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Em Conversa Fintech Ecosystems South America

Em Conversa: Investing Across LatAm with QED Investors

As of April 2023, there were 1,000 active fintechs in Latin America (LatAm) with a vast majority focusing on financial inclusion, tackling the issue of 70 per cent of the population not having access to formal financial services. Em Conversa looks to uncover what the future holds for fintech in the region as it was valued at $2.1billion in 2022 and continues to rapidly grow.

We sit down with Mike Packer, partner and head of LatAm at QED Investors to get a greater understanding of how the LatAm market is evolving and securing capital following a turbulent year for securing funds.

Tell us about the company and your role within it
Mike Packer, partner and head of LatAm at QED Investors
Mike Packer, partner and head of LatAm at QED Investors

QED Investors is a global, early-stage, fintech-focused venture capital group. We’ve been around for 16 years, done over 220 investments, and manage around $4billion.

We’ve all been operators in the past. As a result, we want to have a deep understanding of the sector and connect global dots around themes and the investment theses that we have, and in turn, get active with companies that we invest in.

We tend to be the right hand for founders and founding teams as they consider things in the fintech space, whether it be strategy, specifics about market dynamics, or credit risk management. Our aim is to help entrepreneurs find their path in a lower-risk way.

Currently, we’re investing out of our eighth fund, which is a $650million early-stage fund. We also have our second growth fund which is approximately $300million. Consequently, we’re actively looking at the next fintech opportunities to be part of the community portfolio.

I lead up our LatAm strategy: it mostly consists of Brazil and Mexico with Colombia being a pretty strong third geography. Nonetheless, we’ve made 50 investments in the region since our first in Nubank in 2013.

What are some investment trends we’re seeing in Brazil and Mexico?

I think Brazil is a super interesting market. There’s been a lot of innovation there over the last eight to 10 years, with a lot of it being driven by a central bank that has been very supportive of the fintech sector.

What we’re seeing right now are a few trends in real-time payments, like the PIX system that was launched there, and there are lots of opportunities and changes to the market that are coming as a result of PIX.

We’re also very actively watching the open finance and open banking changes and roles that are coming out in Brazil. The combination of those two technologies can create whole new ways for consumers and businesses to transact, manage money and do business  It feels like the sector’s large enough that we’re still in the early innings there.


Mexico is a little smaller market than Brazil in terms of fintech activity and fintech exits, but we’re still quite excited about several themes there. And in our portfolio there, we’re actively looking at the near-showing trend which is happening in the country right now where a lot of manufacturing has been moved to Mexico, from Asia specifically, and it’s creating a lot of economic activity. As a result, it has created a lot of financial need in the country to keep up with the surge in economic activity.

One interesting company in the space is Finkargo, which does import finance for small businesses that are importing supplies, raw materials, or certain manufactured goods into Mexico. The firm is helping firms get the working capital required to grow.

We’re also investors in a company called Nuvocargo which is focused on the US-Mexico border and cross-border commerce. It specifically looks at how to make those transactions more fluid, more data-oriented, and more efficient.

Right now in Mexico, we’re excited about things in the payments space. Both on the consumer side, but also in B2B payments and merchant solutions across Mexico too.

What is QED Investors doing to improve the variety of fintech sectors in the region?

We’re a major player in the seed through Series B stage of companies in the region. Where we excel has been in sharing our external knowledge with the region and as such we’ve been a part of some really cool stories.

We’re expanding interest in the region too, by talking about how good the opportunity is, how well our companies are doing and so on. We are trying to help our firms find outside capital whether it be equity or more debt.

We aim to be long-term players in the market: to not only build great sustainable companies but also improve the ecosystem along the way. Most of that comes with funding startups and helping to govern them as they grow.

Where does investment come from?

It’s mixed. A couple of years ago, much of the capital that came into the tech Latin American sector was international funds. A lot of equity capital came from the US looking for a higher risk-adjusted return.

However, Brazil particularly has a very solid local source of capital. It has a few functioning markets at a size and scale that’s big and local to Brazil, differentiating it from some of the other countries. Nonetheless, there’s certainly local money in Mexico and Colombia. One of the things that we’re seeing in both those countries is the banking sector is getting a little bit more engaged in the tech sector, which is what we currently focus on. That’s another potential source of funds.

