Today, we announced that we are leading a Series B investment in Cobre and welcoming co-founders Jose and Felipe into the Oak portfolio. Cobre is a Bogota-based fintech company providing treasury management and payments solutions to businesses operating in Colombia and, more recently, Mexico.
Jose and Felipe, both born and raised in Colombia, are two of the most ambitious and thoughtful founders we have ever met. We initially connected with Jose in 2021 when he was working on an earlier version of Cobre. As we spent more time with him and Felipe over the years, we were blown away by their innate resilience, ability to articulate a crisp vision and the high standard they held for themselves. We are fortunate to have the opportunity to work with them now and in the years ahead.
Through Cobre’s dashboards and set of APIs, businesses can control the movement of their money across accounts, semillnd payments (both domestically and internationally), connect collections efforts with the ERP and centralize sensitive financial data in one place. Through years of developing and refining their core infrastructure and application offerings, the Cobre team has built a mission-critical platform for their finance, accounting, treasury and operations customers. They have built integrations into all the major banks in Colombia and the rapid growth they have seen in usage across customers like Bancolombia, Bitso, DLocal and Jeeves is a testament to the value they bring to enterprises in the region. Moreover, B2B payments in LatAm are on the cusp of a major growth surge, based on broader digital adoption trends, favorable regulatory tailwinds and new enablers like Cobre are making it easier to move money.
Cobre’s Series B is Oak’s third investment in Latin America, joining Aplazo (Series A, 2021) and 99Minutos (Series C, 2022). These three investments across the “venture-growth” spectrum represent our continued commitment to the region. The tailwinds in payments, commerce and digital adoption will create a compelling opportunity for founders to build significant companies for many years to come.
Our approach in LatAm, and across our portfolio, is to identify companies with high-potential opportunities where we can help shape the outcome by bringing our fintech expertise, talent capabilities and steady-hand mindset to supporting founders through the ups and downs of “the journey.” Thematically, we have 5 high-priority areas where we are actively looking to invest:
Payments Infrastructure: All aspects of the payments stack are under construction in LatAm. This starts at the most foundational layers (merchant acquiring, gateways, payment processing) and extends through to common front-end applications (billing, collections, POS). In addition to the rapid growth of real-time payments and support from regulatory bodies, the region-to-region nuances in alternative payment methods across LatAm create complexity and a high need for region-focused solutions. Cobre is a great example of an innovative solution in this category.
Access to Credit: The data on consumer access to credit in LatAm, which is well documented, leaves much to be desired. Only 11% of Mexicans have a credit card, and as of July, 1/3 of Brazilians had defaulted on their debt, making it more difficult to access the formal credit markets. There is huge demand for credit in LatAm and a significant opportunity exists for those who can provide access to it while managing risk and building durable capital markets capabilities.
Commerce Enablement: Nowhere in the world was covid a bigger accelerant of digital commerce than in LatAm. In 2021, LatAm’s e-commerce market grew 37% in 1 year. Mexico and Brazil each recorded more than $40B in e-commerce sales revenue that year. The number of e-commerce users in LatAm is set to grow 52% over the next 5 years – reaching 419M consumers by 2029 (vs a population of 656M). With this explosive growth, there is a burgeoning need for back-end commerce infrastructure, merchant tools and consumer payment options to meet that demand.
Fraud, Risk & Identity: Amid increased digital activity in the region, inevitably, bad actors are lurking to take advantage. Brazil has such a large problem with deep fakes that Brazil’s Superior Electoral Court had to outline rules around the use of AI ahead of this year’s elections. Brazil’s identity market – particularly given the long tail of document types used for verification and the focus on facial recognition technology in the KYC process (among other aspects) – creates a compelling opportunity for companies building for that market.
AI Applications: While we are still in learning mode on Generative AI’s impact to fintech applications in LatAm, we are already seeing our portfolio companies using the latest advances in workflow automation and probabilistic techniques, and we look forward to seeing what kind of creative applications are built in the years to come.
As the fintech ecosystem in LatAm continues to evolve, we are committed to helping founders advance innovation in the region. If any of this resonates, please get in touch.