March 3, 2024

Q2 fintech funding: LatAm, Caribbean more than double and payments take a big hit

CB Insights released its Q2 State of Fintech report last week, and not surprisingly, global funding in space was declining — falling almost halved to $7.8 billion, the lowest level since 2017.

But at least one region did not have a bad quarter.

Latin American experience rise in global investor interest in recent years but just as in other regions of the world, enterprise funding has declined.

VC investors deployed $7.8 billion across a record 1,114 deals in Latin America in 2022, down from $15.9 billion in 2021, according to The Association for Private Capital Investment in Latin America (LAVCA). The fintech sector was the largest recipient of venture dollars in 2022, accounting for 29% of investments last year.

It appears that investors in the region are continuing to bet on the space. In fact, according to CB Insights’ State of Fintech Q2 report, fintechs in LatAm & the Caribbean attracted $500 million, up 150% QoQ, while the deal count (69) remained roughly the same QoQ. Early-stage market share is on pace to reach 81% for 2023, a 5-year high, the report found. The main market of the quarter was Cayman Islands-based DeFi platform Kross Wallet, which raised a $100 million seed round. (Blockchain and crypto companies are counted as fintech in CB Insights data). Other deals taking place during the quarter include Mexico-based expense management startup Clara raising $60 million and Brazilian payments infrastructure company Liquido bringing in $26 million. (It should be noted that those rounds were actually raised in 2021, but since it was operating stealthily, Liquido only recently announced the funding).

But overall, the second quarter was not kind to the start of payments, although the sector started the year strongly. Funding for these types of companies fell 75% during the quarter to $2 billion from $8 billion in the first quarter and $4.9 billion for the second quarter in 2022. CB Insights noted that this was a “six-year funding low for the sector.” And there were no new unicorns.

The size of the deals didn’t hurt as badly, although second quarter investments fell 14% to 148 from 172 deals made in the first quarter. One striking point was that early-stage funding for payments companies reached a five-year high.

fall, that automates accounts payable for mid-market companies, had its highest equity deal of the quarter, raising $150 million in a growth round, and adding to its impressive list of huge investments, such as $270 million Series F and $150 million Series E. The list includes others Nimbus, Clara, Volta, spiff and Episode Six.

Finally, 5 of the quarter’s IPO exits all come from fintechs based outside the United States, four of which come from Asia. Also, fntech saw a 20% drop in M&A activity to 142 exits, according to CB Insights.

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