The Ledger
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Regional Copycats Are Superior Businesses When Local Barriers Create Defensibility
“So I'd flip it as, you know, X For why, if it makes even more sense in that geography with the local flavor, is a better business.”
Local LATAM Fintechs Hold Head Start Over International Entrants
“So any new international player is going to have to go through that same experience, and the local team is going to have a very, very big head start.”
Soaring Round Valuations Are Justified for Market Category Winners
“And if you think that they can be number one, maybe even number two across very, very large categories, then it probably looks expensive at the time, but not so expensive in retrospect.”
Strange: Every consumer and business company will embed financial services
“Similarly, we are going to see, and we are already seeing, an explosion of financial services. Which is new neobanks, new, directly new fintech companies, but then more to the point, all of these consumer companies, all of these business companies are adding f…”
Strange: Large, profitable businesses will serve the bottom 25% of the economy
“I believe that there are large for-profit businesses that consumers will love that are still to be built that are going to serve the bottom 25% of the economy.”
Fintech Is Default Local Due to Distinct Regional Regulations
“We talk about fintech being default local versus Default Global, because you want to hop from one country to the other, even if it's next door in Latin America, you've got a different set of regulation, a different set of infrastructure, probably a different s…”
International Expansion Without Home Market Leadership Is a Losing Strategy
“Being number five for a business, like being the number five Robin Hood in Brazil, and then expanding to Mexico to be the number six in Mexico, Is not going to be a winning business model. You would much rather be the number one in your country and then expand…”
Top Five Banks Control 80% of Brazil's Market
“So the, like, top five banks have 80% of the market in Brazil, and Serve maybe 10 to 20% of the socioeconomic pyramid.”
Latin American Banks Boast Double the Return on Equity of US Banks
“Layer on top of that, like, the Latin American banks are some of the most profitable banks in the world. So return on equity, a good measure of measuring this, is over 10%, which is literally double that of American banks.”
Acquiring Unbanked Users Is Easier Than Overcoming Bank Customer Inertia
“It's arguably much easier to get a customer that doesn't have a debit card, doesn't have a credit card, doesn't have an investing account, you know, within that kind of middle tier, than it is to get somebody to switch from a product that they're moderately ha…”
LATAM Online Payments Grew 100% Month-Over-Month During the Pandemic
“Online payments started growing like a hundred percent month over month.”
Nubank's Growth to $35B Proves Initial Valuation Concerns Wrong
“Like, new bank, At a billion dollars, looked pretty damn expensive. What's it worth now? Like, thirty-five billion dollars? Not so expensive.”
Terrible Employees Often Make Fantastic Startup CEOs
“Terrible employees often make fantastic CEOs.”
Passing on Nubank Was Angela Strange's Most Painful Investment Miss
“Oh, so many, but just the Latin American most painful one is NewBank. And this was early in my career in venture when I hadn't spent that much time in Latin America. And it seemed like a relatively high check at a relatively high valuation. And I didn't know t…”
Strange: Fintech competition is incumbent innovation versus startup distribution
“The battle between the incumbent and the startup is whether the incumbent can get innovation before the startup gets distribution. And that applies to any industry, but it applies especially to financial services because getting customers is so damn difficult.”
Strange: Personal financial lives will become increasingly automated
“And as we get better at this, and as consumers start to trust new software companies more, I think our financial lives will become more and more automated and just optimize in a much better way.”
Strange: Carta is uniquely positioned to build private securities exchange CartaX
“The vision for Carta X is right now you can be public and very liquid and private and very illiquid. What would be the platform or the stock exchange, so to speak, of private and liquid? And who best execute on that than the company that has the system of reco…”
Strange: Fintech unbundling requires a high-pain-point wedge for CAC efficiency
“You can't just unbundle, pick a product and go. You've got to find a high consumer pain point wedge that is going to enable to get you customers cost effectively.”
Strange: Banking rebundling will take entirely new forms than legacy models
“The unbundling and rebundling in banking still has a long road to go, but we won't see things rebundled in exactly the same way.”
