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Podcast 273: Manuel Silva of Mouro Capital

The General Partner of Mouro Capital (formerly Santander InnoVentures) talks fintech in Latin America and why it is still such a vibrant region

November 13, 2020 By Peter Renton Leave a Comment

Views: 164

Latin America remains one of the hottest region of the world when it comes to fintech. It is a large market that is still relatively undeveloped and so offers more opportunities than most places on earth. It is also the home of the largest fintech company in the world (outside of China), as far as number of customers go at 30+ million, I am talking Nubank.

One of the people who has been making fintech investments in the region for many years is Manuel Silva, the General Partner of Mouro Capital (formerly Santander InnoVentures). He is the next guest on the Lend Academy Podcast as we delve deeply into Latin American fintech and discover how it has survived the pandemic and its prospects for the future.

In this podcast you will learn:

  • Why Santander decided to spin out their venture capital division.
  • The investment focus for Mouro Capital.
  • The geographies where they invest.
  • How the pandemic has impacted the fintech companies in Latin America.
  • How capital flows have shifted during the pandemic.
  • Why there is more early stage capital today than six or seven years ago.
  • Why there have not been many exits yet in LatAm.
  • Interesting fintech trends happening in the region today.
  • Manuel’s views on digital banking and the rise of Nubank.
  • How Creditas is taking a different approach to expansion.
  • The biggest challenges for fintechs in the region today.
  • Where entrepreneurial activity is is centered today.
  • What is interesting in SME lending in LatAm.
  • Why Manuel remains optimistic about investing in LatAm fintech.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech LatAm 2020. Latin America’s largest fintech event dedicated to lending and digital banking is going virtual in 2020.

Download a PDF of the transcription of Podcast 273 – Manuel Silva.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION NO. 273-MANUEL SILVA

Welcome to the Lend Academy Podcast, Episode No. 273. This is your host, Peter Renton, Founder of Lend Academy and Co-Founder of LendIt Fintech.

(music)

Today’s episode is sponsored by LendIt Fintech LatAm, the region’s largest fintech event dedicated to lending and digital banking is going virtual. It’s happening online on December 8th and 9th. Pandemic or not, LatAm is still the hottest region for fintech in the world and LendIt Fintech LatAm features all the leading players in the region. So, join the LatAm fintech community online this year where you will meet the people who matter, learn from the experts and get business done. LendIt Fintech, lending and banking connected. Sign up today at lendit.com/latam

Peter Renton: Today on the show, I am delighted to welcome Manuel Silva, he is the General Partner at Mouro Capital. Now, Mouro Capital, you may know them as their former name, Santander InnoVentures. Well, they’ve not just re-branded, but they’ve done a spin out of this which we talk about on the show, but the primary reason I wanted to get Manuel on was to really talk about the Latin American fintech space.

He has deep experience here, been doing investments for many years, has one of the most successful companies in the region. We talk about the Latin American region, why it’s so interesting, why there’s been such a surge in fintech in recent years, we talk about some of the biggest companies in the region, we talk about how some of the big platforms like Mercado Libre are coming in, we talk about the different regions where there’s entrepreneurial activity and the future of Latin American fintech. It was a fascinating interview, I hope you enjoy the show.

Welcome to the podcast, Manuel!

Manuel Silva: Thanks for having me.

Peter: My pleasure. So, I’d like to get this thing started by giving the listeners a little bit of background about yourself. Why don’t you give us some of the career highlights, tell us where you’re from, that sort of thing.

Manuel: Yes, of course. So, I am Manuel Silva, General Partner of Mouro Capital, before that Santander InnoVentures, before that BBVA Ventures. As you imagine, I’m Spanish, highly indexed in the kind of corporate VC world and Spanish banks, California and now leading Mouro Capital which is VC-focused on fintech.

Peter: Okay. Where are you from, originally?

Manuel: The easy answer is Madrid. (Peter laughs) Nobody is really from Madrid so there’s a longer answer that involves…..

Peter: Okay. We’ll leave it at that, that’s good. So, you know, people…we’ve known Santander InnoVentures for many years, it has been very active in fintech and then from what I understand you spun out the corporate VC from the bank and re-branded. What was the thinking behind that move?

Manuel: That’s right and, yeah, I would say the re-brand is kind of the least of the changes.  I think the more important one, as you referenced it, is the spinning out. The reason for the thinking was really about alignment and about being competitive in the market that’s increasingly competitive, right.

At the end of the day….now, in our current format we make our own decisions on the investment side and we have a much more aligned incentives with our portfolio which, effectively, what that means is that entrepreneurs feel that we’re much more on their side and nobody can question that. Maximizing return is our main activity which helps be more competitive, faster, etc. etc.

Peter: Right, right. So, entrepreneurs will feel comfortable, more comfortable that you’re not just doing this because the bank wants to get the tech.

Manuel: That’s exactly it and I think over time, I mean, we’re working on that…the value proposition for entrepreneurs are going to be much more focused on them, not only on the relationship that it cannot establish with Santander as it was in the past.

Peter: Right, right. So, are you….from my understanding, Santander InnoVentures, Santander was the sole investor, one LP, is that still the same or are you taking on more investors?

