As one of the biggest emerging economies in the world, investors have turned their attention to a number of Brazilian FinTech startups.
A recent report from JPMorgan showed that Brazil’s eCommerce economy posted double-digit growth rates in the mid-teens between 2015 and 2017. In particular, mobile shopping has enabled more buying activity – it now represents $7.6 billion of sales and is used for 32 percent of all eCommerce payments in Brazil, with the market expected to grow at a compound annual growth rate of 14.4 percent to 2021.
So it’s no surprise that many Brazilian-based FinTechs are attracting investors from around the globe. One example is StoneCo, which provides end-to-end, cloud-based technology solutions to businesses. Warren Buffett's Berkshire Hathaway owns a 4.3 percent stake in the company, which is one of the promising earlier stage investments in Berkshire’s portfolio.
StoneCo reported Q4 revenue growth at 47.9 percent year over year. Comparatively, its adjusted net income was up 76.4 percent in the fourth quarter, and at the end of 2019, its active client base was up 84 percent and total payment volume (TPV) rose 51.4 percent to approximately $8.9 billion. Its shares have returned close to 100 percent since its IPO in October 2018, and Wall Street analysts have forecasted StoneCo sales to grow by 40.4 percent in 2020 and by 28.6 percent in 2021.
“Brazil is the most populous country in Latin America. Its fast-growing economy, coupled with the long-term potential in the digital payment space, makes StoneCo a solid bet for growth investors looking for diversification,” according to The Motley Fool.
StoneCo isn’t the only Brazilian company attracting investors. Rebel, a FinTech that offers unsecured credit to middle-class citizens in the country, raised $10 million in new equity funding late last year from investors including Monashees, 99, Loggi and FinTech Collective. The company also raised $4 million from XP and other companies in 2018. The company said it has gotten more than $1 billion in loan requests since it launched in 2017.
In addition, Digital Bank Neon has raised $94 million in funding in a round led by Banco Votorantim and General Atlantic, with participation from Washington, D.C.-based Quona Capital, Propel Venture Partners, Omidyar Network, and Monashees. And Brazilian FinTech Nu Pagamentos SA (known as Nubank) raised $400 million in a Series F round of funding led by TCV last year, one year after China’s Tencent invested $180 million in the firm. Nubank reported a 25 percent boost in clients within a six-month period in 2019.