Fintech Rhapsody: Harmonizing LATAM's Economy with 24 Million SMEs
The impact of Citigroup in Colombia; the achievements of Bitso and Dollarize; the growing adoption of cryptoassets in LatAm and the challenges and successes of various fintech in the region.
Welcome to our weekly newsletter covering the latest news and trends in the Latin American Fintech startup scene.
24 million SMEs in LATAM use at least one fintech solution
In the dynamic business environment of Latin America, small and medium-sized enterprises (SMEs) are a fundamental pillar of the economy. According to the KoreFusion report “LATAM SME-Focused Fintechs,” 98% of businesses in LATAM are SMEs, equating to approximately 65 million companies.This landscape offers vast fertile ground for fintech intervention and growth, which have started to play a crucial role in these businesses’ digital and financial transformation.
SMEs in Latin America make up most of the business fabric and are a crucial driver for employment and production. Despite their importance, these businesses face a significant challenge: a financing deficit estimated at USD $1 trillion. This gap has created a unique opportunity for fintechs, emerging as innovative solutions to overcome traditional barriers to accessing financial services.
Adoption of fintech solutions in SMEs
Currently, around 24 million SMEs in LATAM use at least one fintech solution, with digital payment acceptance being the most prevalent. This data reveals a growing trend towards financial digitalization, though there is still a long way to go. The latent demand for fintech services is significant, with an estimated 46.4 million SMEs susceptible to adopting these technologies.
Digital transformation in the SME sector manifests in various ways. Brazil and Chile lead this change, showing advanced adoption of digital payments and Software as a Service (SaaS)-based solutions. On the other hand, countries like Mexico and Colombia are making progress, primarily supported by mandatory electronic invoicing, while other regions are still in the early stages of their digital capacity.
Vía Contxto
Quick News
Citigroup invests in Colombian startup Supra to boost international payments
Citigroup announced its leadership in an investment round in Supra. This Colombian startup is positioning itself as an innovative solution to the challenges of international payments for companies in Colombia and Latin America.
This investment also included participation from Far Out Ventures and H20 Capital.
This new capital injected by Citi promises to expand operations, strengthening its role as a payment aggregator
The strategic alliance with Market Exchange Intermediaries (IMC) and other authorized payment service providers is a step forward in its goal to facilitate international trade. (Contxto)
Bitso Business Records USD $8 Billion in Transactions
Bitso managed to gather a user base of 8 million on its cryptocurrency financial services platform in Latin America, recording an annual transaction volume of USD$8 billion.
Bitso Business increased its annual transaction volume by 60%, with Mexico contributing significantly, as over 50% of the platform’s users are in this country.
For 2024, Bitso has three goals: improve the quality and speed of product generation, significantly increase B2B business income, and strengthen internal processes, as well as organizational culture. (dplnews)
Dollarize Wins WealthTech of the Year
At the US FinTech Awards, the fintech that simplifies the opening of dollar accounts in the United States received the highest distinction.
This recognition is granted by FinTech Intel, which highlights the achievements of leaders and companies in the ecosystem.
Dollarize set the goal of reaching 1 million customers in the next three years and expanding its operations to Central America, Asia, and Africa.
The application allows opening an account in just five minutes (according to the company), with an initial deposit of one dollar and loading funds from a local currency bank account or credit card. (Prensario TI Latin America)
LatAm: Leader in the adoption of Cryptoassets
A report from Circle indicates that 51% of Latin American consumers already use cryptocurrencies for purchases, eliminating the need for traditional cash.
Between mid-2021 and 2022, Latin America handled USD $562 million in cryptocurrency.
Beyond Bitcoin and Ethereum, a third of users in Latin America are already using stablecoins in their daily operations.
Despite lacking conventional banking services, Latin Americans have mobile and digital technology. (Circle)
Bitcoin Mercado Captures R$40 Million in Investment Offers in Brazil
This volume is 16 times higher than the R$2.5 million that Mercado Bitcoin raised in 2022.
The company’s information is consolidated on the MB Startups platform and can be accessed, along with quarterly updated financial statements.
The platform allows investors to connect and collaborate with the founder in the operation’s development. (Uol)
Mercado de Recebíveis Completes First Funding Round
The investment was led by Urca Angels, with participation from Inês Corrêa Souza of Magalu and Marcelo Bella of Letsbank.
The round amount was not disclosed, but the Brazilian fintech is already valued at USD$14 million one year after its foundation.
Mercado de Recebíveis specializes in improving the financial experience at the Point of Sale (POS).
The startup has four significant clients, up to 200,000 suppliers, and sales points. (Tekiosmag)
Kapital raises USD $165 million in financing
Kapital closed a US$40 million Series B round and US$125 million debt financing to consolidate its AI-powered platform for SMEs.
This round was led by Tribe Capital and Cervin Ventures, Tru Arrow, MS&AD Ventures, and Alumni Ventures, among others.
Kapital will allocate these funds to develop its AI-powered technology platform to strengthen its financial offering and expand its product range to provide better data analytics to its customers.
Currently has 80,000 SMEs in Mexico, Colombia and Peru and bought Banco Autofin Mexico. Its goal is to be a global bank. (Tekiosmag)
Dapta closes USD $1M round for U.S. expansion
Dapta just closed a USD $1 million pre-seed round from Paramo Partners, Fen Ventures, Kuiper VC, Invariantes Fund, LatinLeap, and 500 Startups, plus a flock of angels.
Dapta will use these funds to spearhead its commercialization strategy.
Dapta focused on serving three main verticals in particularly urgent need of API support: financial services, online retail, and healthcare. (LatamFintech)
High interest rates are the main obstacle for fintech
The main impediment to financial technology (fintech) companies in Latin America is obtaining financing to continue their operations and carry out planned expansions.
According to the State of Fintech Latin America 2023 report, high-interest rates persist as the main obstacle for 44.5% of the firms surveyed.
77.8% of firms surveyed see challenges in securing future financing.
57.1% of firms that provide financial technology also observe a complex funding environment. (El Economista)
Iugu raises USD $14.3M in new investment round
On this occasion, the transaction was led by Bradesco BBI, a former investor in the company.
Iugu will use the funds raised in this financing round to improve the services it provides to its customers in terms of anticipating credit card receivables.
The startup has created tools that connect technology, flexibility, and security to offer, in a single platform, agility, and confidence in financial processes. (El Referente)
Fintech Education
BUniversity of Hong Kong: Blockchain and FinTech: Basics, Applications, and Limitations. Understand the design rationale of blockchain technology and its emerging platforms and applications and uncover the limitations and opportunities enabled by blockchain applications, particularly as they relate to finance.
Blockchain: Fundamentals and applications for business optimization. You will understand the general functioning of blockchain technology and its differences: private, public, and hybrid.
Innovation in Finance: Fintech and Blockchain. It encompasses concepts such as artificial intelligence, open banking, APIs, and neobanks, shaping new ecosystems. The online content allows you to adapt your training process to your work and personal life.
Food for Thought
The middle class LOVES cryptocurrencies
In Latin America, the demand for #cryptocurrencies has increased, and there are several reasons why this is happening. Below, our specialist, Iñaki Apezteguia, tells you the profile of the crypto user in our region.
Jobs
Product Head @Atrato (Remote)
Director, Customer Success, Brazil @Circle (Remote)
Product Owner Lead @Prex (Remote)