Certainly, I think a lot of our companies would say they need more. But it’s, it’s starting to, to pick up in local ecosystems as well.

How does the LatAm investment space compare to the rest of the world?

Of course, compared to developed markets, LatAm is a little smaller in the sense of opportunities and size of the economy or technology sector. That in and of itself, potentially makes it harder to find really large outcomes. But it also makes it easier to find specific opportunities because there’s just less of them.

It’s hard to generalise because it’s different in kind of each country, but the talent pool across Latin America isn’t as deep as the US, for example, or the UK when it comes to technology, and specifically, again, financial technology and sector experience.

The companies that we get excited about find ways to solve challenges at a global scale. So we look at the market, the same as we would any other market and hold the same kind of bar for return on investment.  We’re looking for entrepreneurs that could stand on their own in any geography. We’re also looking for opportunities that are large and interesting enough to have material returns and that’s true in Latin America, the US, Southeast Asia or any market that we’re looking at.

How do other developing markets compare to LatAm?

I think I think Latin America is a little more advanced than the African region for example. Saying that it’s hard to generalise.

So let’s look at what Latin America has. So first of all, Latin America is closer in geography to the US, which I think helps because it attracts capital from there. Secondly, I think the investment cycle in Latin America has been ahead of some other emerging markets, particularly the Middle East and Africa, and probably Southeast Asia.

Especially in terms of the amount of investment and the level of maturity of the ecosystem. You could argue India and China are more sophisticated. Even smaller pockets of Southeast Asia like Singapore too.

If we look specifically at Brazil, I think it’s put itself on the map as a very mature, emerging market in that sense. Purely because of the size of the ecosystem, talent pool, capital availability, etc.

The demographics are extremely favourable in LatAm, much like they are in Africa, and in India in terms of the age of the population and digitisation of the population. In these ways, there are a lot of similarities.

This is one of the reasons why we, as QED, think we’re advantaged to be global. For example, I can call Sandeep Patil, a partner focusing on India and SE Asia, and we can trade notes about India’s real-time payment systems versus Brazil’s or I could call Gbenga Ajayi, a partner focusing on Africa, to talk about what are the most innovative companies he’s seen in Lagos versus what we’re seeing in Sao Paulo or Mexico City.

It’s great that we’re able to kind of have that interaction, not just amongst the investment partners, but also the entrepreneurs.

What are some of the biggest challenges associated with the region?

Exit viability and stability, are the two biggest challenges. Everyone is very much waiting for Mexico to have its moment – to have a large tech exit (and for our purposes, a fintech exit). When that happens, it’s going to validate a lot of capital investment that had been made and it’s going to enable a lot more capital.

Stability is a big challenge within the region. Every election cycle creates some potential instability or questions. Things kind of stop and go, whether we’re talking about currency, interest rates or trade balances. Therefore I think those are the things that are holding, the other LatAm markets back, so to speak.

Brazil has its moments of volatility as well, but comparatively, it’s been stable and has been proven to have large exits in the tech sector.

What are the company’s plans for the future?

We’ve been in the region for eight years and in that time we’ve established ourselves as one of the best alternatives for any fintech entrepreneur to partner with. We’ve had several great investments and we want to set ourselves up to win the next eight years. So how do we find the next wave of fintech entrepreneurs and back them early and often?

Right now what we’re doing is we’ve got a team member, Camila Vieira Fernandes, Principal on the LatAm team in Sao Paulo, and we have Ana Cristina Gadala-Maria, principal on the LatAm team in Mexico. Both are establishing our strategies across the region.

What makes you think 2024 is going to be a great year for LatAm fintech?

The business models have improved. We’re seeing companies achieve profitability at scales and levels that no one knew could be done. Between 2022/23, there was a big question if these companies could get to profitability, and now we’re seeing it happen. That’s giving a lot of confidence to the investor to evaluate the business models in the region.

The second key point is growth. So you know, growth has been challenging in all the sectors and we’re starting to see in some of these sub-themes and some new geographies, with tailwind growth coming back.


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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