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Nubank’s $400M Round Underscores Global Investor Interest In Latin America

Silicon Valley venture firm TCV has confirmed it led a $400 million round for Brazilian fintech startup Nubank, marking the firm’s first “significant” investment in Latin America.

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Crunchbase News reported on Friday that the deal was reportedly in the works. Nu Pagamentos SA, known as Nubank, raised the money at a valuation of $10 billion, according to the Wall Street Journal. TCV, a California-based growth fund with 340 reported investments under its belt, according to Crunchbase, was not the only participant. Existing investors Tencent, DST Global, Sequoia Capital, Dragoneer, Ribbit Capital, and Thrive Capital also participated in the round.

With the new capital Nubank has raised $820 million across a total of seven investment rounds since its inception in 2013, according to TCV.

Nubank

Nubank’s customer base has more than doubled since its last funding in 2018, crossing the 12 million mark in Brazil and making the company Brazil’s sixth-largest financial institution by number of clients, according to TCV. (That’s saying a lot considering the sheer size of Brazil’s population and economy). Nubank’s product portfolio has evolved beyond its original app-controlled credit card and rewards products to now include personal loans, a digital savings account with debit cards for consumers and SMEs (small-to-medium enterprises). Via email, the company unusually (in a good way) transparently told me its revenue more than doubled in 2018 to R$1,223.2 million (about US $323.4 million) – 2.2 times higher than the R$567.3 million (about US$150 million) in 2017.

This year, the company began looking outside its home base. In May, Nubank kicked off its global expansion, opening offices in Mexico and Argentina.

In a written statement, Nubank founder and CEO David Vélez said his company remains firm in its mission “to fight complexity and give back to people the control of their finances.” Brazil is known for its exorbitant interest rates on loans, something Vélez acknowledges.

“Even though the technological change has been transformational for most industries across the globe, most banked consumers continue to pay absurd interest rates and fees to receive very poor financial services in return,” he said. “Additionally, over two billion people still do not have access to basic financial services. With this new investment by TCV and our existing investors, we expect to contribute to meaningfully change this situation by accelerating our growth in Brazil and supporting the launch of our new Latin American markets.”

In a statement, TCV General Partner Woody Marshall said his firm has been impressed by Nubank’s “market position, product-centric DNA and unrelenting focus on the consumer experience.”

Today, Nubank has more than 1,800 employees in Brazil, Germany, Argentina, and Mexico. The company said it expects “to significantly grow” its employee base over the next few years. Specifically, it told me via email today that it plans to hire more than 1,000 employees over the next 12 months alone globally.

Meanwhile, as we’ve reported extensively, Latin America is a region of growing interest for global investors. VC funding into the region nearly doubled in 2018 to a record $1.98 billion compared to $1.14 billion over 2017, according to LAVCA, the Association for Private Capital Investment in Latin America.

Illustration: Li-Anne Dias

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