Fintech Opportunities in LATAM with QED and Broadhaven Ventures
Today, we’re joined by Mike Packer, Partner at QED, and Michael Sidgmore, Partner at Broadhaven Ventures.
Mike and Michael are active investors in Latin America, with collective portfolio companies including Credijusto, Loft, Nubank and many more.
In this conversation, we discuss market dynamics, nuances and opportunities in Latin American fintech and much more.
For all of our past episodes and to sign up for our newsletter, please visit www.rebank.cc.
Thank you very much for joining us today. Please welcome, Mike Packer and Michael Sidgmore.
Full transcript:
Will Beeson:
Michael Sidgmore and Mike Packer, welcome to Rebank. It's great to connect with you both. Michael, you and I have had the pleasure of speaking before. I think it was last year in beautiful San Francisco, way, way before any of this remote by default lockdown type environment set in. I'm glad we were able to reconnect despite the fact that it's via internet this time. And thanks for looping in, Mike. So, it sounds like you guys know each other and maybe have worked together, have looked at deals in the past. Michael, how do you and Mike know each other?
Michael Sidgmore:
Yes, so we have looked at deals together in the past. We're mutual investors in a Mexican small business lender called Credijusto that Mike was a series A investor in, we were a seed investor in. And I just feel lucky that one of the best, if not the best investors in Latin America is involved with Credijusto and that we've worked together on one deal and hopefully more. And have looked at a bunch together as well.
Will Beeson:
Mike, it's a huge pleasure to have you here from QED, one of the premier investors in the FinTech space. Can you just introduce yourself quickly and tell us a bit about your focus?
Mike Packer:
Absolutely. Yeah, thanks again for having me. So, I have been with QED for about four and a half years now, and the last really three and change almost fully focused on LATAM. Prior to QED, I spent about a decade at Capital One. I focused mostly on credit businesses. So, as a kind of operator, a lot of times in credit cards as you can imagine, but also point of sale finance, retail partnerships, and small business lending. And really wanted to get to the other side of FinTech and ended up stumbling into QED. And our LATAM story, which I'm happy to go into more, but it's kind of an accident where we had an investment prior to my joining in Nubank, which is of course an amazing story.
Mike Packer:
And through a prior relationship with David Vélez, Nigel Morris and Frank Rotman had decided to take the plunge into Nubank. And through that we were really just introduced to the region. And as I kind of alluded to a little bit ago, about three and a half, four years ago, QED made the decision to really look at LATAM as a focus. And so myself, Bill Cilluffo and now Lauren Morton have been attacking the region managing the portfolio. I think officially 20 companies now, mostly in-
Will Beeson:
Wow.
Mike Packer:
... Brazil and Mexico, and continuing to look at the region with pretty opportunistic eyes and pretty excited about what we see ahead.
Will Beeson:
Great. Well, I want to come back that piece and just and maybe hear a little bit about how QED got increasingly involved in Latin America over the past few years, because I feel like it's ... It sounds like you guys were very early, but to some extent maybe the industry has followed, so that might be insightful. But real quick, Michael, can you remind listeners what you're up to, and I'm sure you have some updates since we last spoke?
Michael Sidgmore:
Yeah, absolutely. So yeah, so I'm a partner at Broadhaven Ventures, I co-founded the firm with my partner, Greg Phillips, who has built one of the market leading FinTech investment banks and advisory firms called Broadhaven Capital Partners. We started the fund in 2016, really with the idea to be an early stage FinTech investor globally. Majority of our focus to date has been U.S. and LATAM. And we've also invested through prior investments in Europe and more to come there and then recently invest in a Japanese digital bank as well.
