Contxto – News recently broke that SoftBank invested US$20 million in Mexican fintech startup, Clip, earlier this year.
Alongside Rappi’s recent US$1 billion investment from the Japanese corporation, this is a pleasant reminder that Latin American startups will soon be seeing the benefits of SoftBank’s Innovation Fund.
In Summary
?Softbank’s contributions were part of Clip’s latest funding round worth around US$100 million. Other investors included the New York investment group, General Atlantic. Qualified companies often receive assistance from SoftBank to scale and withstand competition.
?Clip raised capital from SoftBank prior to the announcement of the Innovation Fund in March. The fund worth US$5 billion intends to stimulate growth among tech-based Latin American startups. Not only will the capital go to regional fintech projects but also e-commerce, healthcare, and mobility initiatives.
In-Depth
Based in Mexico City, Clip began in 2012 as a credit card reader compatible on smartphones devices. After collaborating with SoftBank, Clip’s valuation increased to between US$350 million and US$400 million. To date, the fintech company has raised approximately US$160 million in funding.
While cash still reigns supreme in Mexico, more businesses have started adopting Clip’s low-cost technology. Traditionally, Mexican companies have opted out of card payments to avoid bank fees.
Keeping this in mind, SoftBank’s support for Clip is historic for many Mexican investors, many of whom are all too familiar with the challenges of local fundraising efforts.
“Growth will be faster, more dramatic and more competitive,” said Fernando Gonzales, CEO of Mexican fintech startup Coru and partner at QED Investors in Virginia.
Mexico represents a particularly attractive ecosystem for fintech based on the “unbanked” population. While large portions of the population don’t have traditional bank accounts, most own smartphones compatible with many digital financial services.
“You have the perfect elements to create fintech giants in this country,” said Eric Perez-Grovas, a general partner from Jaguar Ventures.
Conclusion
Although SoftBank may be used to writing out billion-dollar checks, this US$100 million investment for Clip is quite significant for the national ecosystem. On top of that, many people believe Clip could become Mexico’s first unicorn.
Latin America’s tech market is still maturing, meaning most startups still have smaller valuations and fewer competitors. Odds are not for too much longer, thanks to the newest investors coming to town.
-JA
