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LatAm start-ups beating the pandemic odds

January 24, 2022

Latin Senior women listening music with headphones at home in Mexico city, mexican people
Luisa headshot

Luisa Muneratti

SVP – Latin America & Iberia

Latin America has experienced more than its fair share of tragedy and disruption since the onset of Coronavirus. Still, it has also demonstrated remarkable resilience and innovation in making the best of a terrible situation.

That is certainly true for the region’s tech start-ups, with recent analysis from CB Insights suggesting they collectively attracted over US$20bn of capital from 952 funding rounds in 2021. That was almost quadruple the 2020 and 2019 investment totals according to the company’s State of Venture 2021 Report published earlier this month, suggesting start-ups in the region that have stepped up to the plate during the pandemic are being recognized and rewarded by investors.

eCommerce and payments companies heavily backed

Two eCommerce companies made it into the top ten ranked by investment value. Social commerce enablement firm Facily attracted two rounds of funding worth US$385m combined, led by VC heavyweights including DX Ventures and Tru Arrow Partners[i]. Founded in 2018, Facily has developed a gamified app that connects consumers to affordable prices through group purchases. It makes it easier for low-income people to shop online through flexible payment options that range from bank transfers to cash with no shipping charges (deliveries are collected from local pickup points).

Another Brazilian eCommerce start-up, Olist, was set up in 2016 to provide middleware that links other marketplaces giving merchants simultaneous access to all of them. It attracted US$186m of Series E funding in 2021, with investors including Goldman Sachs Asset Management and SoftBank Latin America. However, the single most significant round of the year went to cryptocurrency trading platform FTX. The Bahamas headquartered company received US$421m of Series B funding led by Lightspeed Venture Partners, Sequoia Capital, and Temasek taking total investment to date to US$1.4bn and resulting in a US$25bn valuation.[ii]

SoftBank Latin American Fund also joined Amazon in backing Pismo to the tune of US$108m. Founded in 2016, Pismo has developed a SaaS-based banking and payments platform for large banks and digital marketplaces which looks perfectly poised to capitalize on Brazil’s recently introduced open banking framework.

LatAm mCommerce forges ahead

The surge of venture capitalist interest in LatAm eCommerce and payments companies and digital banks has been driven partially by the spike in online buying over the past couple of years, much of precipitated by citizens who now regularly buy goods and services using their smartphones. Statista estimates that Latin America hosts roughly 300m digital buyers, a figure expected to swell 20% by 2025. Online retail sales in the region are reached US$85bn in 2021, with mobile commerce (mCommerce) sales worth US$64bn. Brazil and Mexico account for almost 60% of their value, but Argentina, Peru, and Colombia were faster-growing markets.

GlobalWebIndex (GWI) estimates that almost 51% of internet users aged between 16 and 64 in Brazil purchased a product online using their mobile phone in the third quarter of 2020 (54% in Mexico and 45% in Colombia). Almost two-thirds (66.3%) of Colombians also used a shopping app on a mobile phone or tablet, which rises to 77% in Mexico and 79% in Brazil. According to data compiled by App Annie, SEA’s Shopee eCommerce app was the ninth most downloaded mobile app in Brazil in 2021. However, rival shopping app MercadoLibre had more monthly active users (MAUs).

Mobile payments ideal for the unbanked

World Bank global financial inclusion data suggests that large numbers of adults in Latin America do not have bank accounts – 70% in the populous country of Mexico, for example, 54% in Colombia and 30% in Brazil. Even fewer have credit cards while the popularity of mobile money accounts continues to grow. GWI figures suggest that almost five percent of Brazilians and Colombians aged between 16 and 64 used a mobile money account linking an electronic wallet (eWallet) directly to their phone number. That number rises to 6% in Mexico and drops to 2% in Argentina, with GSMA Intelligence estimating there were 26m registered mobile money accounts across the region in October 2020.
Many are also using smartphone-hosted digital wallets to make purchases. Over a third (36%) of Brazilians aged between 16 and 64 used a mobile payment service such as Apple Pay, Google Pay, or Samsung Pay in the third quarter of 2020 according to figures compiled by Global Web Index (GWI), a number which drops to 27% in Mexico, 21% in Argentina and 20% in Colombia.

Adding to the alternative payments landscape in the region is direct carrier billing (DCB), a mechanism that allows consumers to fund purchases directly from their mobile phone bills. DCB is currently offered in multiple Latin American countries by Telefónica brands Vivo and Movistar in partnership with DOCOMO Digital, allowing merchants to reach customers without bank accounts that would usually struggle to make transactions in anything other than cash.

With governments across the continent keen to promote financial inclusion, the ability to make mobile payments using a smartphone is likely to play an increasingly pivotal role in the region’s economic expansion.


[i] Brazil social commerce marketplace Facily quietly raises $366m in less than a year, now valued at $850m, TechCrunch, 16th November 2021

[ii] Crypto exchange FTX raises $420 million from 69 investors, in meme funding round, CNBC, 22nd October 2021

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