$4 million in debt funding

Hola amig@s fintech,

Happy (belated) Earth Day!  Did you know?  20% of the Earth’s freshwater is in Brazil 🇧🇷with a total of 5,116 square miles of freshwater concentrated in the Amazon Basin. Colombia 🇨🇴 also boasts an impressive ranking as the sixth largest source of freshwater in the world and is leading global efforts around the Freshwater Challenge to protect and restore rivers, lakes, and freshwater wetlands.

Please find below this week’s front page of Latam fintech news. If you’re reading this on the web, we’d appreciate your support by sharing and subscribing.  

💛 Until next weekend. Até a próxima!  - Team TWIF Latam

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📊 Stat of the Week

In Latin America and the Caribbean, consumers have different ways to save money, only 63% of consumers in Latam are saving, of which only 33% do so regularly and the remaining 67% occasionally. Read full report in Trends of movement of Money in Latin America and the Caribbean

📖  Read of the Week

Fintech Annual Report 2023 discloses the trends, projections and analyzes the behavior of the Fintech sector in Mexico, with financial inclusion as its main challenge. Fintechs have generated a revolution in financial inclusion, approximately 45% of their clients did not previously have financial products and only 5% of Fintechs in the country focus on offering services for SMEs.

🦉 Tweet of the Week

💸 Venture Financing

💸Equity
There was just one fintech unicorn minted in the first quarter | TechCrunch

💵 Debt
Scalable Credit raised $4 million from SRM Ventures of SRM Asset to fund its revenue-based financing model for startups.  Scalable uses data from ERPs and other sources to underwrite credit lines for SaaS companies.

💰 Venture funds

Banco Santander Brazil announced a new Corporate Venture Capital (CVC) fund focused on fintechs led by Nathalia Britto, head of Open Innovation.  Further details were not available, however, fintechs and investors in the sector were invited to reach out.

☯️ Exits

🤝 M&A - Fintech

These LatAm Startups Acquired Others Companies and It Didn’t Work Out as Expected | Contxto

🚀 Product Launches & Partnerships

💻 Fintech

🇨🇴 Kapital, the Mexican data-driven neobank for SMBs and entrepreneurs in Latam, launched a corporate digital dollar card secured by blockchain technology to provide protection against the devaluation of the Colombian peso. The card allows businesses to perform international transfers, access exclusive Mastercard World Elite benefits, and manage their accounts and payments through the Kapital platform.

🇨🇱 Racional, the Chilean socially-driven savings and investments platform, launched a high-yield dollar investment account, allowing users to earn interest and invest in a completely digital, commission-free way. The account is protected by the Securities Investor Protection Corporation, has no minimum or maximum term and allows unlimited deposits and withdrawals.

🇲🇽 YoCripto, the Mexican digital platform that offers a credit card with Bitcoin rewards of up to 3% on every purchase, launched a new credit card designed specifically for young adults in Mexico. The card's acceptance rate is 100% and it provides access to the benefits of the crypto ecosystem without the complexity.

🇺🇾 dLocal, the Uruguay-based payments platform, launched an all-in-one payment solution called dLocal for Platforms that allows online businesses to manage all global platform payments in one place. The solution enables sellers to be onboarded, payments to be accepted on behalf of users, payments to be split between multiple users, and costs to be deducted as necessary.

🇧🇷 nTokens, the Brazil-based compliant tokenisation company, and Tempo France, the remittances company, announced a partnership to launch remittances to Brazil from EU countries using the Stellar blockchain platform. This project allows people to send money via the Tempo app and receive the funds into their bank accounts in over 170 Brazilian banks. Both companies expect the volume of money transfers between the EU and Brazil to grow from 5% to 10% in 2023, as Brazil accounts for remittances worth nearly $5 billion per year.

