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Nomad, a Latin American fintech that enables Brazilians to establish bank accounts in the United States, has announced a R$160 million (~$32 million) fundraising. The round was led by Stripes, followed by monashees, Spark Capital, Propel, Globo Ventures, and Abstract. The company previously raised a $20 million Series A round in 2021.
Founded in 2019 by Patrick Sigrist, Marcos Nader, and Eduardo Haber, Nomad already has 300,000 customers. Newly-appointed CEO Lucas Vargas has expressed that the company aims to acquire 1 million new customers by the end of 2022. This latest source of funding will be used to invest in new technology, launch new products, and expand the operating team.
Playing to the fintech boom
Nomad is part of a cohort of startups that have benefited from the wave of increased venture capital flows into fintech firms ushered in by the COVID-19 pandemic. According to data from Pitchbook, the number of deals and aggregate deal value reached all-time highs for this vertical in 2021: over 5,000 deals closed totaling $122 billion in deal value. Fintech companies globally raised $29.3 billion in venture funding, representing a 7.3% decline in quarterly deal value. However, this number still represents a 13.8% YoY increase, according to data from Pitchbook.
Spotlight on Latin America
Latin America in particular has been a hotbed for fintech activity. For years, incumbent financial institutions feasted on plump margins by servicing a select, high net worth subsect of the population. However, the increase in pace of technological innovation and digital adoption of banking products has given rise to a voracious pool of competitors. All this has culminated in more attention and dollars from VCs. Over the last three years, the U.S. investor participation rate in late-stage LatAm fintech deals has doubled from 34% in 2019 to 69% in 2021.
Furthermore, favorable demographic trends continue to provide tailwinds for startups seeking to gain a foothold in the region. In countries like Brazil and Mexico, almost one quarter of the population is under the age of 25. The mix of local (monashees) and foreign investors in Nomad’s funding round highlights the relative attractiveness of various regions. According to the report “SoftBank Maps Out Latin America,” Brazil leads the region as being the Latin American country with the highest number of nondomestic investment.
For now, the problem that the Nomad team is intending to solve is uniquely Brazilian. Per Vargas, “in the fight against the fragility of the Brazilian currency – which has been even more volatile in recent months – Brazilians have found a safe, simple and unprecedented digital solution.” Deposits are FDIC insured, and the app also allows for international purchases, remittances, bill payments, and investments. However, given that currency volatility is shared across a number of emerging markets, the future applications of Nomad could potentially be widespread.