A few days after the elections, what do international referents think about the future of the Argentine fintech segment
Despite the complex economic and political landscape of 2019, Fintech references in the region welcome the future of the Argentine market
At least from the point of view of entrepreneurs from the fintech segment, Argentina, regardless of who gets the majority at the polls on October 27, remains an interesting terrain as a destination for its investments in Latin America.
And that has much more to do with a matter of consumer behavior than with economic measures or incentives taken down from the State.
Beyond the fact that the opening promised by the current president Mauricio Macri has facilitated the commercialization of online products by Cross Border companies that are located in other countries or jurisdictions, it was not a fundamental factor for technology companies to put their Look over in country.
“What we can observe from 2015 making a projection until 2022 is that, if we take all those years, despite the economic crises, the recession, etc., the eCommerce was and is growing at 18%, 6% more than the average GDP, “explains Americas Market Intelligence director Lindsay Lehr, who in addition to her professional vision has a very close look at the country for the years she has lived and studied in Argentina before moving to Silicon Valley.
Also, the executive adds that “e-commerce exceeds everything that is happening at the macroeconomic level, because the demand of people is strong and it is still a very emerging market, so it has two decades of double-digit growth.”
In a dialogue with iProUP during a meeting of Cross Border companies that took place this September in Rio de Janeiro, the payment practice leader clarifies that “Argentina is interesting because, despite its economic crises, people still have a purchasing power important. The country has a middle class established for many years, much more than in other countries of the region and population segment has adopted a more sophisticated consumer culture than perhaps in other less developed countries. ”
The same line the commercial director of the Brazilian startup EBANX, Henrik Nilsmo, who is also an old acquaintance of Buenos Aires streets, reinforces the idea that when it comes to technology there is always a consumer eager for news.
“I think it doesn’t matter where you are. Besides, I’ve also lived in other parts of the world, such as Kenya and South Africa, places that, to some extent, resemble Latin America and I feel that beyond the ups and downs of the economy, that doesn’t it necessarily makes people stop buying luxury goodies, and I don’t mean a Louis Vuitton wallet, it could be a Playstation, it could be a smartphone, because it’s a matter of lifestyle, “he explains.
According to Nilsmo, “many people prioritize that and keep buying” and adds that, in regard to the fintech segment, it suffers less impact in relation to economic fluctuations and political fluctuations because technology, and software companies in particular, constitute a new economy that is less impacted by the legal system.
The recent rise of the dollar and the crisis that Argentina is currently experiencing do not seem to be factors that scare those who bet on the maxim that “Technology always wins”, as is the case with Lindsay Lehr.
“Even with the loss of value of the peso and the decrease in GDP per capita, Argentina, however, has the mentality of seeking foreign brands and the level of connection with the international economy. This scenario is a bit more powerful than in other countries, “he justifies.
With a 38% growth in eCommerce, according to the latest WebShoppers index, the country has numbers higher than any other country in Latin America.
Another study by the Argentine Chamber of Electronic Commerce also showed that 90% of adults connected to the Internet had already bought online.
“Argentina is not one of those that is growing faster if we look at the market in dollars, due to the value of its currency. Anyway, it is impressive that it continues to grow,” says Lehr
To a large extent, that has to do with its ability to adapt to adversities. “In the talk I gave today, there was fair talk about the creativity of Brazilians. With the Argentines it is the same or more. People have to live. Crisis after crisis, people have to adapt,” says the specialist.
For the Ebanx product manager in Argentina, Sebastián Fantini, “If on the one hand you see the political crisis and economic instability, on the other hand there is always consumer growth there. Everything that is disruptive technology is growing; then, If you manage to deal with these difficulties and manage to differentiate yourself here, it will be difficult for the country’s situation to represent a hindrance, “he says.
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Technology always wins: the case of Uber
Just a few years ago, it was thought that the legal obstacles and the conflict with the taxi drivers’ union would make Uber give up moving to Argentina. Instead, what happened was exactly what Henrik Nilsmo says: “there is always a way.”
At first, the San Francisco startup could not finish settling in the country because it was not legally authorized to execute the payments of its trips through credit cards – the main way of charging the application worldwide.
What the application did, then, was to allow the Argentine user to pay for the service in cash, at the cost of resigning his commission for each trip.
“What happens with Uber and what governments do not fully understand is that, especially in Argentina, technology will win,” says Lehr.
“Technology is going to penetrate more and more and the power of the consumer is something that cannot be gained, added to that the desire that they have to consume international products and new technology,” adds the expert.
“It is important to know each country, its reality and its regulations. You have to understand the peculiarities of each market and adopt the necessary flexibility to adapt to it in the best way. Running away from problems is never a solution,” Fantini emphasizes.
In this sense, the Brazilian EBANX announced at the beginning of October that it will introduce the option of UBER travel payment through the generation of vouchers and bank transfer in various Latin American countries, among which is Argentina.
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“Uber is a very important company in the region and our focus is to invest in the user experience and the technological technological infrastructure of EBANX and Latin America is the right way,” says Nilsmo.
Beyond the fact that the internal climate is of concern for what will happen in Argentina as of December 10, the heads of the international Fintech market seem little dismayed by what the future government will bring.
“We are going to see how Argentina will work in a couple of months. But I think there is always a way to operate,” Henrik Nilsmo replies to the question of how foreign investors see the impending change of political scene in Argentina.
The most important factor for the country to continue receiving investment from foreign technology companies is that “governments establish clear and stable rules. That implies for all industries,” says Lehr.
Since 2018, the value of funding made to local enterprises has been increasing in volume and weight of investors. For an industry that is composed of 80% by companies with less than 50 employees, it is an essential fuel to advance in the expansion and regionalization of their proposals.
From Latin American Venture Capital Association (LAVCA) they reveal that one of four dollars of venture capitals that arrive in the region is destined to the 4.0 financial market. In Argentina, the proportion is even higher: more than 50% of the capital invested in 2018 was channeled to this segment.
Ualá was the big favorite of venture capital. Last year he had already received $ 34 million in a round headed by Goldman Sachs and Ribbit Capital, which was joined by its original financiers, Soros Fund Management, Point72 Ventures, Jefferies and entrepreneur Kevin Ryan. Its capital was expanded in the first half, since in April added a new investment of the Chinese giant Tencent, owner of WeChat.
The last great “injection” millionaire came from Canada. David Thomson, tycoon who chairs the board of directors of Thomson Reuters, took 15% of Brubank, the digital bank founded by former City Juan Bruchou. This agreement represents the last disbursement recorded in the segment so far this year.
However, at least in the Fintech ecosystem, its growth continues with its bullish streak and does not accuse the impact of economic and political storms that have hit Argentina throughout 2019. What is said, a sector “proof of bullets”.