Nubank is now worth $4 billion after Tencent’s $180 million investment

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent. Tencent has long been interested in financial services startups, and with its $90 million direct investment and another $90 million investment in the secondary market, the company now has access to what is arguably the largest digital banking company […]

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.

Tencent has long been interested in financial services startups, and with its $90 million direct investment and another $90 million investment in the secondary market, the company now has access to what is arguably the largest digital banking company in the world.

With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.

News of the investment was first reported by The Information, which included the $4 billion figure.

For Nubank co-founders David Velez and Cristina Junqueira, the investment from Tencent means the addition of a strategic partner whose financial services products and transaction platform is unmatched by anything in Western Europe or the U.S.

Velez stressed that Nubank, which had raised $150 million in a February financing round led by DST, did not need the additional capital. “We found so much value in partnering with Tencent,” Velez said. “Particularly everything there is to learn about the Chinese financial market.”

Velez hopes to take those lessons and apply them back to the market in Brazil. China is in the forefront of financial services globally because of its technology companies’ ability to offer multi-product platforms. “They have built the playbook of how to use mobile.”

Through the investment, Tencent will gain an understanding of how Nubank has managed to service 5 million credit card holders, and the game plan the company is deploying to develop its own savings accounts and other banking services.

“Over 20 million people have applied for the card,” said Velez. “There are active, engaged, customers that want to get everything from us.”

Junqueira estimates the company will soon be able to serve tens of millions of Brazilians with either a savings account, a checking account or credit.

The opportunity could be even bigger as Brazil’s central bank investigates the possibility of instant payments as well, looking to India’s experiment with demonetization as an example.

Both Junqueira and Velez said the opportunity for financial services startups to achieve significant scale was far higher in emerging markets like Brazil than in developed markets, because the barriers to banking are so much higher.

Financial services, Velez said, has been controlled by massive oligopolies that have erected unfair obstacles to wealth creation for the masses. Nubank and other companies like it are working to change that.

Now the company has the benefit of Tencent’s guidance as it continues to push the envelope.

Rappi raises $200M as Latin American tech investment reaches new highs

Rappi, the Colombian on-demand delivery startup, has brought in a new round of funding at a valuation north of $1 billion, as first reported by Axios and confirmed to TechCrunch by a source close to the company. DST Global has led the more than $200 million financing, with participation from Andreessen Horowitz and Sequoia—all of which were existing investors in the company.

Rappi, the Colombian on-demand delivery startup, has brought in a new round of funding at a valuation north of $1 billion, as first reported by Axios and confirmed to TechCrunch by a source close to the company. DST Global has led the more than $200 million financing, with participation from Andreessen Horowitz and Sequoia—all of which were existing investors in the company.

Rappi kicked off its business delivering beverages and has since expanded into meals, groceries, and even tech and medicine. You can, for example, have a pair of AirPods delivered to you using Rappi’s app. The company also has a popular cash withdrawal feature that allows users to pay with credit cards and then receive cash from one of Rappi’s delivery agents.

Rappi charges $1 per delivery. To help keep costs efficient, the company’s fleet of couriers use only motorcycles and bikes.

Simón Borrero, Sebastian Mejia and Felipe Villamarin launched the company in 2015, graduating from Y Combinator the following year. From there, Rappi quickly captured the attention of American venture capitalists. A16z’s initial investment in July 2016 was the Silicon Valley firm’s first investment in Latin America.

The new capital will likely be used to help Rappi compete with Uber Eats in Latin America.

The round for Rappi is notable for a Latin American company, as is its new unicorn status. Only one other Latin American startup, Nubank, has surpassed a billion-dollar valuation with new venture capital funding so far in 2018. Sao Paulo-based Nubank makes a no-fee credit card and is also backed by DST.

Investment in Latin American tech continues to reach new highs. In the first quarter of 2018, more than $600 million was invested. That followed a record 2017, which was the first time VCs funneled more than $1 billion into the continent’s tech ecosystem during a 12-month period.

