Nomad, a Brazilian fintech, has taken a new step in its short lifetime with a recent Series-B funding. This month, it announced a $61 million investment led by Tiger Global Management as it seeks to expand its portfolio in South America’s largest economy.
“Nomad has received the largest Latin American fintech investment so far this year,” Eduardo Haber, a founder at the firm, celebrated over social media. The company was valued at 1.8 billion Brazilian reais, or close to $360 million.
Venture capital investments in the region have seen a massive decline since mid-last year. Many fintechs have encountered challenges to keep afloat with less capital available, and almost all have done restructurings. However, some million-dollar deals in recent months raise hope that things might take a turn for the better soon.
According to Nomad executives, the fintech will use fresh capital to grow its investment product capabilities. It is also eyeing an expansion into credit, one of the most profitable financial products in the country.
The investment round also saw the participation of venture capital firms Stripes, Monashees, Spark Capital, Propel, Globo Ventures, and Abstract, all of which had previously supported the company.
“The contribution will be a very important game changer for our story,” said Lucas Vargas, the company’s Chief Executive Officer. The company had previously raised $32 million in a round led by Stripe.
Competition on foreign currency products, a new niche
Founded in 2019, Nomad has carved a name for itself in Brazil by catering to a particular niche. It offers Brazilians a U.S. dollar bank account, an international debit card, and an investment platform. It markets itself as a global financial app, a relatively new segment in the country where most fintech offerings are based on local currency.
The fintech has long pitched the idea that Brazilians need to diversify country risk. The Brazilian real has lost over 15% of its value against the U.S. dollar in the past five years. Brazilian equities have lagged the performance of developed markets. That has led some Brazilians to seek new alternatives.
Presently, new fintech companies are introducing products aimed at making international banking economical to a wider audience. In May, Nomad launched a product akin to Buy Now Pay Later, but for international payments. It allows customers in Brazil to pay overseas in installments. Short-term financing is certainly the norm in the country, but it has been limited to domestic transactions.
A bounce-back in funding?
The funding comes at a time when significant investment rounds for startups are relatively scarce, making Nomad’s achievement stand out. The majority of rounds in Latin America have been seed rounds.
With Nomad’s Series-B, this investment already outpaces the largest round in the second quarter, when Mexican fintech Clara took $60 million.
Latin American startups faced a significant 70% drop in venture capital funding year-over-year during the period, reflecting a tough climate. Notably, investment flows remained steady compared to Q1, hinting at a potential stabilization of the capital crisis affecting entrepreneurs worldwide.
