Uber partners with BBVA and Mastercard to offer debit card to local drivers, Latin American VC Funding Trends, Grow Mobility hits 10 million ride milestone, EU-Mercosur Treaty, and more from the region...
Featured stories include: the top four big trends in Latin American startup funding, Grow Mobility’s growing success, EU-Mercosur Treaty: deal details and its international implications for Latin America.
Uber partners with BBVA and Mastercard to offer debit card to local drivers
According to Federico Ranero, Uber Mexico’s General Manager, this announcement marks the first time that Uber has offered debit card services to drivers outside of the United States. The card will preliminarily be available in six cities- including Mexico City, Tijuana, Monterrey, Puebla, Merida and Guadalajara- but will eventually be rolled out to the rest of Mexico.
Ranero told Reuters,
“Uber supports the extension of financial services in the country.”
The ride-sharing giant has been working to integrate the unbanked population into the financial system, Ranero said. Uber drivers must have a bank account to receive earnings, and roughly 35% of the company’s workforce in Mexico opened a bank account specifically for that purpose.
According to Carlos Lopez-Moctezuma, Head of Open Banking at BBVA, the bank’s partnership with Uber will allow drivers to open accounts in the Uber app, without having to set foot in a bank. Many experts blame long lines at banks and a shortage of rural branches for Mexico’s low banking rates.
Uber continues to seek out the ability to reach riders without bank accounts by accepting cash fares, despite being met with resistance from local legislators.
This past April, Mexico City’s government issued rules prohibiting cash payments for ride-hailing services as well as requiring drivers to register with the city (Reuters).
In a press release following Tuesday’s announcement, Ranero expressed that Uber hopes to discuss this issue with city regulators, but the company will continue accepting cash payments in the meantime. “We believe this is a constitutional right of our riders and drivers,” Ranero said.
Latin American VC Funding Trends
As startups begin to flourish throughout Latin American markets, available capital funding continues to adapt and evolve to better suit the needs of maturing companies in these emerging markets.
“It’s not easy to raise growth-stage capital in Latin America, but it’s getting easier… However, Silicon Valley-style Series A rounds in Latin America are still rare, especially outside of Brazil and Mexico” (Tech Crunch).
The region’s remarkable growth in Venture Capital funding over the past year speaks to the increasing number of later-stage rounds that startups are raising across Latin America.
According to Tech Crunch, 2018 was Latin America’s inflection point for startups, with four big trends:
1. Record-breaking rounds:
Mexico’s Grin Scooters raised the largest Latin American seed round to date, and Brazil’s Yellow- a bike and scooter-sharing startup- raised the region’s largest Series A round to date. The two companies merged into Grow Mobility: a company that operates more than 135,000 micromobility vehicles across six countries, with plans to increase its Latin American fleet twofold in the upcoming months.
2. Soaring Asian Investment
Brazil’s most popular ride-sharing app 99,was acquired by Chinese mobility giant Didi Chuxing.
SoftBank has notably committed a $5 billion Latin American fund. Since the announcement, the Japanese conglomerate has invested in Brazil’s logistics provider Loggi, Brazil’s Gympass and Colombia’s largest hotel chain, Ayenda Rooms.
3. Exits to Latin American and U.S. Corporates:
Grocery delivery startup Cornershop was acquired by Walmart for $225 million, and Falabella acquired e-commerce company Linio for $138 million. These notable acquisitions reveal Latin American large companies’ increasing concern about competition from startups.
4. Increasing Number of Latin American Startups Being Sent to Y Combinator:
In the past year, Latin America sent more than 10 startups to the Y Combinator, and many more to other international accelerators. Companies include: Grin, Higia, Truora, Keynua, The Podcast App, SkyDrop, UBits, Cuenca, BrainHi, Pachama, Calii, Cuanto, Pronto and Fintual.
Grow Mobility hits 10 million ride milestone
As an industry leader in Latin America, Grow currently operates in 23 cities across the region, including Mexico, Brazil, Colombia, Chile, Peru, Argentina, and Uruguay, as shown in the graphic below.
