Mexican Bitcoin Exchange Bitso Raises $250M, Becomes Latin America’s First Crypto Unicorn

Other featured stories include: Brazilian Fintech Raises $5.5M; Uala, Argentina's Cashless King, Targets LATAM’s Unbanked Millions; and E-Commerce Giant MercadoLibre's Loss Widens on Higher Taxes.

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May 13, 2021

Mexican Bitcoin Exchange Bitso Raises $250M, Becomes Latin America’s First Crypto Unicorn

Bitso, the largest cryptocurrency platform in Latin America, announced it raised $250 million in Series C investment. The round, co-led by hedge fund giant Coatue and investment firm Tiger Global, puts the company’s valuation at $2.2 billion, making it one of the largest fintechs in the region and its first crypto unicorn. 

Other investors in the round include Paradigm, BOND, Valor Capital Group, QED, Pantera Capital, and Kaszek. Back in December 2020, Bitso raised a $62 million Series B at an undisclosed valuation.

The investment will be used to continue providing access to cryptocurrencies for local residents and expand operations, says Bitso’s Co-Founder and CEO Daniel Vogel, adding that:

“We want to make sure that folks in the region really benefit from accessing these global financial services that are getting built on top of blockchain.”

The Mexico City-based company offers multiple cryptocurrency products and services to over 2 million customers across Mexico, Argentina, and Brazil. Product offerings include the Bitso App, which lets users buy, sell, send, or receive bitcoin and 8 other cryptocurrencies; Bitso Alpha, a professional-grade crypto trading platform; and Bitso Business, a suite of cross-border products for local enterprises. 

As reported by Forbes, the company claims it has more than a 95% crypto market share in Mexico and more than a 60% share in Argentina. In January 2021, Colombian regulators reportedly chose Bitso as one of the nine companies allowed to test crypto use cases under the government’s pilot program. Bitso is also preparing to introduce a crypto derivatives trading platform and interest-bearing crypto accounts. 

In the U.S., Bitso is better known for its crypto remittances services conducted in partnership with San Francisco-based Ripple, which also invested in the company. Last year, Bitso processed about $1.2 billion in remittances, amounting to 2.5-3% of the yearly remittances volume between the U.S. and Mexico. The majority share of those flows was powered by Ripple’s On-Demand Liquidity Service (ODL), which delivers instant cross-border payments without pre-funding through Ripple’s cryptocurrency XRP. 

Brazilian Fintech Raises $5.5M

Brazilian neobank has announced a $5.5 million Series A led by Union Square Ventures (USV). The investment in marks USV’s first investment in South America, solidifying a trend by other major U.S. investors such as Sequoia who only in the last several years have started looking to Latin America for deals.

“The bar was high for our first investment in South America,” said Union Square Ventures partner John Buttrick. “The combination of the business model and world-class management team enticed us to expand our geographic focus to help build the leading digital bank targeting the 100 million Brazilians who are currently being neglected by traditional lenders,” he added in a statement. 

Similar to Nubank’s strategy of the “anti-bank bank”, launched its first financial product in 2019: a fluorescent-yellow debit card which the locals have coined, “o amarelinho,” meaning, “the little yellow card.”

Unlike many fintechs, has a strong social mission and pays commissions for referrals that last for the customer’s lifetime. 

According to the company, nearly a million people have downloaded the Android app since its launch. The company’s core offerings include the debit card, a prepaid credit card, Pix (similar to Zelle), a savings account, and telemedicine visits via a partnership with Dr. Consulta, a network of healthcare clinics throughout the country. The prepaid credit card is key, as online stores in Brazil don’t accept debit card purchases.

Uala, Argentina's Cashless King, Targets LATAM’s Unbanked Millions

Argentinean digital banking startup Uala will double the size of its operations in Argentina and Mexico with a $64 million investment as it seeks to convince more people across the region to choose digital over traditional banking. 

Pierpaolo Barbieri, the company's Founder, told Reuters that the investment would double Uala's 800-strong headcount and operating space. He added that there was potential for Uala to reach out to the unbanked in countries such as Peru, Paraguay, Colombia, and Chile as well as eventually the United States and Europe:

"I believe we're going to see more and more services being globalized. In Latin America, we have great opportunities to serve North America, also Europe. We are in a very good time zone and we have excellent talent."

Barbieri's personal finance app was launched in October 2017 and secured early backing from investors George Soros and Point72 Ventures LLC to offer prepaid debit cards, transfers, payments, and savings and lending services.

Uala first outlined an expansion plan last year after receiving millions in fresh funding from China's Tencent Holdings and SoftBank Group Corp. As part of its plan, last month Uala began the process of acquiring rival Argentine digital bank Wilobank.

Barbieri said the firm's biggest selling point in encouraging future customers was the fact that its costs are almost 80% lower.

"More than 70% of Mexicans never had access to a payment method other than cash, 50% of Argentines, 60% of Peruvians, 80% of Paraguayans, 50% of Colombians and 30% of Chileans," Barbieri said. The company is not currently looking for new investors since it has grown "much higher than expected," he added.

E-Commerce Giant MercadoLibre's Loss Widens on Higher Taxes

MercadoLibre Inc (MELI.O) posted a larger quarterly loss on Wednesday, hit by a higher tax bill and weak margins, as the Argentine e-commerce giant boosts spending to respond to a surge in online shopping and digital payments in Latin America.

The company has been increasing investment in key areas including warehouses and fintech services as it battles competitors such as Amazon in a rapidly growing market where many shoppers are still unaccustomed to spending money online.

Reuters reports that the company’s income tax expense swelled to $43.5 million in the first quarter ended March 31, from $4.4 million a year earlier, while its gross profit margin shrunk by about 5% to 42.9%. Its net loss widened more than 61% to $34 million, or 68 cents per share, from a year earlier. Excluding income tax expenses, the company posted a net income of $9.5 million.

As a company operating out of Argentina, MercadoLibre also incurred foreign currency losses worth $15.1 million due to additional costs for buying U.S. dollars following restrictions imposed by Argentina's government. However, its quarterly revenue more than doubled to $1.4 billion, beating a Refinitiv IBES estimate of $1.14 billion.

The second wave of COVID-19 that has hammered Brazil, which comprised 56% of MercadoLibre's total revenue, has sustained a surge in online shopping and digital payments in the region and neighboring countries including Argentina.

Total payment volume from its fintech arm Mercado Pago rose 81.8% to $14.7 billion, as the company ramps up its digital payments engine with many shops shifting online during the pandemic.

This week will be the last edition of dataPlor’s LATAM Newsletter. Thank you for your continued support and readership over the past few years. 

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