Manuel: No, that is still the same, but now Santander is an LP, meaning they behave as such so…before, we were basically a subsidiary of the bank.

Peter: Right, right, got it, okay. So, maybe you can talk about the investment focus. I mean, what are the regions you’re focused on, what are the types of companies, that sort of thing.

Manuel: Yeah, of course. You know, over the years, both personally and with this project here, we built a fintech specialism and I think that’s really what we  want to stake a. So, you know, we’re providing fintech investors, enterprise, direct to consumers on both sides a….you know, we really think about the whole value chain so within fintech, we’ll touch pretty much anything. We think it’s important to be specialized to be able to A-understand businesses early and B-help entrepreneurs with that, you know, extra piece of knowledge and connections and network that is oftentimes the most complicated one in such a regulated industry.

In addition to that, we’re expanding our investment mandate and kind of our thesis to try and not only cover kind of where the industry is at now, we’re also kind of what’s coming next, right. The result of that…I mean, we’re big believers in reinventing fintech infrastructure, we’re big believers in new financial products that may emerge as a result of, you know, societal changes. We’re very kind of, you know, looking at things that are more fundamental and probably you can see us invest a little bit outside of fintech, not for the sake of it, but mostly because we think there’s a strong connection between finance and many other industries, utility, logistics, education, maybe health as well and we want to explore the financial services angle. So, very much relevant to the future of the industry, but maybe a little bit expanded to what people may have been used to in the past.

Peter: Right, that makes sense. You know, Zach from Plaid said at our LendIt event a few weeks ago that, you know, really every company is a fintech. He clarified what he meant was that everybody uses fintech in their business because every single company has a finance operation and they want to make it more efficient, they want to make it more high tech so, whether it’s just a, you know, a banking app or payroll app or something like that, there’s often a fintech component now to every business.

Manuel: And just on that, it’s interesting because that resonates very well with our thesis. I mean, at the end of the day, I think we’re going back a lot to utility of finance and financial resources as opposed to the product per se.

Peter: Right.

Manuel: You know, I’ve always thought that…I mean, nothing very novel, but that people won’t really wake up in the morning wanting a new card or a mortgage. What they want is what does that enable me to do, right. At the end of the day if you look at everything from that perspective, you know, 100% agree with Zach, but also it opens up…..you know, as the economy changes and as new industries emerge and that’s, you know, COVID changes the way people behave. If you look at things from that lens, we’ll try and spot also kind of what are those emerging spaces where utility can be brought through the lens of financial services.

Peter: Right, right. And then, so what geographic regions are you interested in, what are some of the regions that you have investments in right now?

Manuel: Yeah. So, on that front we’ll stick also to what we used to in the past which is pretty broad, as you would imagine. So, we’ve traditionally invested across the Americas, LatAm, North America and Europe with a strong focus, of course, in London. Then we have a few investments in Israel, I mean, we’ll stick to that. I mean, theoretically, we could invest elsewhere and we’ll look at things that we know or maybe elsewhere, but we would probably stick to that.

You know, most of our current portfolio is in the US, I mean, I think a slight majority and then as I was saying, in Europe, it’s mostly London. We’re looking at all the ecosystems in Europe that are creating companies that are really interesting, that maybe are better priced than in London. And then LatAm which…..you know its part of this conversation, LatAm is fascinating throughout the world that we’ve known for a long time. We have a couple of investments in Brazil, a couple of investments in Mexico and we’re excited about the region.

Peter: Right, right. I do you want to talk about LatAm here in some depth so let’s …..maybe we can kick it off just by giving your thoughts on, you know, Latin American fintech. Obviously, it’s been a challenging year for many companies, but also others have done quite well, how have you seen the pandemic impacting the fintech companies in the region.

Manuel: Well, I would say probably it’s quite similar to what you’ve seen elsewhere. At the end of the day, so much of the real economy have been stressed, digital economy has gone up, you know, access to the capital markets has been maybe a bit more challenging, lenders have seen a little bit more of non-performing loans. All that is pretty common to all the geographies we invest in and LatAm is no different.

I think, nevertheless, LatAm really comes from very, very strong fundamentals when it comes to, you know, the opportunity that was kind of evolving even before COVID and through COVID so my hope is that things will continue to be like that. So, if you think about LatAm from a fundamentals perspective, it’s a deeply underserved region from a digital financial products perspective and that’s why…..also the large companies that people would know in LatAm are actually going to direct to consumer propositions that are not really super far away from what banks should be offering, but just better it in a much more kind of, you know, contemporary way, if you will, right.

I mean, the interest rates across the region are still very high, it has allowed these models to be much more resilient which is good so you are actually….all our companies that are lenders in our portfolio, they have performed actually extremely well just because they have a lot of cushion given the interest rates situation to cover more losses. So, models are quite resilient and then, similarly, we’re excited about our latest investment there, a company called a55 which lends to the digital economy. You know, that is living proof that digital is booming over there and that the shift to e-commerce and mobile experience is booming and that the opportunities are really shifting towards that. So, it’s a very positive development about everything else in the region despite COVID.