Strange: LatAm banking will be delivered via mobile, not bank branches
“So I've got a few investments down there. I hope to make more. If you wanted one chart, you would look at credit card penetration per country. So let's take Columbia where I have a great team there. It's about 14%. It's been stagnant for years. Smartphone pene…”
LATAM Fintech Disruption Will Take Longer Than in the US
“I think in Latin America, it's going to take a little bit longer for a couple of reasons. One, they haven't felt yet as much of the competition, I would say, from the earlier fintechs”
Casai's Unit Economics Benefit From Lower Operational Costs in LATAM
“The complexity of serving the operations is a lot higher, but the cost for it a lot lower. So your unit economics, if you're Kasai, can be that much better, right?”
LATAM Raised $10B in Venture Capital Last Year, Half in Fintech
“There was close to, I think it was a nine or ten billion dollars of venture funding poured into the region just in the last year. Half of that was fintech, by the way, right?”
Local VCs Outperform Global Firms in Local Markets and Hiring
“Local investors are going to know How to help better with recruiting. They're going to know better the nuances of local markets. Like there's lots of things that they will do better than international VCs.”
Nubank, Rappi, and dLocal Mafias Will Build Next LATAM Startups
“Like you've got NewBank, Rappi, Dlocal, right? And so like the kind of mafias from those companies are going to spin out and join the next generation of companies or grow the next generation of companies.”
Strange: Lower fintech barriers will increase CAC for new market entrants
“What that will do, though, is it will make customer acquisition more difficult for new entrants, and we can talk more about that later.”
Strange: Consumers favor predictable monthly subscriptions over hidden fees in fintech
“And what consumers are showing increasingly is that for a high-quality product, a personalized product, They're more than happy to pay a predictable average fee per month, and we're seeing that business model move into financial services, which speaks to your …”
Strange: Software startups gain high retention by becoming systems of record
“The most exciting insertion points are insertion points where you can become the system of record. And that is very hard because usually even if it's a shitty system of record, one exists. It's been building up over the years. It's got tons of data. It's very …”
Strange: Corporate finance software evolution is driven by real-time functionality
“I think of software for the finance suite as less of a unbundling, re-bundling story and more of a new functionality or real-time story.”
Strange: Fintech startups are acquiring incumbent financial institutions
“Hippo acquiring Spinnaker, Lending Club acquiring Radius Bank.”
Strange: Amazon issued $1 billion in small business loans in 2019
“Like Amazon has done a billion dollars in S&D loans last year”
Strange: Financial services is consolidating internally while dispersing broadly
“So it's this consolidation within traditional and new fintech and then dispersion across much, much broader industries.”
30% to 50% of People in Mexico and Brazil Are Unbanked
“And then there's a massive percentage of the population, like, 30 to 50% underbanked or unbanked across Mexico and Brazil that don't have anything.”
Latin America Saw Five Public Listings in 2020
“If you look at LATAM, like, there were five IPOs in twenty-twenty.”
Jeeves' Orchestration Layer Enables Seamless Cross-Border Scalability
“And they have Built this orchestration switching layer on top, such that by definition, their platform is going to be seamless from country to country. It's going to reconcile in the back end. It's just like a very, very clever way of approaching the problem t…”
Strange: US holds $1 trillion in total credit card debt
“The U.S. Infamously has a trillion dollars of credit card debt.”
Strange: Startups can become systems of record through two main strategies
“Becoming a system of record can be stage one of your business, which Carta very cleverly figured out, but it could also be a Stage two of your business, which is solve a very valuable problem for a customer that they're willing to pay for, and over time, you e…”
Strange: Propel's initial app helps 40 million SNAP recipients manage spending
“Propel's first product is they help the forty million Americans who are on food stamps to better manage their spend.”
Strange: Top board members ask unique questions and work unprompted
“The best ones have these two things in common. One, they ask really good questions from a unique point of view. So that's either their world-class sales, the best at building brands, or they prescribe to the Charlie Munger worldly wisdom and just look at the w…”