Funding & E-Commerce Activity Shows Faith In Latin America Business

The first tech-enabled platform for LATAM SMEs secures $25M funding, distressed asset investors renew attraction in LATAM & e-commerce shows immense potential in the region (provided businesses get their act together).

Recent headlines show faith in Latin American business. This includes the funding of the first tech-enabled financing platform for LATAM small and medium sized enterprises (SMEs), the appeal of distress asset investing and immense e-commerce opportunities.  For the full details and weekly updates delivered to your inbox subscribe to our newsletter, LATAM Weekly.

Miami-Based Startup Secures $26M Funding For First Tech-Enabled Financing Platform for Latin American SMEs

Miami-based startup, Marco Financial, announced it has secured $26M in funding and credit in order to support Latin American-based SMEs.  A $350 billion trade finance gap blocks many exporters from the U.S. market. In order bridge this gap Marco Financial will use new risk modeling and management tools to help make better decisions on who should receive loans. It is the first tech-enabled financing platform built for small and medium-sized Latin American exporters (TechCrunch).

COVID Hotspot Turns Distressed Asset Investment Hotspot

While still considered by some as a hotspot for COVID-19, Latin America is also positioned as a hotspot for distressed asset investors.

Although global M&A activity slowed down when the economy went into lock-down, deal-making is expected to pick up in coming months. Distressed asset investors with an eye for bargain and an appetite for risk are drawn to Latin America, particularly Brazil and Mexico, the region’s largest economies and top destinations for foreign direct investment (FDI).

Foreign investors are well-acquainted with the opportunities in the region, particularly favorable exchange rates for those funded in foreign currencies, most notably the U.S dollar.

Private equity firms are anticipated to make the first move. Corporate counterparts are expected to be more wary; shifting their focus to workforce well-being, day-to-day operations and cash preservation.

Capital intensive industries that are acutely shielded from global commodity prices and customer demand, such as oil, gas, and manufacturing, will likely provide opportunities for corporate expansion. A shift towards supplier and supply chain consolidation in the manufacturing sector is expected as companies look to buy small-scale and middle market manufacturers.

After Some Catch Up Immense Opportunity Exists For LATAM E-Commerce Growth

Although online purchases rose in the wake of COVID-19, the region’s businesses seem behind. Today more than 75% of Latin American consumers start or finalize a purchase decision online. Yet, Google estimates that only 10% of SMEs in the region have a web presence, and just 2% sell online.

Many of the 90% of all businesses that fall onto the micro, small, and medium-sized enterprise category, continue to operate informally due to a lack of market information and poor access to digital and financial services for growth. With a large unbanked population -- 70% of Latin Americans do not have a bank account -- 60% of transactions made by small businesses are still in cash.

However, immense opportunities abound. E-commerce in Latin America is projected to reach US$74.8 billion by the end of 2020. This is largely seen as a byproduct of internet access, particularly widespread adoption of mobile devices.

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