Peter: Right, right, yeah. So, you know, I’ve talked to a few of the CEOs in the region in recent weeks and there is concern that some investors, particularly outside investors, are kind of putting a wait and see as far as new investments go in the new companies, have you noticed a decrease in outside VC investment in the region.

Manuel: I would say, yes and no so maybe there’s a different way of responding to that. So, if you look at the recent years in LatAm, I feel there has been a lot of very, you know, uneducated kind of capital coming in, right, for lack of a better word and by an uneducated I mean, the dynamics of the markets in LatAm, especially the two big markets where most of the foreign capital has come, Brazil and Mexico, the dynamics of those two countries are very, very specific and you need to really have a thesis and understand how the market works, otherwise, you may just fall into a bit of a cookie cutter type of strategy, right.

So, I feel that in the past few years there has been a lot of capital that didn’t really fit in much about the region, they were just trying to find commonality between things that worked elsewhere and things that were emerging then have invested like that way. I think some of that capital, naturally, because they may be less, you know, less versed in the region, they are the ones who withdraw so on a statistical basis it is true that there is less inflow of capital. But, on a quality basis, that means other people who really get and understand the market are the ones staying there, right, which I think for the entrepreneurs that’s actually good news.

That means that there’s probably way less they need to explain to whoever is interested to invest in the region because they have a strong thesis and they believe in it. I think the other thing, just to answer your question, is I feel there has been a concentration and a flight to quality in that foreign capital coming through.

So, we’ve seen the likes of Cava in Mexico, rich in great valuations, you know, we’ve seen Klar, a new bank in Mexico that we invested in just a couple of money from Naspers. That was, you know, one of the largest, I guess, Series B rounds in Mexico this year. So, there’s still foreign capital coming, but I think they are very picky and they are just somehow investing in less opportunities as opposed to be more of an equalizer, maybe super opportunities.

Peter: Right. We certainly have seen some large funding rounds this year, but I’ve wondered about like the…you know, one of the things that we noticed, there’s a lot of entrepreneurial activities, a lot of new companies that are still pretty small, do you think they’re going to find it harder to attract capital now that some of the other players have left, or not left, put there investments on hold.

Manuel: Honestly, I don’t know, what I would say is the local early stage ecosystem has sophisticated over the years.

Peter: Okay.

Manuel: They reached a point where some of the local funds that are naturally more resilient because A-they’re local, B-you know, oftentimes in their own investment policy they can only invest locally so, you know, there’s nothing else they can do. So, some of those guys have raised much larger funds that they used to have, they’ve professionalized, etc. so I guess the availability of early stage capital, that’s what you’re referring to, is much higher than it used to be like six or seven years ago. So, I feel maybe, you know, there’s going to be less of a shortage of that just because bigger funds have natural ways from internationals LPs.

Peter: Right, right.

Manuel: So, and then also, you know, it’s still true that….I mean, interestingly enough, it’s less true now that it used to be, but it’s still much cheaper to build a company in LatAm than in many other places of the world.

Peter: Right.

Manuel: So, you can get business up and running with $3 or 4 Million where you may need, you know, ten times that in Silicon Valley just to get to the same thing, right.

Peter: Right.

Manuel: Capital goes a much longer way.

Peter: Right, right, okay. What about exits, we haven’t seen a lot of exits in LatAm yet. Obviously, you’re an investor yourself, do you think that we’re going to see exits soon or what’s your thoughts on that?

Manuel: Yeah. That has been the pending question on the region and, you know, in other regions of the world. Don’t think it’s unique for LatAm, but it’s true that each time I pitch LatAm to, you know, outside LPs or to people who are just more interested in institutional, they always say, you know, where are the exits. I’m positive on that for now as well for a number of reasons, but I think that there’s a few companies that have reached a point where it could be candidates for more of a public markets exit and I think, hopefully, that’s going to create a little bit of those noble effects in a positive way to, you know, make markets more receptive and also investors in the public market more receptive to this kind of, you know, as a thrust.

In particular, I think, in Brazil you don’t need to educate the market about, you know, debt companies. You know, there’s a few examples, Stone and a few others that have been successful there. But, you know, interestingly enough, I think there may be a little more of a consolidation play as well where some of the larger fintechs may be starting or, you know, other platforms may be starting to buy so the exit may not be through public markets, but more from a platform and consideration perspective. So, I think it’s still early days, but I think that can drive an interesting movement where…..you know, that can actually impact the competitive landscape in the region quite interestingly, I would say.

Peter: Right, right, okay. So, when you look at the region itself now, not just Mexico and Brazil, but across the other countries in the region, what do you see as some of the most interesting trends that you’re watching?

Manuel: From a geographic perspective or from a……

Peter: Just from a fintech perspective, what’s happening in fintech that you think is really interesting.

Manuel: Maybe a couple of things that I think are interesting. The first one that I think I would say is really interesting is that, finally, companies are trying to have more of a regional ambition than they used to have. Not that long ago, the story of LatAm was really the story of Brazil for Brazil and Mexico for Mexico and then the rest was kind of non-existent then. I’ve always had the theory that smaller countries which have, you know, very good talents and that don’t have large markets, they would start creating regional companies and we’re starting to see that and also we’re starting to see the larger companies in Brazil, you know, Argentina, Mexico, Chile to a lesser extent start being more regional and expanding.