Michael Sidgmore:
So really look globally, like to be investors early on. We tend to be pre-seed and seed investors. So one of the first institutional checks into a business and like finding things outside the Bay Area in New York, which is really how we ended up spending a lot of time on LATAM, we have six portfolio companies in LATAM at this point, five in Mexico, one in Brazil. And really like to invest early in the ecosystem and then bring companies back to the U.S. for kind of later stage round series A's B's and C's, which I think is something that we can touch on, because it's, you're increasingly seeing U.S. VCs spend time in LATAM. So I think that's been an interesting topic of the past year to year and a half or so.
Will Beeson:
So Mike, so you must have been one of the early VCs on the ground so to speak in LATAM, at least U.S. VCs, if you've been active in that space for three and a half, four years. Can you talk a little bit about what the environment looked like at that point and how you've seen it develop since then?
Mike Packer:
Yeah, I mean, it's a really good question. Having come from a place prior to my experiences, four plus years ago at this point, having little to no background in LATAM and then starting to look to the region for businesses and FinTech investments. We're still a little bit young and new is how we think about it. But kind of to your point, and certainly from a U.S. perspective, I think we were one of the first to be looking at businesses and starting to get involved in things. And again, I alluded to it in my intros, it was almost pure accident and thanks to David Vélez from Nubank for making it happen.
Mike Packer:
But I think one of the things that we were able to do in that time is kept the core DNA of QED of trying to be really specific and strategic about where we want to invest and being kind of operationally involved and trying to be kind of helpful with the companies. And through that, we really developed a pretty deep network early on. But I think in terms of the U.S. VCs, we were certainly in the market on our own is how we felt, which was exciting because we got to meet a whole lot of companies. But there were definitely local funds at that time that were both emerging and had been around for a while, who we've had a bunch of experience with.
Mike Packer:
And I think as the years went on and some early success came on and I think the ecosystem continued to develop. By that I mean more companies were formed, more events started happening, you're seeing some good results. Then we started seeing a little bit more activity, but I often joke when I'm talking to my friends in New York or San Francisco that I feel like a salesman for the region as I'm trying to convince everybody to come down and join us. I think we'd welcome more capital and more expertise and more U.S. investors in the region. But it has been picking up over the coming years, just in terms of both funds that have been investing, but also funds looking. And so I think that in terms of where we got maybe a little lucky in this part of the cycle for being a little early, but it still has some room to run in my opinion.
Will Beeson:
Maybe that Nubank piece is an interesting place to kind of lead into maybe a broader question. So, I'd have to kind of jog my memory, but we connected with David, must have been a year and a half ago now, phenomenal story, extremely, extremely smart and qualified founder. That concept like, "Okay, we're going to launch app plus credit card into a market that we feel is right for this." And he was just spot on, and the thing has exploded. That was in many ways kind of what digital banks in the U.S. and the UK and parts of Europe were trying to do, circa like 2012, '13, '14.
Will Beeson:
And it didn't really play out that way, because it kind of turned out that actually the market was really saturated already for banking services in developed markets. And actually there was some inertia around switching and actually maybe there was more trust in incumbent organizations, even among younger, more digitally oriented users. But that doesn't seem to have been the case in Brazil. Do you think that Nubank case study is the exception or the rule in Latin America? Is that what potentially makes the region exciting is that there are truly disruptive opportunities?
Mike Packer:
Yeah, I mean, I think in part, right? So, comparing to a market like the U.S., you have vastly different competitive dynamics, both at the kind of incumbent current financial services, but also in terms of startups, right? And so, when we looked at Brazil from a broad perspective, you see extremely high return on capital in the banking industry, spreads that are as high as anywhere in the world. You see a very underdeveloped digital ecosystem in terms of just pure investment that the banks and financial institutions have made. And not a very competitive environment going with the kind of high returns. You have a small number of banks catering to a large portion of the market. And by the way, that market is only a portion of the overall total markets, you have a huge kind of underserved and unserved populations.
