interview. And Anita Ramaswamy — who was on site with Consensus in the inferno that is currently Austin, Texas — reported on American Express’s new partnership with crypto wealth management platform and wallet provider Abra. The card allows users who transact in US dollars to earn cryptocurrency rewards for their purchases through the Amex network. Amex users have been waiting for an announcement like this for a while now as its competitors Visa and Mastercard have already launched their own crypto rewards credit cards through partnerships with digital asset companies.
It feels like not more than a few weeks can go by without Better.com making headlines again. This time, the digital mortgage lender is being sued by a former executive who claims she was fired for a variety of reasons, including raising concerns that the company and its CEO Vishal Garg misled investors when it attempted to go public through a SPAC.
Other interesting texts:
Banks and tech giants are losing skilled staff to flexible fintechs
Bolt, taking on challenges, cutting costs and lowering growth target
No money 20/20 Europe
‘The mood is very grim’: The once hot fintech sector faces IPO delays and consolidation
Stripe co-founder hits back at rivals, accusing company of unfair competition
Seen on TechCrunch
With millions in support, SecureSave is Suze Orman’s not-so-surprising debut in startups
Fruitful comes from stealth with $33 million in funding and an app that aims to fuel healthy financial habits
Ivella is the latest fintech focused on couples banking, with a twist
Backbase raises its first funding, $128 million at a valuation of $2.6 billion, for tools that help banks engage
PayShepherd Raises $3M USD in Financing to Refresh Contractor Billing Systems
That’s it for this week! Excuse me while I go to the pool with my family to cool off. Enjoy the rest of your weekend and thanks for reading. To borrow from my colleague and dear friend Natasha Mascarenhas, please support me by forwarding this newsletter to a friend or follow me on twitter†
This post Investors show Latin American fintech startups the money – TechCrunch was original published at “https://techcrunch.com/2022/06/12/investors-continue-to-show-latam-fintechs-the-money/”