LATAM gets a new $1 billion fund focused partly on fintech

Brazil-based VC Kaszek has raised capital for two new funds: Kaszek Ventures V, worth $475 million, focuses on early-stage funding, while Kaszek Ventures Opportunity II, worth $525 million, targets later-stage investments, per TechCrunch. Both raises were oversubscribed. This marks the fifth fund for the firm; the first, worth $95 million, was raised in 2011. Kaszek has since backed 91 companies, and its portfolio has secured over $10 billion in capital.

Although Kaszek is industry agnostic in its investments, a significant portion of the fund will likely go toward fintechs. The biggest share of its active portfolio of 71 companies operates in fintech (20) and insurtech (6). Some of Kaszek’s notable investments include neobank Nubank, alt lender Creditas, and crypto company Bitso. And given that its existing investments in the segment are doing well—Nubank is the largest neobank globally, with 34 million customers—Kaszek will likely try to replicate this success with further investments in fintechs. Additionally, geographically, Kaszek focuses heavily on Brazil and Mexico—the two countries with the most fintech activity in the region—as well as Colombia.

The latest fund is further testament that LATAM’s fintech industry is maturing—and the recent increase in VC funds in the region is set to drive further growth for the future.

• A bigger chunk of the funding is going to later-stage startups, showing growth within the ecosystem. In 2019, Kaszek launched its first fund ($225 million) focused on later-stage investments in existing portfolio companies. It is now reserving a larger share of its new fund for later-stage funding, which will likely go to some of its existing portfolio companies, considering the firm recently participated in Bitso’s latest $250 million round. This points to Kaszek’s confidence in its existing investments as well as a maturing industry that has more fintechs in need of growth capital.
• Kaszek isn’t the only active VC firm betting on LATAM for investments, helping the region boost overall funding. SoftBank already launched its $2 billion LATAM investment fund in 2019, focusing on industries including fintech, while US-based Clocktower Technology Ventures recently closed its first fund dedicated to fintech innovation in the region. Meanwhile, banks including BBVA and Santander are making investments in the region with their VC arms. This accelerated interest can be seen in overall investment in the region: South American fintechs raised nearly $1 billion in funding in Q1 2021, up 348% year over year, per CB Insights.