VC Investments Pour into LATAM Fintech and Gig Economy Sectors as Countries Continue to Fight Against COVID-19
VC investments into the region’s digital economy surge while LATAM countries struggle with the spread of COVID-19.
This week, Mexican challenger bank albo raised $45 million to expand product offerings, Heru snagged $1.7M for software services for LATAM gig workers, and Henry secured $1.5M to train software developers in Latin America. Concurrently, new data reveals that Mexico has lost over 1 million small businesses during COVID-19 Pandemic, while Argentina taxes the country’s ‘super-rich’ to fund federal COVID-19 resources.
Mexican Challenger Bank albo Raises $45M to Expand
With nearly half a million customers across Mexico and a network of 30,000 retail partners, challenger bank albo on its way to becoming a dominant player in Mexico’s emerging fintech industry, and has recently raised another $45 million to consolidate its position.
“When your mission is to build the biggest bank in Mexico, you will need a ton of money,” albo Founder Angel Sahagún stated.
The company received its license to operate as a full depository bank in Mexico, and is looking to become the premier internet-based financial services provider for Mexico’s large and growing middle class, Sahagún added.
For this reason, the company has set up a network of 30,000 locations- including convenience stores and drug stores- that accept deposits via albo’s platform.
This retail presence, in addition to the company’s 40% share of the digital banking market in Mexico (according to data from Apptopia) has investors like Valar Ventures, Greyhound Capital, Mountain Nazca and Flourish Ventures willing to invest in the company’s $45 million round.
YC-backed Heru Raises $1.7M to Build Software Services for LATAM Gig Workers
The pre-seed round was led by Mountain Nazca, and participated in by Magma Partners, Xtraordinary Venture Partners, Flourish Ventures, YC itself, and angel investors. Tech Crunch reports that the investment was raised in two pieces: a $500,000 check in February and the other $1.2 million closing a few weeks ago.
Heru aims to provide software-based services for gig workers in Mexico, and eventually other countries. Its founders, Mateo Jaramillo and Stiven Rodríguez Sánchez, are both ex-Uber employees.
Heru is a package of software products aimed at gig workers (delivery drivers and the like). The platform helps to provide insurance and credit and tax preparation support. The company’s founders explained that the tax element is key. Mexico now expects independent workers to file taxes on a monthly basis, so Heru built them a tool to do so.
Henry Secures $1.5M to Train Software Developers in Latin America
As Latin America’s startup scene attracts mega rounds of venture investment, startups need more talent than ever before to meet demand.
Henry, a Buenos Aires startup, has created an online computer science school to train software developers from low-income backgrounds to understand technical skills and get employed.
The company claims that there’s an estimated 1 million software engineering job openings in Latin America, but fewer than 100,000 professionals that have training suitable for those roles. With 90% of graduates coming from no formal higher education background, Henry seeks to help bring more back-end junior developers and full-stack developers into startups (Tech Crunch).
After going through Y Combinator’s Summer batch, Henry announced that it has raised $1.5 million in seed funding in a round led by Accion Venture Lab, Emles Venture Partners and Noveus VC. There were also a number of EdTech angel investors from Latin American that participated in the round.
Mexico Loses Over 1 Million Small Businesses During COVID-19 Pandemic
Measures to contain the COVID-19 pandemic in Mexico appear linked to the closure of more than 1 million micro, small and medium enterprises (MSMEs) through September, according to statistics agency INEGI.
In its second nationwide private sector survey since the pandemic began, the agency reported that only 3.9 million MSMEs remained in operation, suggesting more than 1 of 5 such businesses were unable to survive the first six months of the pandemic.
INEGI president Julio Santaella stated that while it isn’t possible to know for certain that the pandemic’s impacts were directly to blame for the closures, there is a clear correlation (BN Americas).
“Business closures appear exactly timed to the period of the pandemic. While we can’t prove causality, we can definitely say that the pandemic has a factor in all of this. The pandemic has not disappeared and continues to wreak havoc,” said Santaella.
In the survey, 86.6% of companies said their business had suffered since the arrival of COVID-19: a statistic that is 7 percentage points lower than in INEGI’s first survey conducted during the initial lockdown.
Many businesses reported that work from home would likely become a permanent part of their model, including 11.2% of micro businesses, 19% of small and medium-sized enterprises and 44.8% of large firms.
Argentina to Tax the Super-Rich to Fund the Country’s Fight Against COVID-19
Argentina's Congress has approved a wealth tax on individuals with assets worth over 200 million ($2.5 million). Only the top 0.8% of the population- about 12,000 people - will be affected, according to the BBC.
Pressenza reports that Argentina's government is hoping to collect about $3.3 billion from the taxes. The money raised will go to a variety of causes, with a significant proportion dedicated towards the country’s fight against COVID-19.
Medical supplies and equipment will be covered by the new tax, with 20% of its revenues. Another 20% will go towards economic relief for small and medium-sized businesses, according to the AFP news agency.
The pandemic has badly hit Argentina: the eighth-worst affected country in the world in terms of deaths per million people. To date, almost 40,000 have died in the South American nation of 44 million, as the economy also struggles. Argentina is facing its third year of economic recession and is burdened with massive amounts of debt. At the end of 2019, Argentina owed $323 billion.
While the tax was passed through congress with a “comfortable margin”, it has faced fierce opposition from those across the political aisle (Business Insider).