Latin American consumer fintechs should postpone their IPOs until market conditions turn unfavourable, a report from startup platform Latitude said on Tuesday, as rising inflation and interest rates cloud investment prospects. Let’s reduce
“2022 is not much older than last year in terms of consumer fintech and planned IPOs (initial public offerings),” he said.
“With rising inflation and interest rates, consumer fintech was one of the hardest hit verticals in the fundraising landscape,” he said.
The report pointed to a 29% drop in fundraising by private consumer fintech companies in the region in the first half of 2022.While China’s fintech faced a year-on-year decline of 38%.
focus on milestones
The report also mentions Nubank, a Brazilian digital bank that went public last year and has since lost nearly 60% of its initial market capitalization of $52 billion, according to Refinitiv data.
Uruguayan payment processing firm dLocal DLO.O has seen its shares fall to less than half their value since its 2021 IPO, after hedge fund Muddy Waters noted “red flags” in its accounts this month. , The company’s shares were down 30% even before the Muddy Waters report.
“Of course, in 2022 the market has changed,” Mike Packer, partner at US venture capital firm QED Investors, said in the report.
“Through most of 2023, we expect companies to continue to focus more on milestones and on track rather than growth at all costs,” he said.
Latin American fintech raised a record $12.9 billion in funding last year, with companies that focus on consumer finance receiving half that amount, according to the report.
Investors told Latitude that now, as the brakes on funding have started rolling in, startups may face more scrutiny and fail to enter the final stages of raising.