Brazil-based financial services firm Banco do Brasil (BB), has set up two corporate venture capital (CVC) funds with a combined R$200m ($36m) to back local startups.
Banco do Brasil is controlled by the Brazilian government but listed at the B3 in São Paulo, and MSW Capital is one of the fund managers.
MSW Capital partner Richard Zeiger said: “This past week we announced a new CVC dedicated fund for Banco do Brasil. It was a tough competition with several other managers that we were very honoured to win. It is a seed and series A fund for [financial] tech, agritech and govtech startups.”
MSW has had two exits that have returned all the capital invested in its first fund, BR Startups, including financial assistant developer Olivia, which was acquired by neobank Nubank through an October 2021 deal giving MSW shares two months before Nubank went public.
With almost 50 million users, Nubank has become the world’s biggest digital bank and has a market capitalisation of nearly $40bn. In Brazil, five banks control over 80% of the market, but unmet demand for credit for small and medium-sized enterprises is sized at over $650bn.
In response, Brazil’s central bank introduced a series of rules in 2020 to foster transparency and competition in finance. Customers can now compare services and transfer more easily between providers.
Central Bank of Brazil also launched an instant payment system called Pix and paid covid-19 stimulus money digitally, also authorising the issuance of tokens on blockchain within the national financial system.
An estimated 40 million unbanked people have signed up for traditional and digital accounts in Brazil, Colombia and Argentina.
Banco Itaú, another of the main banks in Brazil, used CVC unit Kinea to back Liqi, a local blockchain-based asset tokenisation startup, in its $5m series A round last week.
In addition to Itaú’s Kinea, fund management service provider Oliveira Trust and the Honey Island by 4UM fund – created through a partnership between Honey Island Capital and 4UM Investimentos – also invested in Liqi.
Editor’s Note, GCV will hold its latest Corporate Venture in Brasil conference in partnership with Apex-Brasil in October.