I think the regionalization of fintech is a trend that we’ll see over the next two, three, four years and I think I’m really excited about because that’s when you’re really going to start seeing well-run companies have a very, very large critical mass and can really change competitive dynamics. A couple of things that I…well, there’s one thing I’m interested in and one thing I’m inquisitive about, I am a big SME finance or SME fintechs supporter and I think LatAm is moving little by little towards that piece of the market which I think is really interesting because the data play may be a bit more interesting, the economics are better, etc. etc.

I think the next thing to watch for is probably, you know, SME fintech and mid-cap fintech which is a little bit new. I think the part that I’m a little bit inquisitive about is whether there’s going to be or not an emergence of enterprise fintech in LatAm, right, meaning, most of the companies we know over there are companies that agree that adapting a foreign business model, adapted locally, make it work.

But, a lot of the building blocks from the technology perspective are imported building blocks, right. I think at some point, that needs to shift and it needs to be infrastructure fintech being built for the region and I hope that’s the case, but, you know, I think it’s still early to see, but, definitely, if anyone listening to the podcast is innovating there, they should reach out to us because we’re really interested in that and we believe that local players will do it locally.

Peter: Right. So, do you think it’s more going to come locally than from say the Plaids of the world, Marqetas of the world coming into LatAm and doing things there.

Manuel: I think so. I mean, you know, if I’ve learned something about LatAm over the 15 years I’ve been traveling and doing business there and a lot of it is in venture investing is that on designing the market dynamics, having access to regulators, etc., etc. that makes a big difference and I think it’s really tough. I need to take a plane and travel 12 hours, that’s really tough.

Peter: Right, right, yeah, yeah. So, you talked about scale, I want to talk about the fintech that probably has….one of the largest in the region, Nubank, and it’s interesting that they’re acquiring companies now, they’re expanding, their offerings, they’re almost sort of becoming a platform. I just read they’ve got 30 million customers now which is staggering more than any other fintech in the US or Europe. So, what are your thoughts on digital banking, Nubank being obviously the clear leader there and their play, it seems to me, to become like a banking platform almost.

Manuel: Yeah. I mean, to respond to that, I would go back to what I was talking about, you know, the utility of finance. At the end of the day, I think the natural evolution of neo banks is to really be an ecosystem where the user can find a digital solution to their needs. So, whether you call it platform or the ecosystem, at the end of the day, it’s really about having a high share of  wallet with a particular customer and, you know, creating data synergies and creating to rich data environment so that the products are made better and more kind of relevant to the time. It’s about capturing that entire relationship to the extent possible.

So, what they’re doing is makes total sense, because at the end of the day, there are things out there A-why would you read them and B-if you can pick them up and kind of erase a piece of the competition then you may as well…thankfully, the levels of valuation and levels of cash generation that make them very healthy and very capable of actually doing this so why not, right. But, I think that’s kind of where the market is going, you know, if you look at it from the utility perspective, how can you be around the clients’ experience and how can you help them holistically as opposed to just offer very narrow vertical product.

Peter: Right, right. Speaking of, you know, platforms, one of the companies that invested in is Creditas and I had Sergio on the podcast earlier this year, the CEO, and they’re really interesting to me because they started off as a consumer lender, they’ve done really well, they’ve got decent scale now and now, they’re the company that …..they’re going off into other areas really unrelated to lending. I’d love to get your take on how you see that, I mean, it’s a slightly different approach with what Nubank’s doing, but still sort of this, you know, broadening of their offering.

Manuel: At the end of the day, I think it’s exactly that, it’s exactly the same rationale of increasing shared wallet and, you know, even from an economics perspective making your customer acquisition cost more efficient because it can basically, sell more products or get more revenue lines from the same interaction or relationship. I think the logic is the same even if as you say the angle they’re taking which is more credit first, longer term credit, secure credit first angle is a little bit different. You know, the great thing about Brazil and the region, I mean, Brazil in this case, but the region at large, is that there’s enough market for a number of players to be successful.

Peter: Right, right, yeah. It’s interesting to me because you have, particularly, Creditas, I don’t see anybody in the US or Europe doing what they’re doing, It seems like it’s fairly unique. Is that because something specific about Brazil or is it more about Creditas?

Manuel: I think it’s the….without putting words in Sergio’s mouth, but I think, you know, what’s interesting about both companies is that they both started in a niche that was really underserved and, you know, they became winners there and then expanded, right. So, one thing that we were interested when we invested in Creditas three and a half years ago is the product that they were launching, which could be the equivalent in the US to a HELOC, that product per se was just non-existent. And Sergio, who’s a Spaniard as well, but he had a lot of experience in the US when he was at BCG over there, he just saw how that product works in a country like the US and landed in Brazil.

