The fintech that’s winning Mexico
#032: One company isn’t just beating other startups – they’re surpassing big banks, too
Olá technopolists,
The end of the year looms large, and the holiday season will arrive as a much-needed respite from 2022’s turbulence. Data from Kroll confirms that US late-stage valuations were down 40-50% in Q3 – an American trend that reflects the global funding mood.
And while the Men’s World Cup is terrible for productivity, Budweiser, and Neymar’s ankles, as a techno-optimist, you can find some solace that it’s great for Globant, Nubank, and NFTs.
What’s hot
🏦 Nu Mexico debuts debits. Nubank’s Mexican operation has announced the launch of savings accounts and debit cards in the country. So far, the Brazilian fintech has opened up a waiting list for the accounts, and new users will be invited to offer feedback as part of a beta-like testing group; Nu has not given a specific date when the accounts will be available more broadly to all existing 3 million Mexican users. Debit accounts will not have a minimum balance requirement and will be serviced entirely digitally. The launch is the first major move under new General Country Manager Ivan Canales, who stepped into the role one month ago. (Reuters)
⛓️ Crypto optimists keep pushing. Crypto maximalists are refusing to let the long shadow of FTX’s collapse cast a pall over their ambitions in the private and public sectors. Ripio, the Argentine-born crypto exchange, has announced an expansion to Florida where they aim to target wealthy US Latinos. Ripio’s CEO has boasted of 4.5mn users on their platform; if true, this puts them at similar penetration with LatAm exchanges Mercado Bitcoin and Bitso. Meanwhile, Salvadoran President Nayib Bukele has made good on a plan he has touted for months: offering crypto-backed ‘volcano bonds’. Salvador’s Economic Minister introduced a proposal that set out a legal framework for offering cryptobonds while creating a National Commission for Digital Assets oversight body. Still, most outsiders have declared bitcoin’s legalisation an outright failure. (Latam List)
🚘 Mexican gig workers inch forward on labour rights. Drivers for Uber, Rappi, and DiDi in Mexico advanced gig worker labour rights by publishing a reform proposal alongside their employers centred around offering social security payments to core workers. The proposal, put forth by advocacy group Not One Driver Less, centres around protections for decent pay, harassment, and discrimination; it arrives amidst the backdrop of Mexico’s Ministry of Labour pressuring mobility companies to recognise gig workers as full-time employees. The move is in the right direction, but the language of the agreement is very vague with no specific terms released publicly. The delivery companies are likely to use the agreement as a bargaining chip with the Ministry of Labour to soften future proposed regulations. (Bloomberg Linea)
What’s not
🛻 Kavak makes deep cuts. Kavak, the used car marketplace currently treasured as Mexico’s largest unicorn, announced widespread layoffs in a company-wide email sent by CEO Carlos Garcia. In the email, Garcia cites a “complex macroeconomic context that projects a challenging 2023”, going on to say that the company needs to do “fewer things better” while pursuing a faster path to profitability. The exact number of the mass layoffs is unknown, though the announcement is received as a relative shock for the Softbank-backed darling; Kavak’s ability to raise nearly $900mn in debt, avoiding layoffs or a down round, and expand to the Middle East has cast the company as a bastion of strength in LatAm tech. This announcement follows close after the organisational re-shuffling that saw the replacement of Kavak’s Mexican leadership team amidst stagnant growth. (Reuters)
🥑 JOKR retreats from Colombia and Chile. JOKR, the rapid food delivery company, announced that it will close operations in Medellin and Santiago while letting go of 41 employees to focus on profitability in core geographies. Previous reports from The Information noted that the company faced trouble this past autumn as it was short on runway and seeking $50mn in fresh funding at a flat valuation. The LatAm withdrawals follow similar closures this past summer, as JOKR closed US operations in NY and Boston. Within LatAm, JOKR will continue to operate in Mexico and Peru. (TechCrunch)
Stat of the week
Nubank’s savings account launch in Mexico is their next jab in the fight to dethrone traditional banks.