Mike Packer:
And so I think when you put all of those things together, I think you do find that there are Nubank-like opportunities in the market. Now, Nubank is its own kind of animal. I don't even think David could have predicted anywhere close to this type of success being in the right place and right time. But they did everything right. And they got more response than they expected, or certainly than we expected, I don't want to put words in his mouth. But it's just that story in itself I think is incredible. And certainly we think there are opportunities like that. But I do think this kind of difference between the environment they were going into is a huge part of both why Nubank did well and why I think FinTech opportunities still exist.
Mike Packer:
The only thing I think Nubank did really well, and I'm very biased in this statement, both as a former credit card executive and as a current investor in Nubank, but they went after the most profitable consumer banking product on the planet and made it work. And so the unit economics, profitability, just raw ability to create returns in a credit card versus deposit or savings or strategy, I think is much, much different too. And so they were able to kind of go into that strategy and get that right. And so I think that again, whether it's the high margins generally in the market, whether it's going after the right mix of profitability versus growth in terms of growing the company. Or whether it was just an excellent team with an excellent strategy, you put any of those three together, and you're going to come out with something great. But at a really high level, yes, we agree that there's all kinds of opportunities that still exist in the market because of those types of dynamics.
Will Beeson:
Michael, looking at the kind of opportunity in the market from a different angle almost, you guys are going to have to help fill in some of these company names. It's admittedly not a geography that I've followed all that closely over time. But maybe, it's a company called Rappi, which is maybe originally Colombian. And it was kind of like delivery or at base source an individual to bring you whether it was food or supplies, or even cash from an ATM. Similar I guess to the Uber style model of starting with ride hailing and moving into financial services, kind of using some sort of really powerful entry point into consumer behavior that isn't finance related, to then build a very extensive and very successful FinTech type offering around that. That's a trend that I understand may be visible in Latin America. Michael, do you have any thoughts or any sense of whether that's true? And if so, any examples of companies that are doing that well?
Michael Sidgmore:
Yeah, it's a really good question. I think both you and Mike are highlighting two views that we hold on Latin America as a opportunity to invest in financial services companies and part of our FinTech thesis. So one which you're alluding to is, can there be non-FinTechs that become FinTechs? We believe that there can be. The reason why is, because in many respects they're meeting a customer at point of need. So in Rappi's case delivery, they're doing on demand delivery, not too dissimilar from a DoorDash in the U.S. And then you can think about what kinds of financial services products could be offered to both sides of that marketplace, the end consumers, as well as the Rappi delivery people. Those in many cases are people who are not banked or underbanked. So opportunities for financial services on that side of the marketplace, and then on the consumer side as well around payments e-commerce, et cetera.
Michael Sidgmore:
So that I think is certainly an interesting trend in Latin America. The question there is still, can a super app platform work in Latin America like it's worked in Asia, both on the non-FinTech side? So, there's been messaging platforms like WeChat in Asia, things like that, that have done very well to then expand into financial services, e-commerce et cetera. There have also been delivery apps like Gojek that have done that as well. And then also on the financial services side, you've seen in Asia the rise of financial services super apps. So digital banks in Korea, like Toss, which as a venture partner at Goodwater I'm involved with, that's a business that has built a kind of financial super app for Korea.
Michael Sidgmore:
So, can the same happen in Latin America, either starting with financial services? And if I had to make my bet, I think company Mike alluded to, Nubank probably is the best bet for a financial super app. And then if you're thinking about kind of outside in FinTech, so can a Rappi do that? We're investors in a business called Kovi in Brazil, which raised $30 million last year in a series A from GFC. They lease cars to on demand drivers in Brazil and Mexico. So DiDi and Uber drivers, and they're enabling those drivers to get access to a car so they can drive for Uber or DiDi, and then lease them on a weekly basis where they in many cases would otherwise not have a chance to access a car because they can't access credit.
Michael Sidgmore:
So then you could think about banking them or serving them through financial services products and other ways. I think that's an interesting kind of thesis as a wedge into FinTech, and those people need the product. So, we certainly see that to be something that's interesting in Latin America and where we've actually invested in a few different businesses, Kovi being one of them, Nowports' a digital freight forwarder, somewhat similar to Flexport in the U.S. as a business that meeting an exporter or an importer at a point of need, solving a problem of tracking and shipping.