Well, you know, there’s nothing like that because at the end of the day, what he went for is……..what he’s trying to do, his strategy was just going to dominate this which he did and then I’m going to expand from that. Oftentimes, what drives this model is the uniqueness, just kind of extrapolating, is the uniqueness of the fact that….you know, in the US and Europe, the upcoming fintechs are kind of born in a hyper-saturated market where every single product is very highly served. Whereas, in LatAm you still have those niches where you can start to dominate the market being a great business and then expand from there using the early success as a funder for your own growth.

Peter: Right.

Manuel: I think that dynamic is unique to the region.

Peter: It’s one of the really exciting things about the region because you’ve got companies that can reach decents scale pretty quickly with a lower cost, as you say, than you could do that in the US.

I want to talk some of the bigger players in the region like companies that traditionally weren’t in financial services that are entering….you’ve got Mercado Libre which is the Amazon really of Latin America have multiple offerings now in financial services.

You’ve got Rappi which sort of started as a delivery app and now they’re doing a whole range of different things in finance, you’ve, obviously, got big banks that are starting to kind of innovate as well. What’s the biggest challenge for fintechs do you think, is it the Rappis and Mercado Libres, is it the big banks or is it something else?

Manuel: I kind the challenge is kind of all of the above, right. It’s reeling through a very fast moving market, a market that’s changing very quickly and, you know, through the magic of embedded finance, infrastructure, if you will, anybody who has a large customer base and an installed customer base can get into your industry, right.  So, I think if you look at fintech five/ten years ago, the rules of the game in each vertical work here, right, so you know you’re a lender and you compete other lenders and that’s what you do or you’re a transactional company, parents company that’s what you do. Whereas now, the issue is you have all these platforms that have massive customer bases and the barrier of entry from them to jump from the industry into Euros is actually lowered through and the kind of infrastructure that powers fintech these days.

So, I think, you know, there’s a lot of things happening and probably if I was a new entrepreneur trying to build my next fintech in LatAm, what I would be worried about is spending a lot of time on is trying to refine my read of the market to see how these tectonic changes may apply to me and where my niche today seems like a great opportunity, how resilient that is in the future and where other opportunities on the other side may emerge, right.

Peter: Right, right. Speaking of that, I mean, are you seeing lots of new startups still happening and new opportunities coming in across your desk from the region pretty regularly and if so, what countries? Is it still Mexico and Brazil or where is the entrepreneurial activity happening?

Manuel: So, there’s really like three things that we’re seeing recently. So, we’re seeing of the smaller market versions o things that have worked in Mexico and Brazil so the Peruvian Neo banks, the Colombia lenders, the Chilean whatever. So, we’re seeing that version which, again, may or may not be that interesting, depending on how regional, how big the market they want to address is so that’s still in existence. I think that in the bigger markets, what we’re seeing that I think is interesting is, you know, aside from a little bit more of a SME flavor to the market, which I particularly appreciate, there is also more sophistication on the infrastructure side of things, right.

And, it’s a little bit like what we have seen maybe in Silicon Valley or to some extent in Europe which has….you know, everything starts with direct to consumer propositions where the entrepreneur needs to build everything end-to-end because nobody was able to service them or give them the technology or the processes they need. And then, as you start having niches or dens, you start having the ability to create backend services, backend infrastructure that helps you and helps all these different lenders, neo banks, etc., etc. be more efficient. And so, what we’re seeing is more and more of\drive to that kind of backend infrastructure that I think is going to be interesting.

Peter: We’re almost out of time, but a couple of other things. You talked about SME lending, you said there’s something that you find personally really interesting and I do as well. I feel like it’s something that fintech has really served the world, served the small business owner very, very well by providing easier access to capital.

I mean, what are the things you’re looking at there that……… I mean, we’ve seen small businesses just decimated here in the US, across Europe, there’s been so many challenges, I mean, are fintech lenders in the SME space…I mean, are they’re stepping up in the region because obviously there’s not as much government support as there has been in say in Europe or in the US.

Manuel: Yeah. I mean, there has been a little bit, but I think that is still a temporary matter. I think if you want to build a company that’s going to be big in the long term, you need to think more about fundamentals and I think the fundamentals in SME lending around integration to processes and it’s about data, right.

So, for example, the a55 our latest investment in Brazil, they do a kind of a revenue-based lending to SMEs in the digital economy so it’s all about understanding recurrence, it’s about understanding payments, it’s about integrating the flow, it’s about speed of delivery, speed of underwriting, etc., etc. I think in things like that there is an opportunity because you get the best of lending and a good team that knows how to access capital markets and then on the other side you get the best of technology, right. As long as you keep those two things in check, you can build interesting businesses. If you lose any of the two then you’re probably more in trouble or you become irrelevant.

Peter: Right, right, right, okay. So last question then, as we close out this year, it’s been obviously a challenging year across the world, how do you feel that…..are you optimistic about LatAm in 2021 and beyond, I mean, how do you feel the region is going to…is it going to continue to develop like it has been?

