Why the fintech boom in Latin America is more than hype and superlative venture capital investment – TechCrunch



Of all the startup markets around the world, fintech in Latin America is one of the hottest. Capital is pouring into the region’s FinTech companies at a breakneck rate, leading to a wave of startups creating value in the private market at a rate that is nothing short of amazing.

The volume of capital flowing into Latin American fintech startups may seem overheated, but there are several reasons why the flooding makes sense. That’s not to say that every transaction and every resulting valuation markup makes sense. But there are several factors at play that make the booming venture capital totals that these companies raise more reasonable than initially appearing.

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Favorable regulatory winds in some markets are helping to build momentum for FinTech products. In addition, several startups – we’ll talk about Pomelo and Belvo below; Swap is another example: they are working on building infrastructure that should help bring more financial services to market.

And finally, the Latin American fintech market is seeing the volume of exits increase, which implies not only that the capital can be returned to the investors who make an offer to the startups in the region, but also that the funds previously kept in the region. Amber from the private market and recently liquidated can be reinvested. in startups, creating a virtuous circle.

Let’s take a quick look at how much money fintech startups in Latin America are raising this year before we discuss the logic behind the influx.

A rising tide of capital

CB Insights data indicates that despite rapid growth from 2015 to 2020, when Latin American fintechs raised $ 138 million and $ 3.14 billion respectively, 2021 stands out from other years in terms of growth.

Image credits: CB Insights

It has proven to be quite common to see the increase in dollar volume of a venture capital market or category of startups reach new heights in recent quarters. But we have seen such records come in often with flat or even lower trading volumes. This is not the case with the LatAm fintech; dollars and deals in the region are going to shatter the superlatives of 2020 and 2019, and they already have.

The dollar result will be more impressive than the deal number, but both should override previous totals.

By reducing our vision to quarterly results versus annual and cumulative results, Latin American fintech startups have just achieved the second best quarter on record. The period of the third quarter of 2021 of the cohort of startups was not beaten until the second quarter of 2021; if we exclude the second quarter, for reference, the third quarter 2021 itself is more than double any previous quarterly record.


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