Brazil’s Nubank Raises $400 Million in Latest Funding Round

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Brazil's Nubank Raises $400 Million in Latest Funding Round
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Latin America’s Nubank Raises $400 Million in Latest Funding Round

Becoming one of the most valuable Latin America financial institutions, Nubank, a Brazilian challenger bank, raised $400 million in Series G funding last week. This funding round has also seen them become the largest Fintech in Latin America.

The neobank is extremely popular with Brazilians, as they provide similar banking services that traditional banks offer, but without all the high fees and interest rates.

Since their launch in 2013, they have now raised a total of $1.8 billion. GIC, Whale Rock, and Invesco were a few of the investors involved in a statement round, comprised of both public and private equity investors. Dragoneer, Ribbit, Sequoia, and Tencent, current Nubank investors, also participated in the statement round. Nubank has been the most downloaded app in the market, with claims of being the largest digital bank worldwide. Since July 2019 their customer base has grown, increasing to 34 million from 12 million, with a daily sign up rate of 41,000 new users. This challenger bank has emerged into the Mexican and Columbian markets, placing its lion’s share toward boosting those entries, upwards of $400 million.

Nubank CEO, David Vélez, said “Nubank was born out of the conviction that people deserve better, more transparent, and human financial services. We started seven years ago in Brazil, a country with one of the most concentrated banking sectors in the world, and we were able to free millions of people”, he stressed. “But this pain is not exclusive to Brazilians. It is a pain shared among all Latin Americans. With this new round of funding, we will be able to grow, and scale our recently launched operations to Mexico, and Columbia”.

Because Brazil is the largest economy of Latin America, at least in terms of gross domestic product, Latin America remains a big opportunity for fintechs as a whole. For example, in the first six months of 2020, Nubank’s transaction volumes were up 54%. Posted net losses were in the range of $17 million over a six month period, which was a noticeable reduction of 32% from the previous year. By adhering to their core offerings, such as no-fee credit cards and digital savings accounts, Nubank has enabled its customers to save $3 billion since launch over a seven year period.

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While Brazil lags behind in terms of bank density, Brazil features more banks in comparison to other nations within Latin America. The four largest banks of Brazil are in control of more than 80% of all deposits, according to the global finance index. These Brazilian banks also charge some of the highest global interest rates, and comparative fees. However, set to reach implementation by fall 2021, Brazil is putting open banking legislation into place – a regulation that will allow fintech start-ups to take advantage of new opportunities.

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