Ep. 77: Have you ever heard of Nature Tech?
Welcome to Scenius Mexico: Your weekly newsletter on technology, innovation, and startups in Mexico.
I had personally never heard of the term “Nature Tech” before, but after so many years in the startup world I have learned that everything can become disruptive by adding “Tech” to its name. Call it what you want, but Cultivo project is a fascinating one! This startup is growing a portfolio of high-quality nature-based carbon removal projects, using a unique business model.
In addition to Cultivo Capital’s raise, this week we cover Amazon and Kueski BNPL’s partnership, Mercado Pago’s dream to be a bank, Digital Currency Group’s foray into LATAM, and the Open Finance’s regulation “ahorita” announcement.
Follow The Money
Nature Tech Startup Cultivo raises US$ 14 million
Cultivo is a nature project originator startup, developing high-quality nature-based carbon removal projects. This funding round will support Cultivo's growing portfolio, which already covers over 100 million hectares. The new capital will accelerate Cultivo's AI-driven technology platform, essential for originating and monitoring these projects' carbon capture, biodiversity, water storage, and social impact.
Cultivo's unique business model accesses different capital pools to finance nature-regenerative projects, ranging from equity and debt investment to grants and bond instruments. The startup's focus includes developing a pipeline for nature-based carbon removal projects to address the scarcity of high-quality natural capital, and aims to maximize the environmental and societal benefits of these projects while ensuring their financial viability and transparency.
Sector: Nature Tech
Total raised to date: US$14 million
Founders: Manuel Piñuela, Adolfo Patron Martinez
Investors: MassMutual Ventures, Octopus Energy Generation, Salkantay Ventures, Grupo Peña Verde
Startups News
Amazon and Kueski team up to launch a BNPL payment method in Mexico
This collaboration aims to offer an alternative to the predominantly cash-based transactions in the country. With Kueski Pay, users can opt for flexible payment options, including bank accounts, debit cards, or cash payments at affiliated networks, without requiring a credit card. Initially available to select Amazon customers, the service will soon expand to all eligible clients, offering up to four bi-weekly interest-free payments or up to 12 bi-weekly payments. This initiative marks a significant move towards more financial services in Mexico by Amazon.
Mercado Pago wants to be a bank in Mexico
The Fintech division of e-commerce giant Mercado Libre, is exploring the possibility of becoming a bank in Mexico. Currently operating under an Electronic Funds Institution (IFPE) license, Mercado Pago seeks to simplify its regulatory complexities by obtaining a banking license. This move would enable the Fintech to extend its product range beyond the limitations of its current license. Currently, Mercado Pago has various partnerships, including with stock brokerage GBM for investments, Paxos for cryptocurrency trading, and Western Union and Xoom for remittances. They also offer aggregator services through MP Aggregator and financing through Mercado Crédito. A banking license would streamline Mercado Pago's regulatory responsibilities, which have become increasingly burdensome due to its extensive operations and partnerships. In Mexico, Mercado Pago saw a 77% revenue increase in 2023. The transition to a bank would require substantial capital, with the minimum capital for a niche bank ranging from approximately 290 to 450 million pesos, and over 700 million pesos for a full-service bank. Or they could buy a struggling Fintech with a license.
VC - Accelerators - M&A News
DCG is doubling down on LATAM
Digital Currency Group (DCG), a prominent investor in the blockchain sector, is expanding its operations to Latin America with the opening of a new role based in Mexico City or São Paolo. Founded in 2015 by CEO Barry Silbert, DCG has invested in over 200 blockchain-related startups across the world. The VC, which also directly invests in digital currencies and assets, aims to foster the growth of a superior financial system through digital assets and blockchain technology. The new role in Latin America will be a part of the DCG Investments Team and play a crucial part in the DCG Expeditions team. This team focuses on global early-stage investments in top fintech and crypto founders who are creating the next generation of financial services.
500 LATAM is increasing its funding for early-stage startups
The investment firm, is now offering an initial investment of US$ 300,000 for a 10% stake in the startup. This is a significant increase from their previous check of US$ 80,000 for an 8% stake. Along with the financial boost, startups will be part of a customized acceleration program lasting six to 12 months, offering strategic support and mentorship. The program works with groups of 10 to 12 startups three times a year under the name “Somos Lucha”. Furthermore, 500 Global is transforming its acceleration methodology to allow startups to apply throughout the year via the "500 LatAm Seed IV" fund.
Colombian WeKall acquired Sirenna AI
Sirenna AI is a Mexican startup specializing in telecommunications technology. This acquisition aims to strengthen WeKall's position in the Mexican market, particularly in key cities like Mexico City and Monterrey. The integration of Sirenna AI's technology will enhance WeKall's communications capabilities, allowing companies to improve the efficiency of their advisors and tackle audit issues, especially in the finance and healthcare sectors. Felipe Sánchez, CEO of WeKall, anticipates double-digit growth and significant transformation in company communications in Mexico. Gabriela Morales, founder of Sirenna AI and the new Country Manager of WeKall in Mexico, believes this acquisition will catalyze growth for WeKall in Mexico and the broader region.
Rest of the World
Argentinian Simplestate is expanding its operations into Mexico
Simplestate is a real estate investment platform with the goal of making real estate investments accessible, secure, flexible, and profitable. Co-founded by Joaquín Sepulveda Lemus and Gonzalo Abalsamo in 2019, the platform was designed to leverage technology for real estate investments with minimal initial capital and dollar-denominated returns. Ariel Cilento joined as Chief Product & Technology Officer to enhance the business and aid expansion into new markets like Mexico. This expansion into Mexico builds on Simplestate's presence in Argentina, Uruguay, and Miami.
Economy
Fintechs are awaiting the long-delayed Open Finance regulation
Despite being a pioneer with its 2018 Fintech Law, Mexico risks falling behind other Latin American countries in Open Finance frameworks, crucial for the next wave of financial innovation. The Mexican regulator has promised to officially announce Open Banking regulations by the end of the year. However, the fintech industry urges the government to expedite the process, arguing that the current legal framework hampers the growth potential of open banking.
Although FinTechs have made significant strides in the market, the competition has intensified with large players entering the digital space. Mexico's Open Finance faces challenges, including the need for data sharing standards. Concerns about data protection are also significant, with customers needing explicit authorization for the use of their transactional data.
Mexico is emerging as a significant player in the global data center market
Mexico’s data center market is anticipated to reach a market value of US$ 116 billion by 2027. This growth is fueled by Mexico's strategic location near the United States, its status as Latin America's second-largest economy, and a booming digital economy. The Bajío region, particularly Querétaro, is a preferred location due to minimal environmental risks and seismic activity, housing over 50% of Mexico's data centers. With significant investments from major corporations like Huawei Cloud, Amazon Web Services, Oracle, and Microsoft, Mexico is on track to become a critical technological hub.
See you for the next edition. Have a question or any feedback? Just hit reply. I'd love to chat!
Arnaud