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Wednesday, December 1, 2021

Why QED, hot on Nubank, is bullish about LatAm fintech – TechCrunch

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As venture capital totals grow in Latin America, the region is about to see its leading champion go public. Nubank’s IPO is coming into closer focus after the Brazilian neobank filed privately to list its shares in both the United States and its home market, later releasing a public IPO filing.

One investor in the company that caught our eye for its Latin American investments is QED. As it turns out, its first investment in the region was Nubank, a deal that is set to pay off handsomely.

Per Crunchbase data, QED put capital into Nubank’s 2014 Series A, 2015 Series B, 2016 Series D and 2018 Series E, though there may be more dollars in play that we cannot see. According to an interview, QED only invested in the company after being impressed with its CEO, David Vélez, instead of due to a larger push into Latin American fintech.

Since then, the fintech-focused fund has made more investments in the region. QED partner Lauren Morton is dedicated to the Latin American market for the investor, so we reached out to get her take on recent results from the region. Last week, The Exchange delved into fintech investment from a global investment pool powering a host of Latin American financial technology companies, including QED portfolio company Pomelo. This morning, we’re tuning in to a single voice to further our understanding.

QED has been investing in LatAm for seven years now, so the spike in valuation has been great for our back book and our legacy fund, but it has also made it more expensive and more competitive for new deals. Lauren Morton

QED recently closed $1.05 billion to invest in global fintech companies, across a $550 million early-stage fund and a $500 million growth-stage fund that, TechCrunch reported at the time, will back “fintech companies primarily in the U.S., the United Kingdom, Latin America and Southeast Asia.”

This should help add more names to a portfolio that includes several LatAm fintechs that recently raised new rounds, such as crypto exchange Bitso, SMB lender Cora, payment infra provider Hash and B2B credit card provider Tribal Credit.

Let’s talk about how the boom in valuations is proving to be both a bonus and a cost center for investors putting capital into Latin America today.

TechCrunch: On a high level, why are you and QED bullish about fintech in Latin America?

Lauren Morton: QED is incredibly bullish about the fintech opportunities in LatAm. Latin America has a large, young population that is adopting technology at some of the fastest rates in the world. The infrastructure is starting to catch up to build the foundations upon which great companies can be created. Compared to other more developed markets, the number of friction points is also staggering — from data to payment rails to access to capital — resulting in massive opportunities to disrupt traditional players.

There’s also real generational change happening across the region. It has of course been accelerated by COVID-19, but we had seen the early tailwinds of this step function to digital even prior to the pandemic. More money is coming into the region than ever before and the quality of the entrepreneurs and founding teams has never been stronger.

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