Michael Sidgmore:
And then you could think about kind of expanding from there and offering other products that meet the needs of their day-to-day financial operations. So, we certainly like that trend. I think the other trend that you both alluded to in your question is, can there become platforms that end up being bigger than just a single verticalized solution, like you might see in the U.S.? And I think that's certainly the case in large part due to kind of under penetration of banking services by the incumbents.
Michael Sidgmore:
There's a ton of room to build horizontal platforms, kind of like Mike alluded to, and we see that in both Brazil and Mexico, where you can build either on the consumer side or the SME side platforms that serve the needs of that customer in multiple ways. So, you might end up seeing a business that ends up being a Brex plus an accounting software, plus a cabbage all rolled up into one business. Whereas in the U.S. you have three standalone businesses that could be multi-billion dollar businesses.
Will Beeson:
So Michael, you kind of ran through some of your investment thesis around LATAM. Mike, are there any specific thesis that you guys are kind of pursuing in the geography?
Mike Packer:
Yeah, we take a pretty detailed view of the FinTech market, and I think we are still very much open for business. I think anything FinTech, as of anything we're very happy to be surprised, especially in a region where we're not on the ground necessarily by models we haven't thought of. But that said, I mean, one of the things that Michael alluded to, so companies that are able to add financial services into their offering, we like that as an example. This kind of idea of being able to own the customer, own a significant transaction or a significant portion of business in a time of need, and being able to tie financial services into that. I think that's very interesting. We've made a couple of investments in the real estate prop tech space, similar to that in Quinte and Loft in Brazil.
Mike Packer:
So companies that are dealing with a primarily real estate tech or prop tech platform, but adding financial services or financial services-like components to that to enhance their value proposition. So we're very excited about that as a trend. And I think the other side of that is, how do those companies actually deliver the financial services? So what are the picks and shovels so to speak? What's the infrastructure that you use to actually develop financial or FinTech solutions for your customer if that's not in your inner core DNA? I think this is something we're starting to see really happen in Brazil, a lot of activity. Kind of everything from banking as a service to FinTech as a service, to more specific payments as a service and everything in between we think is very interesting and completely underdeveloped at scale.
Mike Packer:
This is I think a market that should continue to expand because of the trend that Michael said. And I think the last one I'll just kind of call here that we've been really focused on and interested in, but kind of confused at how exactly to play it is e-commerce. So, e-commerce in Latin America is 4% or 5% of retail sales is actually probably a lot higher now given the COVID metric, especially during the COVID months when you have both the numerator and denominator effect. But this is a number where, I think it is inevitable, there's going to be a tailwind in e-commerce in terms of just raw transaction activity.
Mike Packer:
And so whether it be payment services or other types of infrastructure or things like lending solutions at point of sale, or buy now pay later, or frankly anything that helps enable e-commerce businesses do business better. We've been very, very interested in that. And again, it's not a novel tailwind. This is something we've been talking about for years. But the kind of recent COVID environment has put a magnifying glass on it and I think we're going to start to see some real activity there. So those are a few that we're pretty excited about at the moment.
Will Beeson:
We talked to Clay Wilkes, the founder of Galileo recently, who is a great business and has really been an accelerator of a lot of U.S. digital banking. They've recently expanded to Latin America, and I think view that as an important part of their strategy going forward. How do you, Mike, just on that topic of banking infrastructure, how do you think about early stage companies or kind of purpose built startups that are looking to provide these sorts of services, maybe in markets where either digital banking or payments, or some sort of payments enabled e-commerce hasn't necessarily been present before? Versus incumbents in those markets who have seen what's happened in other geographies and realized that being quick to digital would be beneficial and perhaps being a bit more aggressive in terms of getting there?