Manuel: I would say, I am optimistic about the region because I guess the fundamentals are there and, you know, it will last as long as the fundamentals are there. I’m definitely optimistic about investing in LatAm because I think that if you spend the time to do your homework, to understand the market and if you’re an investor like we are who like to spend time with entrepreneurs helping them, sharing the knowledge that you may have gathered from other markets and just spending time building companies with them, I think it’s a great moment to come in, identify talent and work with that talent to build a very strong company when things pick up again. So, I am positive on both those fronts and I think it’s going to be a good year from that perspective.

Peter: Okay, we’ll have to leave it there, Manuel, I really appreciate you coming on the show today.

Manuel: Thanks for having me.

Peter: See you.

Manuel: Alright, bye.

Peter: You know, it’s one of the reasons I find Latin America so interesting. It is how Manuel kind of described there where there are still niches that are untapped where companies can come in and really make a sizable company. Obviously, that’s going to be slowly changing here as more and more companies come in and get scale, but there is such an opportunity there still, I think, for homegrown players that will becom..you’ve seen Nubank. Nubank is the largest digital bank in the world outside of China, potentially, but it really has been an amazing success story there and we’re going to see more like that. Obviously, many of these companies, pretty much older companies that we talked about here on the show, will be speaking at LendIt Fintech LatAm coming up here in December 8th and 9th.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by Lendit Fintech LatAm, the region’s largest fintech event dedicated to lending and digital banking is going virtual. It’s happening online on December 8th and 9th. Pandemic or not, LatAm is still the hottest region for fintech in the world and LendIt Fintech LatAm features all the leading players in the region. So, join the LatAm fintech community online this year where you will meet the people who matter, learn from the experts and get business done. LendIt Fintech, lending and banking connected. Sign up today at lendit.com/latam.

You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. To listen to this podcast episode there is an audio player directly below or you can download the MP3 file here.

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Filed Under: Fintech One-on-One Podcast Tagged With: Latin America, Mouro Capital, Santander, venture capital

Views: 164

LendIt and Innovate Finance in the UK Teaming Up on a Fintech Webinar

Webinar will get the perspectives of leading venture capitalists on fintech opportunities in the US and the UK.

June 5, 2017 By Peter Renton Leave a Comment

Views: 0

[Update: The webinar replay is now available here.]

This Wednesday LendIt and Innovate Finance are teaming up with some the leading VCs to discuss fintech in the UK and the US. Titled, FinTech Opportunities in the UK and the US: The VC Perspective, this first of its kind webinar will bring perspectives from both sides of the Atlantic in a fast-paced one hour educational session.

I will be moderating along with Lawrence Wintermeyer, the CEO of Innovate Finance. Panelists include Matt Harris of Bain Capital Ventures, Luis Valdich of Citi Ventures, Alston Zecha of Eight Roads Ventures and Sheel Mohnot of 500 Startups. We will be discussing how the fintech environment is different in the UK and US and what these leading VCs are seeing today. We will also be talking about which areas of fintech are the hottest, what startups can do to get noticed today and much more.

Here are the details for the webinar:
Date: Wednesday, June 7
Time: 9:30am Eastern/2:30pm BST
Duration: 1 hour
Register here

Come prepared with questions, there will be some time for audience Q&A towards the end. Even if you might not be able to make it go ahead and register at the above link because a replay will be made available for all registered participants. I hope to have you on the webinar on Wednesday.

 

Filed Under: Peer to Peer Lending Tagged With: Innovate Finance, LendIt, venture capital, webinar

Views: 0

Own SoFi, Other Fintechs Through Renren

Renren is a social networking platform turned fintech investment firm allocating serious capital to some leading players in fintech

January 31, 2017 By Ryan Lichtenwald 1 Comment

Views: 152

Renren_fintech_investments

There are no shortage of VC firms who have allocated dollars to various fintechs throughout the world. But for individual investors it is difficult to get exposure to fintech companies because so few have actually gone public. There is one company called Renren that has allocated to numerous fintech firms and is currently publicly traded on the NYSE under symbol RENN.

The company operates a real name social networking platform in China but has most recently made investments in fintech businesses which will be the focus of this post.

Most notable investments from a US perspective include SoFi, Lending Home, Motif Investing and Fundrise. Renren has participated in SoFi’s series B, D, E and F rounds for a total investment of over $242 million. According to the 2015 year end report, “The Company held 28.85% and 21.20% equity interest of SoFi as of December 31, 2014 and 2015, respectively.” While we don’t have updated numbers, Renren owns a significant interest in SoFi, which continues to buck the trends of their competitors. The below table was taken from Renren’s 2015 year end earnings report and highlights their top fintech investments.

Investment Location Cost (thousands) Ownership % Portfolio %
SoFi 1 San Francisco $235,920 21.2% 58%
Lending Home San Francisco $65,843 14.7% 16%
Motif Investing San Mateo $40,000 10% 10%
Snowball Finance 2 Beijing $35,534 n/a 9%
Credit Shop Austin, TX $15,000 n/a 4%
Fundrise 1 Wash DC $15,144 25.3% 4%
Total $407,441 100%
1 equity method investments; 2 available for-sale investments

In order to invest this amount in SoFi, the company borrowed nearly $60 million at 6% to finance the transaction. According to financial reports, the loan is expected to be repaid over three years with the potential to extend to five years if SoFi meets revenue targets. It was reported in September, 2016 that SoFi was seeking to raise an additional $500 million after their massive $1 billion Series E round in 2015. [Read more…]

Filed Under: Peer to Peer Lending Tagged With: Fundrise, Motif, Renren, SoFi, venture capital

Views: 152

What VCs Really Think of Banks

The huge depth and breadth of FinTech investments reveal the scale of disruption in financial services.

