Welcome to The Interchange, a take on this week’s fintech news and trends. To receive this in your inbox, sign up here. Greetings from Austin, Texas, where temperatures have been above 100 degrees for days and we are trying not to melt. The global funding boom in 2021 is unlike anything most of us have seen before. While countries around the world saw surges in venture capital investments, Latin America in particular saw a massive increase in dollars invested. Unsurprisingly, with so many unbanked or unbanked people in the region and digital penetration finally taking off, fintech startups were among the biggest recipients of that capital. The trend continued in the first quarter of 2022, according to LAVCA, the Association for Private Equity Investment in Latin America, which found that startups in the region overall raised $2.8 billion in 190 transactions during that 3-month period. which ended on March 31. This marked the fourth largest quarter on record for investment in the region, the data showed, and represented a 67% increase compared to the $1.7 billion raised in the first quarter of 2021. It was also up 375% compared to $582 million. million raised in the first quarter of 2020. In particular, fintech startups were by far the largest recipients of venture capital funding in the first quarter of 2022, with 43% of the dollars raised, or $ 1.2 billion, which went to the category. That’s an increase from 16% in the first quarter of 2021. Meanwhile, fintech investments accounted for 30% of all deals in the second quarter, compared to 25% in the first quarter of 2021.Image credits: LAVCA Carlos Ramos de la Vega, director of venture capital at LAVCA, told TechCrunch: “We continue to see the cross-pollination of business models within the sector: payment platforms increasingly incorporate BNPL alternatives, lending platforms have turned full-service digital. banks, challenger banks have expanded their product suite to include embedded credit products and working capital facilities.” Now, with the global business slowdown underway, it is remarkable that Latin American fintechs continue to raise big rounds in the second quarter of this year. For example, last week Ecuador got its first unicorn when payment infrastructure startup Kushki raised $100 million at a $1.5 billion valuation. And, Mexico City-based digital bank Klar raised $70 million in equity funding in a round led by General Atlantic that valued that company at around $500 million. I first wrote about Klar in September 2019, when he aspired to be the “Bell of Mexico”. You can read about how their model has evolved here. Does all this mean that LatAm is an outlier? Not necessarily. But it does indicate that investor appetite in the region remains.
Now, we all know that insurtechs have taken a beating in the public markets.. And last week, I covered a major round of layoffs in the industry. So it is very interesting that a startup in the space is not only continuing to raise capital and increasing its valuation, but is also actively working to become cash flow positive. I wrote about Branch, a Columbus, Ohio-based startup offering bundled auto and home insurance, which raised $147 million in Series C funding at an after-the-money valuation of $1.05 billion. I first heard/wrote about Branch in the summer of 2020, and it has been amazing to see the company consistently grow their business. With the latest news, I wanted to dig into what sets Branch apart from other struggling insurtechs. CEO and co-founder Steve Lekas told me in an interview, “We are now at a scale where we are selling more products than most that came before us. I think what we’ve done is what everyone thought they were investing in to begin with.” To learn more, read my story on the June 8 issue.TC’s Kyle Wiggers and Devin Coldewey delved into Apple’s biggest move in financial services to date, becoming a formidable player in the increasingly crowded buy now, pay later (BNPL) space. This article covered the news to start with. This one took a look at how Apple is making its own loans. And this one delved deeper into how other BNPL providers are reacting to the news. And ICYMI, the week before, Square announced that it would start supporting Apple’s Tap to Pay technology later this year. It was a partnership that MagicCube founder Sam Shawki predicted despite rumors that Apple would kill Square. In his opinion, that association only continues to increase the need to provide an equivalent payment acceptance solution for Android.Also, last week, two big players announced big moves related to cryptocurrencies.. I took a look at how PayPal users will (finally) be able to transfer crypto from their accounts to other wallets and exchanges. “This move shows we’re in this for the long haul,” one executive told me in an interview. And Anita Ramaswamy, who was at Consensus in the hell that is currently Austin, Texas, reported on American Express’s new partnership with crypto wealth management platform and wallet provider Abra. The card will allow users who transact in US dollars to earn cryptocurrency rewards for their purchases through the Amex network. Amex users have been waiting for an announcement like this for some time, as its competitors Visa and Mastercard have already launched their own crypto rewards credit cards through partnerships with digital asset companies.It feels like no more than a couple of weeks. it may pass without Better.com making headlines again. This time around, the digital mortgage lender is being sued by a former executive who alleges she was ousted for various reasons, one of which includes expressing concern that the company and its CEO, Vishal Garg, misled investors when it tried to go public. bag through a SPAC. . Other interesting reading: Banks and tech giants are losing skilled staff to flexible fintechs Bolt, faces challenges, cuts costs and lowers growth target Out of Money 20/20 Europe ‘Mood is very gloomy’: fintech sector once-trendy faces IPO delays and Consolidation Stripe co-founder hits back at rivals accusing company of unfair competition.Image credits: Branch/CEO Steve Lekas
Spotted on TechCrunch With millions backed, SecureSave is Suze Orman’s not-so-surprising debut at startups. a twist Backbase raises its first funding, $128 million at a $2.6 billion valuation, for tools to help banks with engagement. And elsewhere, PayShepherd secures $3 million in funding to upgrade contractor billing systems. Now excuse me while I go to the pool with my family to try and cool off. Enjoy the rest of your weekend, and thanks for reading. To borrow from my colleague and dear friend Natasha Mascarenhas, you can support me by forwarding this newsletter to a friend or by following me on twitter.