Last week, we saw that fintechs have made small penetration gains, but are still a long way off from totally displacing the big incumbents: only 9% of ‘banked’ Mexicans rely solely on a neobank or fintech.
The next logical question is: which companies are winning?
So what? Nubank (2% penetration) touts their 3mn Mexican customers as a large milestone, which is much deserved since they’ve rapidly overtaken local fintechs like Stori and Klar. Yet Mercado Pago (18%) has a major lead, with a two-decade head start giving them sizeable distance over the even-newer challengers. What makes MP interesting is their business model: rather than focusing on credit and banking, they’ve focused on payments and POS terminals.
Smart links
After the “big short”, dLocal affirms solidity but fails to address fraud accusations (Bloomberg Linea)
XP: Brazil’s Robinhood goes from hot sensation to cold case (FT)
Frubana has lent more than $2mn to restaurants (Forbes)
Credit default ratio in Brazil hits highest in almost 4 years (Reuters)
Risky digital wallets help Argentines fight inflation (Rest of World)
Brazilian central bank authorises payments via WhatsApp (Noticias Concursos)
Meet the 19 new Endeavor entrepreneurs (Startups BR)
FTX-affiliated crypto exchange Lemon Cash lays off 38% of its workforce (Latam List)
Mexican open banking legislation still facing delays 2.5 years on (El Economista)
Deals (November 23 - 29 , 2022)
M&A
🇧🇷 ISA Labs, a telemedicine platform, bought 🇧🇷 Saúde C, a homecare services platform, for an undisclosed amount
🇺🇸 Fligoo, an AI-based digital marketing platform, bought 🇧🇷 Mobi2Buy, their Brazilian competitor, for an undisclosed amount
🇧🇷 Bionexo, a healthcare logistics provider, bought 🇧🇷 Avatar Soluções, a revenue cycle management platform, for an undisclosed amount
Fundraising
🇪🇸 Cobee, an employee benefits platform, raised a $41mn Series B co-led by Octopus Ventures and Notion Capital with participation from Balderton Capital, DILA Capital, and SpeedInvest; the company plans to use the funds to expand to LatAm
🇨🇴 Pomelo, a B2B fintech offering whitelabelled financial products, raised a $30mn Series A extension; existing investors include Sequoia, Tiger Global, Index, Insight Partners, monashees, and QED
🇧🇷 ISA Labs, a telemedicine platform, raised a $17mn Series A extension from Vox Capital
🇪🇸 GoTrendier, a second-hand clothing marketplace with a significant presence in Mexico and Colombia, raised a $14mn investment from BID Invest, Creas Impacto, and IDC Ventures
🇺🇸 Howdy, a talent platform connecting LatAm engineers with Silicon Valley-based employers, raised a $13mn Series A led by Greycroft with participation from Obvious Venture Capital and others
🇺🇸 Flourish Fi, a B2B2C customer engagement platform for fintechs, raised a $2.3mn round led by Magma Partners with participation from Remarkable Ventures, Lightspeed, Canary, Seedstars, Kadmotek, Amplifica Capital, and others
🇧🇷 Klavi, an open finance data aggregation platform, raised an undisclosed Series A extension from investors including Banco BV and RX Ventures
🇪🇨 Reliv, a healthtech platform, raised a $1.5mn seed from Buentrip Ventures, 500 Global, Best of Stonks Fund, and angels
🇵🇪 Netzun, an online education platform for university students, raised a $1.4mn seed from Grupo RPP
🇧🇷 Vörr, an ecommerce clothing retailer, raised a $1mn seed round from undisclosed investors
🇨🇱 GoodMeal, a foodtech platform, raised a $1mn crowdfunding round via Broota
🇵🇪 Talently, a tech training and recruitment platform, raised a $750k round from the Inter-American Development Bank
🇧🇷 Bitfy, a digital wallet for cryptocurrencies, raised an undisclosed round from undisclosed investors
Ad hoc
🇲🇽 Baubap, a digital microlending platform, raised a $20mn credit facility from Park Cities Asset Management
🇵🇪 Leasy, a car loan fintech for gig economy drivers, raised a $10mn credit facility from Percent Technologies