Emerging markets have been the talk of VC-town since the start of the pandemic. With more and more individuals gaining access to cell phones, internet, and financial technology across the globe, investing is buzzin’ in places like Latin America and Africa . 🐝 💰
So what’s going on now?
Well, the MSCI Emerging Markets ETF is getting wrecked. iShares MSCI World ETF is down as much as 8% from February highs due to China’s crackdown. On the other hand, VC funds continue to dump capital into global fintech.
African fintech firm Wave just raised a $200 million Series A from well-known investors like Sequoia, Stripe, and others. Cora, a Brazilian-based banking provider, raised $26.7 million in a Series A round this year. And Chile’s Xepelin raised $230 million in debt and equity this year, too. Most emerging fintech startups implement some kind of third-party financial infrastructure to provide non-traditional banking solutions in places with widespread government distrust.
As global levels of fintech investment reach all-time highs, KPMG’s Global Fintech Co-Lead commented “Overall investment in fintech surged to a record high in the first half of 2021 as investors, particularly corporates and VC investors, made big bets on market leaders in numerous jurisdictions and across almost all subsectors.”
There’s no clear way to interpret signals in emerging markets — just look at the El Salvador/Bitcoin situation. But you can’t deny that generally, where there’s a lot of risk, there’s often a lot of reward, too. 😉