Photo Courtesy of Grow
The platform has over 5 million registered users and more than 2,500 employees throughout Latin America. The New York Times includes Grow in their list of the next potential companies to achieve unicorn status.
According to Sergio Romo, Grow’s CEO,
“The situation with our cities’ public transportation systems creates unique challenges that we address latino-style: with a lot of passion and care. With every trip we validate our slogan ‘We love our cities’ and our commitment with the communities by providing excellent mobility services” (Lat Am List).
EU-Mercosur Treaty: Deal details and international implications for Latin America
According to a European Union news release,
“The new trade framework – part of a wider Association Agreement between the two regions – will consolidate a strategic political and economic partnership and create significant opportunities for sustainable growth on both sides” (CNN).
The EU-Mercosur deal – committed to more open markets in the face of rising protectionism and international trade tensions– aims to remove the majority of tariffs on EU exports to Mercosur: an economic and political bloc comprised of Argentina, Brazil, Paraguay and Uruguay, and other associate members.
“[The deal] Creates a market of close to 800 million people for goods and services comprising almost a quarter of the world’s gross domestic product. In terms of tariff reduction, it is the largest deal the EU has struck: duties on EU exports to Mercosur are expected to be cut by €4bn a year” (Financial Times).
As explained by Financial Times, the “was hailed by both sides as a ‘landmark’ in global policymaking and a coup for their exporting companies”.
In response to news of the deal, Brazilian President Jair Bolsonaro expressed that he believes this free trade treaty should trigger a domino effect and encourage more countries to negotiate with Brazil.
President Bolsonaro told reporters that he expected the Brazilian Congress to be one of the first to approve the EU-Mercosur treaty. According to the Brazilian President, it could take up to three years for the free-trade deal to come into force, depending on approval by lawmakers of all countries involved.
“(The deal) comes into force in one or three years, depending on the parliaments…Maybe ours will be one of the first to approve, I hope” (Reuters).
Mexican Foreign Minister expresses country’s intent of seeking closer business ties with China
Mexican Foreign Minister Marcelo Ebrard told reporters that Mexico is looking to deepen economic ties with China by increasing its exports and attracting more investment from the country.
Ebrard spoke to reporters during the Group of 20 summit in Osaka, Japan; where explained that talks with various government officials demonstrated viable interest in boosting trade and investment with Mexico.
“What we’re interested in is increasing Mexico’s presence in China, Mexico’s capacity to export to China. And China’s investments in Mexico” (Reuters).
According to Mexican economy ministry data, Mexico imported $83.5 billion worth of goods from China last year, while Mexican exports to China were worth only $7.4 billion.
Mexico currently sends around 80% of its exports to the United States, and is eager to sell more to other countries in efforts of reducing its economic dependence on its American neighbor. Mexico’s trade dependence on the U.S. has become a rising liability, as President Trump recently vowed to slap tariffs on all Mexican exports to the United States if the Mexican government did not demonstrate efforts of halting the surge of migrants heading across the U.S.-Mexico border.
Ebrard explained that during the summit, Trump expressed to him that “(The United States) had good signs that things were going well” in Mexico’s bid to cut the flow of mostly Central Americans seeking to cross the U.S. border (Reuters).
Brazil posts $5.02 billion trade surplus in June
The Economy Ministry announced that Brazil posted a trade surplus of $5.02 billion in June, narrower than May’s $6.3 billion surplus and down 4.2% from June 2018.
June 2019’s surplus was also slightly smaller than the $5.4 billion median estimate in a Reuters poll of economists. According to Reuters, exports totaled $18.05 billion and imports totaled $13.03 billion.
Podcast: The Dirty Residue of Brazil's Car Wash Probe
On the podcast: The editor in chief of Americas Quarterly explains why investigators are now under scrutiny in Brazil’s largest corruption inquiry.Learn more about your ad choices. Visit megaphone.fm/adchoices