October 14, 2015 By Peter Renton Leave a Comment

Views: 179

VC Fintech highlights

[Editor’s note: This is a guest post from James Alexander, an experienced marketplace lending executive who has been following this industry for many years. See the end of this post for a more complete bio.]

In 1998 a small Internet banking site called X.com made the bold decision to focus on its payments business. A few years later—renamed PayPal—this company encompassed over 100 million active users. Today, the disruption of financial services promises to be more dramatic and far-reaching.

Financial technology (FinTech) represents nothing short of revolutionary change, encompassing payments, next generation advisors and lending. Investments into FinTech startups recently quadrupled, growing to over ~$12 billion in 2014 from ~$3 billion in 2013. It appears 2015 is on track to dwarf the previous year, according to CB Insights, which charts more than 1,300 transactions in the sector since 2008. [Read more…]

Filed Under: Peer to Peer Lending Tagged With: fintech, funding, venture capital

Views: 179

Upstart Closes a $35M Funding Round Led by Third Point Ventures

This new breed of marketplace lender is gearing up for growth as VC's continue to show strong interest in the space.

July 16, 2015 By Peter Renton 1 Comment

Views: 112

Upstart is gearing up for growth. One of the newer marketplace lenders announced some big news today. They have closed a $35 million Series C led by Third Point Ventures. This is the largest funding round ever for the company and will provide them with the resources they need to scale. Ryan wrote a detailed investor review of Upstart a few weeks ago and we introduced them to Lend Academy readers here.

I caught up with Upstart CEO Dave Girouard earlier this week to talk about this funding round and to get an update. He told me that Upstart has been growing steadily. After launching in May last year they have issued nearly 9,000 loans totaling more than $125 million. They are up to 65 employees now and with this new round they are “doubling down on data science and engineering” according to Dave.

One of the unique things about Upstart is that they have done a lot of analysis around education – their use of the school and major of a borrower, along with traditional credit data, is an integral part of their underwriting model. But they are looking at other data sources as well.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: marketplace lending, Upstart, venture capital

Views: 112

Prosper Reboots With a New CEO and New Funding

January 22, 2013 By Peter Renton 64 Comments

Views: 117

There is some really big news out of Prosper today. They have not only received a new $20 million round of financing but there has also been a management change at the top of the company.

Interim CEO Dawn Lepore has resigned and been replaced by new CEO Stephan Vermut. Prosper has also named a separate president for the first time – that title has been held by the CEO until now. Aaron Vermut will become the president once he transitions out of his current position. Also coming on board is Ron Suber as Head of Global Institutional Sales. All three executives have worked together at Merlin Securities, a prime brokerage services firm that was acquired by Wells Fargo in July 2012.

A New Round of VC Funding Headed by Sequoia Capital

There is probably no bigger name in the Silicon Valley venture capital community than Sequoia Capital. They have funded some of the most successful names in business today including Apple, Google, Cisco, PayPal and Oracle just to name a few. Now, they will be adding Prosper to their portfolio of companies.

Sequoia Capital is leading a $20 million round that includes funding from all existing investors as well as the three new executives. Sequoia Capital Partner Pat Grady will join the Prosper Board of Directors along with new CEO Stephan Vermut. This reconstituted board was made possible after the resignations of David Silverman and Larry Cheng last month.

[Update: Prosper released their Form 8-K after I published this article and it should be pointed out that there is going to be a completely new Board of Directors. Founder Chris Larsen, Timothy Draper, Gary B. Coursey, Nigel Morris and Eric Schwartz have also resigned as members of the Board, effective January 14, 2013.]

A New Beginning for Prosper

This marks an exciting new chapter for Prosper. They will have a new look executive team that should bring some renewed vigor and energy to the company. I happen to know Ron Suber, Prosper’s new Head of Global Institutional Sales, who has been a reader of this blog for some time and we have communicated several times over the past year. In our conversation yesterday he stressed that the new management team will bring a clear vision, passion and creativity to Prosper and the p2p lending space.

They have a “100-day plan” of goals for their first hundred days and a list of nine things Prosper needs to do to reestablish itself.  Suber is also going to bring a renewed focus to the investor side of Prosper’s business particularly when it comes to institutional investors. But he has assured me that retail investors will also be a priority.

My Take on This Change

While I have known a new round of funding was coming (although I was pleasantly surprised at the size of the round) I had no idea about the management changes until my phone conversation with Ron Suber yesterday. These changes have the potential to propel Prosper forward on to a new trajectory of growth.

The one piece that has been concerning some investors is the class action lawsuit against Prosper. The suit is still ongoing and the new management team would not comment on this matter but based on the new round of funding clearly the lawyers at Sequoia Capital are not too concerned about it.

