Investors are showing the money to Latin American fintechs – TechCrunch

Welcome to The Interchange, an overview of this week’s fintech news and trends. To receive this in your inbox, subscribe here.

Greetings from Austin, TX where temperatures have been above 100 degrees for days and we are struggling not to melt.

The global funding boom in 2021 was unlike anything most of us have seen before. While countries around the world have seen an increase in venture capital investments, Latin America in particular has seen a massive increase in dollars invested. Unsurprisingly – with so many people in the region underbanked or unbanked and digital penetration finally taking off – fintech startups have been among the main beneficiaries of this capital.

The trend continued in the first quarter of 2022, according to LAVCA, the Association for Private Capital Investment in Latin America, which found that startups in the region collectively raised $2.8 billion across 190 deals in during that 3-month period ending March 31. the largest fourth quarter ever for investment in the region, according to the data, and represents a 67% increase from the $1.7 billion raised in the first quarter of 2021. It was also up 375% from to the $582 million raised in the first quarter of 2020.

Notably, fintech startups were from afar the largest venture capital funding recipients in Q1 2022, with 43% of dollars raised – or $1.2 billion – having flowed into the category. This represents an increase from 16% in the first quarter of 2021. Meanwhile, investments in fintech accounted for 30% of all transactions in the second quarter, compared to 25% in the first quarter of 2021.

Picture credits: LAVCA

Carlos Ramos de la Vega, head of venture capital at LAVCA, told TechCrunch, “We have continued to see the cross-pollination 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 range to include integrated credit products and working capital facilities.

Now, with the global corporate downturn underway, it’s worth noting that Latin American fintechs continue to raise major fundraising rounds in the second quarter of this year. For example, last week Ecuador got its first unicorn when payments infrastructure startup Kushki raised $100 million at a valuation of $1.5 billion. And, Mexico City-based digital bank Klar landed $70 million in equity in a funding round led by General Atlantic that valued that company at around $500 million. I first wrote about Klar in September 2019 when it aspired to be the “chime of Mexico”. You can read how his model evolved here.

Does all of this mean that LatAm is an outlier? Not necessarily. But it signals that investor appetite in the region remains.

Weekly News

Now we all know insurtechs have been beaten in the public markets. And last week, I covered a major series of layoffs in the industry. It is therefore very interesting that a startup in the space not only continues to raise capital and increase its valuation, but too would actively work to become cash flow positive.

I wrote about Branch, a Columbus, Ohio-based startup offering bundled home and auto insurance, which raised $147M in Series C funding at a post-money valuation of 1.05 billion dollars. I first heard/wrote about Branch in the summer of 2020, and it was crazy to see the company steadily growing its business.

With the breaking news, I wanted to dig deeper into what differentiates Branch from other struggling insurtechs. CEO and co-founder Steve Lekas ​​told me in an interview, “Now we’re at a scale where we’re selling more products than most that came before us. I think the thing that we did is the thing that everyone thought they were investing in initially. For more, read my story on the topic from June 8.

TC’s Kyle Wiggers and Devin Coldewey Weigh in on Apple’s Biggest Decision in financial services to date – becoming a formidable player in the increasingly crowded buy now, pay later (BNPL) space. This article has covered the news to begin with. This one looked at how Apple makes its own loans. And this one delved into how BNPL’s other suppliers react to the news. And ICYMI, the previous week, Square announced that it would start supporting Apple’s Tap to Pay technology later this year. It was a partnership that MagicCube founder Sam Shawki predicted despite the buzz that Apple would kill off Square. According to him, this partnership only increases the need to provide an equivalent payment acceptance solution for Android.

Also, last week two big players announced big moves related to crypto. I looked at how PayPal users will (finally) be able to transfer cryptocurrency from their accounts to other wallets and exchanges. “This decision shows we’re here for the long haul,” one executive told me in an interview. And Anita Ramaswamy – who was on the ground at Consensus in the inferno which is currently Austin, Texas – reported on American Express’ new partnership with crypto wealth management platform and wallet provider Abra. The card will allow users transacting in US dollars to earn cryptocurrency rewards on their purchases through the Amex network. Amex users have been waiting for an announcement like this for some time, as competitors Visa and Mastercard have already launched their own crypto rewards credit cards through partnerships with digital asset companies.

It doesn’t feel like more than two weeks can pass without Better.com making headlines again. This time, the digital mortgage lender is being sued by a former executive who alleges she was kicked out for a variety of reasons, one of which includes raising concerns that the company and its CEO Vishal Garg have instigated misled investors when it attempted to go public through a SPAC. .

Other interesting reading:

Banks and tech giants are losing skilled staff to flexible fintechs

Bolt, facing challenges, cuts costs and lowers growth target

Cash-strapped 20/20 Europe

‘The mood is very dark’: Once-hit fintech sector faces IPO delays and consolidation

Stripe co-founder hits back at rivals accusing company of unfair competition

Insurtech outlier branch closes at $147 million with a valuation of $1.05 billion

Picture credits: Branch/CEO Steve Lekas

Funding

Seen on TechCrunch

With millions in support, SecureSave is Suze Orman’s not-so-surprising startup debut

Fruitful emerges 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 First Funding, $128M at a $2.6B Valuation, for Tools That Help Banks Engage

And elsewhere

PayShepherd Secures US$3 Million in Funding to Upgrade Contractor Billing Systems

It’s all for this week ! Now excuse me while I go to the pool with my family to try and cool off. Enjoy the rest of your weekend, and thanks for reading. To borrow from my colleague and dear friend Natasha Mascarenhas, you can support me by forwarding this newsletter to a friend or follow me on twitter.

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