Ep. 75: Mexico is set to launch its first nearshoring ETF
Welcome to Scenius Mexico: Your weekly newsletter on technology, innovation, and startups in Mexico.
Bitcoin was not the only one to get its ETF last week, Mexico nearshoring trend got one too. ETFs aside, the startup scene had a slow start of the year. Still, we had the emergence of a new FinTech, the end of RappiCuenta, Nu México going after a share of the remittance pie, and a new incubation program by 99 startups.
I added some economics predictions about Mexico’s economy by two top forecasters at the end, let me know if you agree with them and what’s your prediction for the Startup scene. You can hit reply to this email.
Let’s go!
Follow The Money
FinTech Finbra secures a US$ 2.3 million credit line
The Mexican SOFOM has recently secured a financing line of US$ 2.3 million from Protección Patrimonial Unión de Crédito to continue providing loans to small and medium-sized enterprises (SMEs) in Mexico. Its main product, the Crédito PYME with automotive collateral, is designed for businesses registered with Mexico's tax system (SAT) to offer loans ranging from 100K to 3M Mexican pesos with fixed rates and standardized payments over 3 to 24 months. With this new financing, Finbra plans to expand its team and product portfolio, including leasing and factoring services.
Sector: FinTech
Total raised to date: US$2.3 million in Credit line
Founders: José Sesin
Investors: Protección Patrimonial Unión de Crédito
Startups News
Coppel invests in a Digital Campus
Grupo Coppel is investing US$ 700 million for expansion and technological enhancements in 2024. This includes opening new stores, remodeling existing ones, and enhancing digital loan services. Responding to Mexico's growing digital consumer base, Coppel has integrated digital kiosks in over 1,750 stores, contributing to 8% of its total sales in 2022. The company has also committed US$ 40 million to create a Digital Campus, a hub for software development to strengthen digital financial services. This campus, with 2,200 programmers, develops software for Coppel’s retail, banking, and pension units in Mexico and Argentina. Coppel aims to increase its online sales share to 20%, including loans and payments.
RappiCuenta is set to cease operations
RappiCuenta, Rappi's digital debit account service, is set to cease operations in Mexico by February 11, 2024. This closure, however, does not affect the RappiCard, a credit card offering, which will continue to operate in Mexico. RappiCuenta was offering up to 10% annual yield and fee-free management through the Rappi app. Probably not that profitable in the current macroeconomic setting. The closure of RappiCuenta in Mexico is a significant shift in Rappi's strategy, and the company has not yet elaborated on the reasons behind this decision or any plans to discontinue the service in other regions.
Nu México partners with Félix Pago
Nu México has announced a strategic alliance with Félix Pago, allowing its clients to conveniently receive money from the United States. This collaboration aims to simplify and streamline the money transfer process from the U.S. to Mexico, addressing the significant segment of the Mexican population that relies on remittances from the U.S. The process to receive money through Nu México is straightforward and can be achieved via the Nu app in a few steps, involving selecting a contact in the U.S. through WhatsApp, who will then complete a form on Félix Pago.
Bineo, Banorte's digital bank, has launched operations in Mexico
The digital bank is offering a user-friendly digital banking experience similar to digital banks like Nu Mexico, Ualá, and Hey. Its app, available for iOS and Android, provides convenient online banking services, including savings accounts and personal loans, without the need for traditional branch visits. Bineo offers a savings account with no minimum opening amount, no minimum balance requirements, and no commissions, along with a digital debit card. Its personal loan options range from 5,000 to 200,000 MXN with flexible repayment terms and no opening commission.
VC - Accelerators News
Mexico is set to launch its first nearshoring ETF
The Exchange-Traded Fund will be listed on the New York Stock Exchange. This news comes has Mexico is now more than ever a leading destination for manufacturing relocation to serve the US market. The ETF, titled AZTLAN North America Nearshoring Stock Selection ETF (NRSH), has already raised US$ 10 million and focuses on benefiting from the nearshoring trend. The ETF, priced at US$ 20 per share, is based on an index designed by Aztlan, utilizing algorithms and AI to select 30 out of 70 companies across Mexico, the US, and Canada, benefiting from nearshoring in areas like industrial real estate, transportation, and logistics.
99 Startups launches an acceleration program
Their program aims to be the first institutional check for entrepreneurs, investing US$ 50,000 for a 3% stake in up to four companies. The 12-week program offers private sessions with experienced founders who have scaled or sold companies, emphasizing community support and shared learning. The deadline for applications is January 21, with a rolling acceptance process prioritizing early applicants. This initiative is designed to build a strong foundation for the next generation of iconic Latin American startups.
The Mexican economy in 2024 according to two top economic forecasters
Alejandro Padilla of Banorte Prediction:
Alejandro Padilla forecasts a 2.4% growth for the Mexican economy in 2024. This outlook is bolstered by the continuance of positive factors from 2023, including private consumption, investment, remittances, and favorable labor and credit market conditions. Despite expecting a slower growth rate than the 3.3% in 2023, the growth will be supported by investments in infrastructure and foreign investment driven by nearshoring initiatives. Padilla also emphasizes the significant role of public spending on social programs in fueling consumption. He notes the potential impact of the 2024 US elections, especially if they focus on migration and trade issues. Banorte's baseline scenario does not anticipate a US recession but a moderate economic slowdown that could influence Mexico's economy.
Rafael de la Fuente from UBS Prediction:
Rafael de la Fuente from UBS projects a 2.2% growth for Mexico in 2024, which could increase to between 2.5% and 2.7% barring a recession in the United States. He attributes this growth to the ongoing contributions of private domestic consumption and investment. De la Fuente expects a deceleration in some sectors of the economy, such as the non-automotive manufacturing sector, and a potential loss of momentum in growth drivers like employment. Despite this, he doesn't foresee a collapse in the economy. He anticipates that the strength of the Mexican economy will be higher than its historical average, even in the event of a mid-year US recession. De la Fuente also mentions that private investment, particularly in non-residential construction, is gaining momentum and may offset any loss of dynamism in the latter half of 2024, further bolstered by nearshoring activities.
See you for the next edition. Have a question or any feedback? Just hit reply. I'd love to chat!
Want to support me? Help me get out of the spam folders by answering this email and improving my deliverability score. It’s free and makes me happy!
Arnaud