Research

 

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The strong rebound in private capital fundraising for Brazil so far this year has stood out amidst a contentious election cycle: the US$2.7 billion raised in Q1-Q3 2018 is on track to more than double last year’s total. Private credit strategies accounted for 48% of fundraising, with four funds drawing US$1.3 billion in commitments. Similarly, Brazil’s venture capital (VC) ecosystem continues to mature, with the US$374 million in disclosed capital invested across 60 deals in Q1-Q3 2018 representing a record-high 20% of all invested capital. The financials sector in particular has gradually attracted increasing amounts of ven-ture funding in the decade since the Global Financial Crisis, receiving 35% of VC investment in the last five years—compared to just 1% in the preceding five years. Much of this growth has taken place as established global venture investors increasingly turn their attention to successful startups seeking to upset the concentrated and costly Brazilian banking system. Emblematic of this trend was the DST Global-led March 2018 US$150 million funding round for Nubank—the largest round ever for a Brazilian fintech startup. With recent regulatory changes allowing greater foreign ownership of credit-focused fintech and consumer finance companies, fund managers may commit even greater amounts of capital to the sector in the future.