Mike Packer:
Yeah, it's a great question. I personally would much rather find the early stage startup in the region personally. But, I'm sure there are pieces of Galileo's system that crosses borders, right? In terms of their product and offerings. And I think where there are that type of cross border synergies, I think you will see real pressure from that type of entry. I don't know which one is better so to speak. And we've kind of, separating from the Galileo specific example for a second. I mean, we have been very cautious in our understanding or approach or learning in the region, and have been very biased to companies that are homegrown in LATAM. We just think it, or I personally think it eliminates some variables of uncertainty when you have a team that understands the market, understands local kind of nuances that's well-networked, that's able to kind of maneuver through the market.
Mike Packer:
And so I think broadly that's been our bias. But again, I think at the same time we don't want to see anybody really reinventing the wheel. And so there are a number of companies I'm talking to that are also talking to Galileo. And I think that they should totally look at that as an option as a user or a buyer, because there really is no other option. And so I think it's going to come down a little bit to timing and a little bit to some of that nuance of how the products will cross borders and kind of will be able to adapt or perform in these other locations.
Will Beeson:
Do you have a sense of how proactive incumbents in retail or banking or payments or being in terms of pursuing the digital opportunity?
Mike Packer:
Yeah. I mean, I'll give my perspective and Michael, feel free to chime in here. I mean, every kind of country in LATAM is a bit different. It's hard to generalize, but I think things in Latin America are at least five years, maybe 10 years behind or seen in the U.S. in terms of just the sheer amount of kind of momentum and activity of the incumbents. The net result of that is probably not a real five or 10 years behind, because things have gotten easier. They can learn from the regions and all of that.
Mike Packer:
So I think you're starting to see activity. You're starting to see some catch up, but you're not seeing anything really revolutionary. And again, I don't think it's any fault on those institutions because they have significant market share in their markets. They're driving good returns, again, recessions, and COVID notwithstanding creates a whole bunch of different impacts here. But the kind of digitization of financial services has been happening just at a slow pace and a pace that's been behind the U.S. I think we're seeing some signs of things picking up across a few countries, companies getting more involved with accelerators, trying to invest, actually buying FinTech solutions as a kind of commercial user.
Mike Packer:
We're seeing increased likelihood of adopting those types of things. We're still waiting for things like M&A, things like really big ... I mean, there's been some really big roll outs from incumbents in Brazil, but I think it's still time will tell how successful they've been. So it's a bit of a mixed bag, but we're definitely seeing increased activity.
Michael Sidgmore:
Yeah, I mean, I think to add to some of Mike's points. I think the one I would highlight is the local players will likely win and in large part because you really have to tailor the solutions to the region or even the specific country. And I think that is more difficult for people from the outside trying to come in. And that's why I think it's also so important to be on the ground. I think I give a lot of credit to Mike and the QED team for creating a completely separate LATAM team that can be on the ground in Latin America a lot. We've felt the same way that really the way to understand the region is to be in the ecosystem and spend time there. Just one example that's kind of striking is that I think in Mexico, the number is something like 60% of Uber rides are paid for in cash.
Michael Sidgmore:
Now, maybe that'll change at some point, and I'm sure it will. But just think about what that means for the way people think about payments, the way people think about living in a cash-based economy. What that means for how they spend money, how they transact the merchants, et cetera. And then also on the other side, think of how Uber had to figure that out in terms of how they had to think about payment acceptance. How they track how much money they're making. How they put that aside for pay for taxes. How they design their app. There are so many second and third order effects that you really have to think about when you understand what the ecosystem is like.
Michael Sidgmore:
So, I think that history may not repeat itself, but it's going to rhyme, but it'll rhyme in terms of winning from local players. So, you might see the "Brex for LATAM," or the Plaid for LATAM or the Open Door for LATAM, but there'll be one by local players, not by Brex necessarily coming in or Plaid coming in, because you have to tailor it to the ecosystem itself.