🇧🇷 Nubank's NuPay, the exclusive online payment service for Nubank customers, announced it can now be used on iFood, allowing customers to make payments and use an extra credit limit. Since its launch in March 2022, NuPay has been integrated into over 160 e-commerce platforms and 6,000 establishments.

📜 Policy

🇸🇻 DitoBanx, the Salvadoran fintech that facilitates the acceptance of payments with bitcoin, obtained a license to operate as digital asset provider in El Salvador, aiming to expand financial inclusion in the country. The company buys, sells, and stores cryptocurrencies. El Salvador recently became the first country in the world to recognize Bitcoin as a legal tender.

🇦🇷 In Argentina, international banks are requesting that the interoperable QRs regulated by the Central Bank, which began by opening up the systems of banks and wallets by scanning a QR code, also include payments initiated with credit cards, in addition to the aforementioned payments and transfers from one account/user to another. The request comes as banks and fintechs continue to compete for the country’s market share.

🇧🇷 Starting on April 24, the Central Bank of Brazil will receive proposals from those institutions interested in participating in the digital real (the Brazilian Central Bank Digital Currency, CBDC) pilot. The deadline to submit proposals will be May 5. The pilot will initially include around 10 participants, and will involve simulated operations with federal public bonds, and institutions must submit transaction simulation projects to participate in the process.

📰 Other News

🇨🇴 Colombian startups raised over $8 billion in venture capital, with fintech leading the way, according to the ColombiaTech Report 2022-2023. The report also reveals that the Colombian startup ecosystem has grown by 19% in the past year with 1,327 startups operating across 31 different sectors. Fintech startups are the largest, followed by RetailTech and HealthTech.

🌐Mastercard launched a suite of services for female entrepreneurs in the LAC region, which includes access to capital and functions to optimize business operations, as well as services that address specific needs of women such as health and continuing education. The move reflects and supports the entrepreneurial environment in the region, where 99.5% of firms are SMEs, with 50% being managed by women. Mastercard's latest move follows its commitment to bringing together one billion people, 50 million micro and small businesses, and 25 million women entrepreneurs into the digital sector by 2025.

🇨🇴 Alive Ventures, the Colombia-based VC firm focused on supporting tech-based startups addressing social inequality and climate issues, secured $20 million in funding for a second fund of $80 million. Investors in the fund include the Dutch Good Growth Fund, Latam Impact Fund, Acumen, and the WWB Foundation. The company's first fund of $28 million included Crehana, Uplanner, and Finaktiva, among others.

🇲🇽 Belvo, the Mexican open finance API platform, named Federica Gregorini as its new General Manager in Mexico. Gregorini’s previous experience includes experience working across Latam and Europe at firms such Kavak, Grupo ITG; General Electric and BNP Paribas. Belvo has also launched a mentoring program for women in tech to promote equality and equity in the industry.

🌐Apple launched a high-yield savings account exclusively for Apple Card owners, with 4.15% APY with no minimum balance or monthly fees. The account allows customers to automatically transfer 1-3% of their Apple Card purchases into their savings account, as well as transfer money in and out of a linked bank account.

📚 Deeper Reads

Credit Card Debt, Defaults Pose a Major Challenge to Brazil’s Fintechs

No, Steve Jobs was not Satoshi Nakamoto

The rise and fall of Argentina’s celebrity crypto pastor

Fintech: how is the world shaping the financial innovation industry?

The 7 biggest threats CEOs see to their business finances (ES)

🌱 ClimateTech Corner by Daniela

Hey there! Are you as excited about ClimateTech as we are? It is fitting that for this year's EarthDay the theme  is on "Invest In Our Planet". During last week's EarthX 2023 conference, several interesting facts about Latam's potential in ClimateTech were highlighted, including:

🚀 Latam has the potential to become a global leader in ClimateTech due to its rich natural resources, including renewable energy sources such as solar, wind, and hydropower.

📈 Latam's ClimateTech market is expected to grow to $1 trillion by 2030, representing a significant economic opportunity for the region.

