March 24, 2017
The second part of the LATAM FinTech Series explores the homegrown disruptors that are making LATAM the next FinTech destination and changing the local economy by inviting investment and changing how locals do business
LATAM is being eyed as a destination for expansion and investment by the rest of the world. The homegrown startups have some of the most ingenuous offerings designed to keep in mind local challenges in the banking space and drawing much applause and consumer base. Here is a quick look at the top 10 disruptors in the region
Nubank, the Brazilian financial services startup has led the financial revolution with key investments from top American and local VCs. Nubank offers a Mastercard which can be controlled from an app that runs on an Android or iOS phone or watch. Free of fees or annuity, all card services are offered through the app. This is not an entirely new concept but appeals to the majority of Brazil's emerging middle-class mobile enabled audience. It revolutionized the banking scene because as a payment company the rates were one-third of that of the banking institutions and it did not come under the purview of the central bank. Considering over 100 million users are under 29, there is a scope for growth and the company has rightfully generated interest and gained customers. As of date, Nubank has over $178.3 million in equity funding over 5 rounds with over 11 investors, lead investors being DST Global, Founders Fund, Goldman Sachs, Sequoia Capital, Tiger Global Fund.
MercadoPago, the secure digital payments offering from Latin America's largest e-commerce player often referred to as the Amazon of South America MercadoLibre. The platform supports over 150,000 merchants. They also have a mobile app to send and receive money without incurring fees. With over 90 million customers on this platform, this is a classic case of a P2P payments disruptor that is posing a challenge to traditional bank payment services. Total payment transactions in Q1 jumped 85.5% year over year to 27.5 million, while total payment volume more than doubled in local currencies as against PayPal's 26% global average.
PayCLIP (CLIP) is a Mexico-based startup that developed a card reader much on the lines of Square that reads any type of card and allows the user to accept card payments from their smartphones and tablets. The LATAM market being 95% small and solo business driven makes CLIP an instant hit. Clip can boost merchant sales and accepts cards from over 18 issuers along with offering payments in installments making it a favorite with the users and clearly establishes itself as the market leader in this space. CLIP has over 42.5 million in funding. Investors such as Alta Ventures pumped in around 8 million in December 2015. Others betting on CLIP include American Ventures, Sierra Ventures, Angel Ventures Mexico and Mexico Ventures.
Konfio is a young Mexican startup that offers microloans up to $150,000 for small businesses with a payback timeline of up to 24 months at much lower rates than that of banks with a much-simplified process and disbursement in a matter of hours. Konfio has raised about 8 million dollars across 2 rounds from 6 investors. Konfio looks up credit bureaus but uses its own proprietary algorithm to measure creditworthiness and has a very low rate of default currently.
Afluenta the Argentinian startup's website reads 'The World changed. The Credit Also.' Very true to its thinking, this company nestled in Buenos Aires, leads the peer to peer lending space in the LATAM. Afluenta has received over 10.78 million USD in funding from International Finance Corporation and Elevar Equity. Afluenta promises lenders up to 43% in estimated annual return and borrowers up to 250,000 USD dollars in 48 hours. Afluenta promises a 100% online process with no banks or bureaucracies to its customers, something which instantly strikes a chord with the consumers. Afluenta has already expanded to Peru and Mexico and Colombia are next on its radar followed by Chile, Brazil and Uruguay.
Conekta is a Mexican startup that acts as a payment engine for LATAM to process online and offline payments through their API and has readily supported libraries for PHP, Ruby, Python and plugins for Magento, Spree and others. Conekta allows companies and developers to create their own payment solution with their own design and flow for any website and app. Conekta has recently launched a Shopify integration suite as well. The overall suite supports debit and credit card payments, cash payments via their OXXO solution and a number of interbank transfers for Mexico; in addition to that, international payments via Visa, Mastercard and American Express. In October 2016, it garnered a funding of 6.6 million USD in Series A funding led by Conconi Growth Partners as it shows potential for global scale.
Creditas, formerly BankFacil, the Sao Paulo-based lending FinTech recently raised 19 million in seed funding in February 2017. The International Finance Corporation (IFC) led the Series B Investment with participation from Naspers’ new FinTech division in Latin America along with existing investors Redpoint eVentures, KaszeK Ventures, Quona Capital and QED. The Sao Paolo-based digital lending platform focuses on originating and processing secured loans at much lower rates. Creditas aims to use the funds to expand within Brazil at the moment.
Ripio is the Argentinian bitcoin wallet company earlier called BitPagos. It enables one to buy and sell bitcoins and also to pay in installments for goods. Latin America has seen a rather dramatic depreciation of local currencies and bitcoin has proven to be a more stable option. People look towards BitPagos (now Ripio) as an alternative option to substitute currency with bitcoin as well as credit with bitcoin. The company successfully created a payment system that enables users to buy goods online without the need for a credit card, or credit check and no actual bitcoin is involved for either merchant or buyer. This makes Ripio stand out from other blockchain companies. Ripio is currently present in Argentina, Mexico and Brazil, and is slated for growth with a total of 5.73 million USD in funding from about 16 investors.
MesFix is a Colombian crowdfunding platform that connects small and medium businesses to investors to improve the cash flow and allowing them to sell pending receivables at a discount to MesFix community members. Mesfix recently won at Santander InnoVentures’ FinTech event in São Paulo and was selected as the winner of the Seedstars World Colombia competition.
Kubero Financiero is a microfinance company that helps to connect lenders with borrowers through better interest rates. Based out of Sao Paulo, the company has raised about 7.5 million USD in series A funding and is looking to tap into the massive credit market that exists in the region.
Others of note in the region that are gathering interest and VC traction are
GuiaBolso is a Sao Paulo-based personal finance app that has raised a total of about 23.5 million USD and has over 2.5 million users. Similarly, WealthSimple is another personal finance management app that guarantees investment in autopilot mode through smart technology.
MoIP or Money over IP is a payments gateway/intermediary very popular in Brazil. It supports debit cards, credit cards, auto debits and over 15 other options of payments including bank financing with ready adapters for online e-commerce checkout, subscription payments and more. It was acquired by Wirecard in February 2016. Others include ClicPago, ComproPago, Open Pay, TPAGA, Netero, EWally, Sr. Pago, EBanx.
Latin America is an energetic hub of innovation and deserves all the spotlight it currently basks in. Real problems and banking challenges sometimes bring out the most innovative solutions and the current ecosystem is proof that some of the most promising solutions are being incubated in LATAM at the moment.