Will Beeson:
Picking up on that a little bit, Michael. So, you personally have experience investing in U.S. companies and Latin American companies. I think you mentioned European companies and even Asian companies. Are there any specific considerations that you have in mind in evaluating a LATAM investment that you don't in some of those other geographies?
Michael Sidgmore:
It's a good question. So I mean, I think there's the things that you look for in every founder and team in terms of kind of them and their vision, their background, the product, the market, and the market size and the opportunity pain point they're solving. I think where we spend a lot of time with founders is, one is, just understanding the local pain points so that, that ends up being a really important thing is understanding what are the local problems that they're solving and how might that be different?
Michael Sidgmore:
Because then when we think about, what are they building? Will they beat incumbents or will they beat others who could come into the region who are very well capitalized? That's one thing. I think the other thing we tend to look for is, can this founder and team figure out how to grow and scale such that they can raise later stage rounds of capital, most likely from VCs, either who are much bigger in size and scale?
Michael Sidgmore:
So groups like Mike and QED who have a larger fund or Kaszek in the region who has a larger fund, they just I think recently raised a $600 million fund and then from U.S. investors as well. So I think one of the things you've seen happen in Latin America more recently is that there've been a number of LATAM startups go through YCombinator and other accelerators. And I think in part a lot of founders are doing that because they want to A, figure out, like A, get that stamp of approval from YC, B, get trained and coached on how to pitch to U.S. investors and C, be exposed to the U.S. investor market. Mike mentioned that a lot of U.S. VCs were coming down to LATAM and have been kind of increasingly so. So I think that's something we also look for is, can this team be investible by growth stage investors if and when they need that type of capital?
Will Beeson:
Mike, if you think about those 20 or 21 portfolio investments that you guys have made, are there any companies there that, I don't want to say that stand out, because I'm sure they're all phenomenal companies, but that might be illustrative to talk about in terms of for what they're doing in their specific market that might be interesting for U.S., European or international listeners?
Michael Sidgmore:
Yeah, I mean, I think there's probably a number of them. One of the more interesting ones that we're working on right now has been Loft in Brazil, which kind of started out like an iBuyer, so similar to the Open Door model. But what we've kind of seen in their evolution over the couple years that we've been invested is, the ability to continue to look at other problems in the value chain and then build incremental pieces of the business around that. And so, instead of being just a pure kind of iBuyer in the market, starting to look a lot more like a real estate marketplace, or starting to look like kind of a full stack, buy, sell, real estate platform.
Michael Sidgmore:
And I think the reason why I think that's instructive or illustrative is, similar to some of the themes we've been discussing here is that the opportunities across so many industries because of the underinvestment and technology are huge. And some of these things are things that may seem somewhat straight forward from the outside, things like digitization, but in the case of Loft, they basically have to rethink the concept of title insurance because of the way that notaries work in Brazil. Or kind of rethink the role of brokers in terms of how they interact with brokerages and agents.
Michael Sidgmore:
And so there's just there's so many problems when you get in and start in on some of these markets that they continue to look interesting. So I think that has been a really interesting company to watch. And just another one just really quickly, which I think is interesting, because it's a little earlier and we don't quite know the answer. But we did investments at the end of last year in a company in Mexico called Fairplay, which is kind of a revenue funding model lending to e-commerce businesses based on what their marketing spend is and kind of getting paid back depending on the returns on their marketing campaigns.
Michael Sidgmore:
I think that company is really interesting because of the e-commerce theme we've been talking about, but just the intersection of so many things, right? So you have e-commerce, you have that whole sector moving and optimizing and perfecting digital advertising. And a lot of cases, just starting. You have buyers who are coming more and more online, and you have the whole providing capital to different size businesses. And every time I have a meeting with that team, they're learning something new about a different kind of segment or target of that market. And again, you just see how vast the problems are. And again, as I said, we don't know how that one ends up. I'm quite excited about the team and what they're doing. And of course, very biased because I'm an investor in the company.