🧑‍🌾 Latam has been recognized for its leadership in sustainable agriculture, with countries such as Brazil and Argentina being major producers of soybeans and beef, and Uruguay being a leader in sustainable forestry practices.

We want to make sure we're delivering the content that matters most to you. So let us know what climate tech topics are you most interested in reading about! It is time to jump in 🌎.

🔦 Guest Post: Spotlight on Retail Businesses Doing Fintech by Shanti Galvan

Five years after Mexico’s famed fintech law took effect, the sector has failed to meet Finnovista’s prediction that it would “broaden the frontiers of the financial inclusion of segments of the unbanked and underbanked population” with only a growth of 2%  in adults ages 18-70 with a bank account (INEGI 2016-2018). One of the key challenges has been incentives for formalization, thus there lies a big opportunity for retail companies to create low-cost solutions.

Retail companies in Mexico are increasingly integrating fintech solutions into their business models, and buying fintech licenses to do so in order to offer more convenient and efficient financial services to their customers.

Q. How are they uniquely positioned to build strong financial solutions and compete with banks?

They have an established customer base whose relationships they can use to encourage them to try new financial services. By offering integrated financial services, retail companies can improve the overall customer experience and increase customer loyalty.

Retail companies already have an extensive physical and digital infrastructure in place, which can be used to offer financial services. Thus offering financial services at a lower cost than traditional banks and other fintechs.  Retail companies have a deep understanding of consumer behavior, which they can use to design fintech solutions that meet customer needs. They have access to data on customer preferences, spending habits, and financial behavior, which they can use to develop personalized financial products and services.  Retail companies have strong brand recognition, which can help them stand out in the crowded fintech market. They already have a strong presence in the market, and customers are more likely to trust them with their financial data and transactions.

Q. Who are the most relevant players?

Walmart: Walmart de Mexico y Centroamerica, is the largest outside of the US with up to 2,862 retail units attending all kinds of segments. Specifically there is about one Walmart-owned store per 47,000 Mexicans with millions of customers visiting its stores every day. New Technologies brought Walmart back into the game, as in 2007 Banco Walmart shook the whole financial ecosystem, nevertheless it failed to deliver on the disruption of the financial ecosystem and it was sold to Inbursa in 2015.  In 2018, Cashi allowed customer to do digital and utilities payments and ask for a micro-credits, now with the recent acquisition of Trafalgar (IFPE) license they will have access to SPEI network, cash-in & out, as well as heavily bet on the remittances business.

Oxxo: OXXO, the largest convenience store chain in Mexico with more than 20,000 stores in Mexico and presence with 310 stores in Peru, Colombia, Chile and Brasil. It receives more than 13 million visits a day. In 2014, together with Citibanamex, one of the largest retail banks, they launched a pre-paid debit card called Saldazo. Nonetheless, as part of a strategic decision they decided to finalize their relationship. In 2021, launched Spin by Oxxo with its own IFPE Fintech license and it already has more than 6 million clients that can receive deposits, remittances (with a huge network of partners like Western Union, Xoom, MoneyGram), send and receive money, access SPEI and cash-in & out and a ready to use Visa Card to transact (App Is optional).

Conclusions

The rate of growth of these players is showing that their entry to the market is a game changer for the fintech and banking ecosystem. In Mexico, we have been seeing a shift away from customer facing fintechs as consumers still seek brand-recognition to trust them with their money and physical presence and a rise of B2B Fintech solutions in the market. This definitely confirms that there will be a consolidation of the players that will survive that game. There is an opportunity for fintechs to partner with these players to offer a wider range of financial services to customers and to service these players as a technology provider. Banks have now an additional pressure to not only play a catch-up game but to differentiate their value proposition. May it all be in the name of making the pie bigger for everyone and bring more financial inclusion to Mexico.

Made in Latam with 💛 by Elena, Daniela, Lorena, and Christine

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