The rise in investment is mostly due to companies like Rappi and NuBank, as well as Brazil-based 99, which sold to Chinese ride-hailing business Didi Chuxing in deal worth $1 billion.

 

In Argentina, venture capital surges even as the broader economy stutters

Even as the Argentine government was announcing the biggest slide in the country’s economic output in nearly a decade, technology investors in the nation’s capital are all gearing up for record fundraising years. Three of the country’s biggest firms (which are still small by international standards) are raising new, exponentially larger, funds in a sign […]

Even as the Argentine government was announcing the biggest slide in the country’s economic output in nearly a decade, technology investors in the nation’s capital are all gearing up for record fundraising years.

Three of the country’s biggest firms (which are still small by international standards) are raising new, exponentially larger, funds in a sign that technology companies are showing promise despite the bleak picture painted by the broader economy in Latin America.

Leading the pack is NXTP Labs, the early stage investor that’s developing a regional network of accelerators and seed investment funds through partnerships that extend from Mexico City to Montevideo and Sao Paulo up to San Francisco. Despite its regional reach, home for NXTP is Buenos Aires and it’s there that the firm began accelerating and investing in early stage companies back in 2011.

NXTP has already had 13 exits, according to Crunchbase, and is perhaps the most mature of the crop of investment firms in the country. It’s also looking to be among the largest as it capitalizes on that track record of exists and a portfolio of investments that has raised follow-on capital of nearly half a billion dollars. 

The firm is currently knocking on doors to raise $120 million, a significant step up from its previous $38.5 million investment vehicle.

NXTP Labs isn’t the only firm based in Argentina that’s looking to significantly expand its capital under management. Jaguar Ventures, a firm that invests in both Argentina and Mexico, and Draper Cygnus, an Argentine-focused, Buenos Aires-based investment firm has already raised roughly $30 million of the $60 million it has targeted for its new fund,

While Cygnus is very much focused on the early-stage Argentine opportunity (which makes sense given the track record of technology companies coming out of the country — and the capital behind the firm) both NXTP and Jaguar have more of a regional perspective. And Jaguar, too, is massively increasing the size of its fund.

While its first fund was only $10 million, the new one will be closer to $60 million, according to one person with knowledge of the firm’s plans.

Behind the surge of confidence in the region’s technology fortunes, despite the economic turmoil that continues to roil the region, is a growing track record of valuable companies — all with a homebase in Latin America’s largest market.

And while Brazil remains the region’s undisputed economic powerhouse, there’re growing numbers of tech giants coming from Mexico, Argentina, Colombia, and Chile, investors said.

As Gonzalo Costa, a co-founder of NXTP Labs wrote in an editorial for TechCrunch earlier this week:

For the first time, companies are raising rounds of $100 million plus. 99 (acquired by Didi Chuxing), Nubank and Rappi, have all raised mega rounds in the past two years. Others have raised large rounds, such as Selina and Movile, with $90 million-plus, or Auth0 (part of our portfolio), with $50 million rounds in 2018. But the increase in dollar amounts is not only driven by mega rounds. More than 30 transactions of $3 million or more happened in 2017, which is triple in amount of rounds of that figure when compared to 2016. This shows a market maturity not seen before.

Not only are companies attracting more capital, but entrepreneurs are launching companies across a dizzying array of technology verticals.

These are companies like NubiMetrics, which provides competitive analysis and data for marketplaces like MercadoLibre; or Satellogic, which is developing a network of satellites for earth observation (and raised $27 million last year); or Pago Rural, which provides financing options for farmers in Latin America (and is raising a $20 million round, according to sources).

It’s clear that venture capital and tech in Argentina (and across Latin America) is having a moment. But with a broader base of local capital, it’s possible that this moment could become a movement. And that would have a profound effect on economies around the world.