LATAM’s FinTech sector takes a boost
Brazil-based VC Kaszek has raised capital for two new funds: Kaszek Ventures V, valued at $ 475 million, focuses on seed funding, while Kaszek Ventures Opportunity II, valued at $ 475 million. $ 525 million, targets investments at a later stage, through TechCrunch. Both increases were oversubscribed. This is the company’s fifth fund; the first, worth $ 95 million, was raised in 2011. Kaszek has since supported 91 companies and his portfolio has secured more than $ 10 billion in capital.
Although Kaszek is independent of the industry in its investments, a significant portion of the fund will likely go to fintechs. Most of its active portfolio of 71 companies operates in fintech (20) and insurtech (6). Some of Kaszek’s notable investments include neobank Nubank, alternative lender Creditas, and crypto firm Bitso. And given that its existing investments in the segment are doing well, Nubank is the the biggest neobank globally, with 34 million customers – Kaszek will likely attempt to replicate this success by investing more in fintechs. In addition, geographically, Kaszek has a strong focus on Brazil and Mexico, the two countries with the most fintech activity in the Region– as well as Colombia.
The latest fund is further evidence of the maturation of LATAM’s fintech industry – and the recent increase in venture capital funds in the region is expected to boost future growth.
- More of the funding goes to startups at a later stage, showing growth within the ecosystem. In 2019, Kaszek launched his first fund ($ 225 million) focused on subsequent investments in existing holding companies. He is now reserving a larger chunk of his new fund for future funding, which will likely go to some of his existing holding companies, given the company recently took part in Bitso’s last $ 250 million round. This is a testament to Kaszek’s confidence in its existing investments as well as in a maturing industry that has more fintechs that need growth capital.
- Kaszek is not the only active venture capital firm betting on LATAM for its investments, helping the region increase its overall funding. SoftBank already launched its $ 2 billion LATAM investment fund in 2019, focusing on sectors such as fintech, while US firm Clocktower Technology Ventures recently closed its first fund dedicated to fintech innovation in the region. Meanwhile, the banks including BBVA and Santander invest in the region with their VC arms. This accelerated interest is evident in overall investment in the region: South American fintechs raised nearly $ 1 billion in financing in the first quarter of 2021, up 348% year-on-year, through CB Insights.