Brazilian fintech startup QI Tech secured a $200 million investment in a landmark deal, marking one of the largest funding rounds for Brazilian startups this year and one of the few substantial Latin American equity investments in 2023.

At a time when the venture capital market is still seeking to recover from its lowest levels in two years, Sao-Paulo-based QI Tech managed to raise a significant amount for a Series-B round. Growth equity investor General Atlantic led the investment. The U.S. fund is also invested in regional companies like Unico, Kavak, and QuintoAndar. Across Capital, which was already an investor in QI Tech, also participated.

The fintech did not disclose its valuation after the investment. But it was the largest round announced by a Brazilian startup this year, according to local media reports. It surpassed Gympass’ $85 million funding earlier in the year. Elsewhere in Latin America, Mexican fintechs Klar and Konfio had seen sizable investments in debt during the third quarter ($100 and $90 million, respectively). The most significant series-B round in the previous period was that of Nomad, also a fintech in Brazil, which raised $62 million.

QI Tech, a finance infrastructure provider

The company, founded in 2018, provides tech infrastructure for credit, banking, payments, collections, anti-fraud monitoring, and customer onboarding. It’s part of a new generation of fintechs that have grown in recent years to create much-needed digital infrastructure. Companies like QI Tech enable fintechs and non-financial companies to easily integrate online payment tools, further boosting digitization.

“With the mission of decentralizing credit from major banks, QI Tech offers a complete set of APIs that enables any company to provide financial products to their customers,” the company said in a press release.

The investment round is quite significant for a Series B. To put it in perspective, Nubank, the Brazilian neobank and a leading fintech in Brazil, raised $30 million in its Series B round in 2015 before achieving unicorn status later on.

“QI Tech is seizing an excellent opportunity by providing high-quality financial infrastructure to clients in various sectors,” Luiz Ribeiro, a managing director at Atlantic’s office in the South American country, said. “It benefits from an increasing adoption of credit and digital penetration in Brazil.”

QI Tech had previously raised $50 million in a Series-A back in 2021. At the time, the investment was led by Singapore’s Sovereign Investment Fund (GIC).

The firm plans to leverage the new capital to explore merger and acquisition opportunities. “We will use the new capital to strengthen our leadership position in Brazil, executing an aggressive growth strategy for each business unit, and remaining attentive to potential M&A opportunities,” Pedro Mac Dowell, CEO of QI Tech and a co-founder, said.

Fintech investment has yet to pick up

While the company has said its new capital will fuel acquisitions, executives floated the idea of an Initial Public Offering down the line, although current market conditions show little appetite at the moment for such operations.

QI Tech’s investment comes at a time when investment funding for Latin American startups is scarce. After several years of record-high investments in the sector, there has been a noticeable decline in investment opportunities in recent quarters, although current levels are still significantly higher than in pre-Covid times.

However, there have been early signs of investment flows stabilizing earlier this year. While they haven’t fully rebounded yet, the third quarter did witness substantial investment rounds, and according to data by Itaú BBA, total investments reached $1.3 billion in the quarter, down just 15% from the year-ago period.

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