Last year Lending Club caught all the headlines for their astounding growth and high profile board nominations. No doubt they will continue to do well in 2013. But I think this year it will not be all about Lending Club. Prosper has an excellent chance to establish themselves as the strong number two in the p2p lending space.

Clearly this is a shot in the arm for Prosper at a time when they need it. I expect we will see increased volume at Prosper very soon, probably as soon as the Prosper Funding LLC changes are implemented on February 1st. I will be in regular contact with the new management team and will report back on new changes as they happen. The next few months will be very interesting.

Here is a link to the official press release announcing these changes as well as an article on Techcrunch.

Filed Under: Peer to Peer Lending Tagged With: Prosper, sequoia capital, venture capital

Views: 117

Lending Club Receives $15 Million in Funding From Kleiner Perkins

June 6, 2012 By Peter Renton 8 Comments

Views: 970

There is probably no bigger name in venture capital than Kleiner Perkins (officially known as Kleiner Perkins Caulfield Byers or KPCB). They are one of the stalwarts of Silicon Valley having invested in such household names as Amazon, Google, Compaq, Groupon and AOL. Now, they have added Lending Club to that list of companies.

Today, Lending Club announced (press release is here) a $15 million equity investment from Kleiner Perkins. At the same time Kleiner Perkins partner Mary Meeker has been appointed to the board of Lending Club. Along with John Mack’s recent $2.5 million investment this brings the total capital raised by Lending Club to $100 million. More importantly it brings the total cash on the balance sheet to around $45 million.

Here is what Mary Meeker had to say about Lending Club in an official statement:

“Lending Club is helping reinvent the consumer lending industry. It’s the kind of opportunity that Kleiner Perkins is interested in and I knew I wanted to be involved.”

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: kleiner perkins, Lending Club, venture capital

Views: 970

Prosper Receives a New Round of Funding

November 4, 2011 By Peter Renton 20 Comments

Views: 11

I have been out in San Francisco this week visiting with the management teams at Prosper and Lending Club. I arrived at the Prosper offices yesterday morning and was greeted by some big news. CEO Chris Larsen shared that they have just received a new round of venture capital funding.

Here are the details of this funding round. Prosper issued 8,996,739 shares of its Series F Preferred Stock to a group of new investors that includes IDG Capital Partners for an aggregate purchase price of $9.0 million. Prosper will not be issuing a press release about this funding and they have given me permission to make this announcement.

This funding was unsolicited and came at a higher valuation than the round that closed in June. It brings the total cash on their balance sheet to over $25 million and gives them even more flexibility now to ramp up operations. The mood at Prosper headquarters was understandably jubilant when Chris Larsen announced the news to employees.

I think this funding is great news not just for Prosper but for all of peer to peer lending. Their CFO stated to me yesterday that Prosper expects to reach break even in 12-18 months at somewhere around $30 million in new loans per month. This new funding should easily see them past that point even allowing for slower growth than expected.

All p2p investors benefit from having two strong and successful competitors. It certainly looks like we have that now. The future keeps looking brighter for peer to peer lending.

Filed Under: News Tagged With: Prosper, venture capital

Views: 11

Lending Club Closes a New $25 Million Funding Round

August 3, 2011 By Peter Renton 2 Comments

Views: 973

Today, Lending Club announced that they have closed their latest funding round, a Series D, to the tune of $25 million. But what is more significant about this big news is that it places a valuation on Lending Club of a whopping $275 million, up from $80 million last year.

All existing investors participated in the round as well as a new investor, Union Square Ventures, a New York based venture capital firm that have invested in the likes of Foursquare, Twitter and Kickstarter. The $25 million round brings the total raised by Lending Club now to $77.7 million.

This is an historic day for the peer to peer lending industry. A valuation of $275 million for Lending Club demonstrates that the industry is coming of age. It clearly is a vote of confidence not just in Lending Club but in the peer to peer lending concept as a whole.

The news first appeared in the Wall Street Journal this morning, there is no official press release as of right now.

[Update: Here is the official press release.]

Filed Under: News Tagged With: Lending Club, venture capital

Views: 973

Prosper.com Closes Next Round of VC Funding

June 7, 2011 By Peter Renton 1 Comment

Views: 4

Today Prosper announced that they have closed another funding round, this time for $17.2 million. It came from several of their existing investors as well as from some new investors as well. Here are some of the details from the press release:

Prosper.com, a social lending marketplace that brings together creditworthy borrowers with individual and institutional investors, today announced that it has raised over $17 million in funding from new investors Draper Fisher Jurvetson and CrosslinkCapital. Existing investors Accel Partners, CompuCredit, Omidyar Network, TomorrowVentures, and Volition Capital also participated in the round.

This $17.2 million funding round is their largest cash injection to date and brings their total cash raised to $74.7 million. Based on their latest financials it was clear that Prosper needed a new cash injection soon. This new injection will give them breathing room now for at least year and probably longer. Prosper has been on a steady growth curve for the last six months and with this higher loan volume will likely be reducing their cash burn rate as they start to generate more cash from operations. [Read more…]

Filed Under: News Tagged With: Prosper, venture capital

Views: 4

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LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

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