Although investment in LatAm fintechs is in the midst of a slump following years of broad growth, VC firm Quona Capital says businesses offering embedded finance still have scope to raise funding.
This week, the company launched its US$332-million Fund III for investments in Africa, Southeast Asia and Latin America, where it will allocate almost half of the portfolio, or about US$115 million. Quona is no longer interested in putting capital into wallets or neobanks, a more mature market. Instead, it will focus on fintechs with business models that span various industries.
“A lot of what we’re seeing are embedded finance solutions, finance that’s within a broader platform, where the financial service is what
increases customer engagement, increases revenue,” Jonathan Whittle, a co-founder and managing partner at Quona, tells iupana.
The company focuses on start-ups, seed rounds or series A fundraising, with an investment horizon of four to eight years. Whittle acknowledges that the global economic deterioration has complicated fundraising for fintechs in growth phases investors have become more choosy about investing.
In recent weeks, bigtechs in the U.S. such as Amazon and Meta led losses in equity markets after they reported slower growth, raising questions about whether the boom in digital sales and payments is ending. Cryptocurrencies also tumbled, propelled by the imminent collapse of the FTX exchange after Binance abandoned a rescue bid, which worsened
the already palpable instability.
“It’s already more difficult to predict when the market for growth capital is going to open. It’s better to invest in companies that are efficient with their use and capital,” says Whittle.
Do you expect 2023 to be just as tumultuous in our sector? As we approach the end of the year, we want to hear your perspectives on the year ahead. Take part in our 2023 Outlook Survey here. The results of the survey, with all the predictions and trends, will be shared in January.
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“Consumer protection must be absolutely top of mind during the development of a digital currency. Data protection is very important, as is protection of the funds that consumers hold in these digital currencies.”
Walter Pimenta, senior vice president of products and innovation for Mastercard Latin America and the Caribbean, in the podcast series “The Future of Money: Crypto, Digital Currencies, and
Mercado Pago grows
Mercado Pago, the payments division of Mercado Libre, posted positive results for 3Q, when its active user numbers reached 40 million, a jump of 32% year-on-year. The company recorded a 56% increase in its acquiring activities: payments both inside and outside the Mercado Libre platform, mobile point of sale networks (MPOS) and QR transactions, the latter being driven by activity in Brazil and Argentina.
Mercado Crédito’s lending portfolio held steady in the quarter at close to US$2.8 billion, following its decision to apply the brakes on origination and stabilize the non-performing loan ratio in an effort measure to “mitigate the more demanding macro environment,” Mercado Libre said.
The company also reported reaching 26 million users on its wealth management service.
Bradesco bolsters digital transformation
Brazilian bank Bradesco presented its 3Q results with an overall performance that fell short of expectations. However, the bank highlighted growth in its digital services. Through Sept. 30, 98% of transactions took place using virtual channels, and mobile and Internet transactions saw an increase of 64% compared to 2021. And digital loans to individuals and companies grew by 26% and 35% year-on-year, respectively. By 2025, the bank expects 75% of its digital channel transactions to be hosted in the cloud, in partnership with Microsoft Azure.
Inter sees user
Brazilian digital bank Inter ended the last quarter of its fiscal year with 2.1 million new clients more than in the previous quarter, reaching a total of 22.8 million. The company originated 95% of its sales through its InterApp superapp with 100,000 new sales per month. In addition, Inter reported the launch of an ‘invest now, pay later’ product within its mobile investment service.
Mercado Libre opens door to investing
Mercado Libre struck an alliance with Simplestate, a digital investment startup, with the aim of offering wealth products in Argentina. The agreement allows Simplestate to operate an investment section within the MeLi platform.
Mexico’s FEMSA acquires NetPay
Mexican retail and beverage group FEMSA acquired the payment aggregator NetPay and its B2B solutions for
MSMEs. The deal is part of FEMSA’s strategy to build out its digital finance offering, which includes Spin by OXXO.
- Colombian payment fintech Minka expanded its solutions to the Dominican Republic.
- Tribal Credit acquired Paykii, a Mexican bill payment platform, with the aim of
expanding and strengthening its offering for SMEs.
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Mendel snags US$60 Million in financing
Mexican fintech Mendel, which offers financial management solutions for business, raised US$50 million in a debt round led by Victory Park Capital. It also expanded its series A by US$10 million, with participation from Industry Ventures and Infinity Ventures. The financing will be used to promote the financial digitalization of local businesses.
- Levannta, a Chilean fintech providing business loans, closed a fundraising for US$2 million, with which it aims to expand operations and grow in the region next year.
- Chile’s VentiPay raised US$370,000 in a pre-seed round to finance growth.
How will remittances using crypto work? Bitso, the Mexican crypto unicorn, takes the test. Bárbara González, the firm’s CEO for Mexico, explains why volumes in this channel quadrupled in the first half of 2022 and why they are set to keep growing in 2023.
- The fintech processed US$1 billion in international transfers with crypto assets.
- Its app lets users make transfers in dollars from the U.S. to Mexico and Argentina.
- The two biggest markets for Bitso are Mexico and Colombia.
Read all about this booming corner of the remittance market in this week’s iupana Exclusive.