REUTERS NEXT-Fundraising for Latam Fintechs Probably More Difficult

By Carolina Mandl and Katanga Johnson

Dec 3 (Reuters) – Fundraising will likely be more difficult for a while for financial startups in Latin America as the prospect of higher interest rates has reduced investor appetite for riskier assets, CFOs said at the Reuters Next conference.

The panelists said investors will ask for more indications of profitability before putting money into fintechs in the region.

“There will be more scrutiny around projects, like around the prospects of what the real business is; more insights around the economics of the unit, around a path to profitability; around how to actually the business is running, “said Mariano Carranza, CFO of Mexican payments fintech Clip.

Latino startups, primarily fintechs, raised $ 14.8 billion in fresh money in the first nine months of this year, a 174% jump from last year, according to CBInsights.

However, there have been signs recently that investors are more cautious. Earlier this week, Nubank, Latin America’s largest fintech company, was forced to cut its expected valuation in an initial public offering by 20%, to about $ 40 billion, after facing weak demand from financials. investors.

“The growth prospects for these companies in the region remain very attractive, despite high interest rates. So I think many investors could end up being more selective. Some startups will have to offer more before they have access to a quantity so big of debt, “said Helena Caldeira, CFO of Inter, a Brazilian digital bank backed by SoftBank Group Corp.

Still, he believes this should not be a long-term trend, as financial inclusion in the region is low.

Caldeira said the 5.5 billion reais ($ 971.94 million) that Inter raised in a share offering and customer deposits will help it weather a possibly more difficult period in raising capital.

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