Michael Sidgmore:
But I think just the nature of the number of problems that you find, assuming you can get into the right focus and the right amount of resources on specific problems, your chances go way, way up. And so those are the types of things that we really like to see, or entrepreneurs uncovering sometimes small problems that lead to much bigger problems. And then I think in LATAM you can start to pick away kind of adjacent markets, probably similar to the FinTech financial services add-ons that we were talking about earlier. That concept of nonfinancial services companies adding FinTech solutions.
Will Beeson:
Hi guys, to wrap up, I'm interested in your predictions. No, not predictions, your expectations for the future of LATAM FinTech over the coming years. Michael, do you want to start?
Michael Sidgmore:
Yeah, I'll start with that. I think it's really good time to be a founder in Latin America. There's a lot of VC capital in the region, both from regional focus funds raising larger funds, because they've had some good proof points and want to raise bigger funds. Companies are raising larger rounds as well as some of the big regional players. So, the larger funds, brand names have bigger funds than U.S. funds coming in. So there's a lot of capital.
Michael Sidgmore:
I think there's wide open markets in many areas of FinTech to build market leading brands. So, I think there are certainly some of the most innovative incumbent banks in the world that have a presence in places like Mexico. So like BBVA, Santander are both very innovative banks, but they also don't necessarily need to bank a large portion of the customers in Mexico. So that leaves room for FinTechs to take a lot of market share and for everybody to maybe not be happy, but everybody to exist and exist in a big way. So I think the new, I mean, you could see new brands in FinTech emerge. I think Nubank, which Mike mentioned is certainly one where it just rolls off the tip of people's tongues, like this is a financial services brand in Latin America. We're probably not, if we're not there already, we're probably not far from it.
Michael Sidgmore:
So I think those are things we'll see happen in the marketplace. And then I'll say something else, Mike probably won't, but I think that we're seeing the rise of these larger regional funds. So like Kaszek, QED, Quona are raising bigger funds, because they've done incredibly well and invested in a lot of the unicorn businesses in the region. I think it's also a great time for those funds to really build their brands is the Sequoias and Benchmarks of the region where founders have been going to them as the first port of call. But I think will continue to do so in many respects just because they've proven out great track record. And it'll be interesting to see whether or not U.S. VCs post COVID spend as much time in LATAM. So I think there's a huge opportunity for the kind of regional focused VCs that are larger in size and scale to really build out their brand and just continue to perform really well.
Will Beeson:
Mike?
Mike Packer:
Well, thanks Michael for the shout out there. I'm not sure we deserve to be in the company of the others who spent more time there, but we're certainly very happy and humbled by our experiences so far. I think in terms of broad predictions, I don't like to do predictions well, but you put me on the spot like this. I have to say something. So look, I think I agree with Michael that it's a good time to be an entrepreneur. I think it is that there are lots of opportunities. I think the reason why now is a good time, or at least over the next year I think is a good time. I think it's going to be a tough market given the macro impacts that we're seeing over the last few months. And I think it's going to be a tougher market, which I think is going to drive out a lot of competition. Banks are going to retreat. There may actually be less capital for a period of time, but I'll continue trying to recruit all our friends to come and look.
Mike Packer:
But I just think that now is going to be a great time because the ecosystem's developing, you have the infrastructure, it's starting to develop. It's easier to start a company than it was three, four years ago. And so I think for all those reasons I wholeheartedly agree it's a good time to be a founder. The other thing I'll say is a bit of a prediction. I mean, I think Brazil has been ... Brazil Central Bank specifically has been one of the most forward looking banks in the world on FinTech. I think they've done some really great initiatives in terms of getting FinTech companies licenses to operate and payments and money markets as examples, and also where they've been leading on open banking.
Mike Packer:
Of course, they're on the open banking side they're taking a lot of things from Europe and the UK. But I think that that combination of things in Brazil is going to create a explosion of some version of whatever FinTech 2.0 or 3.0, whatever cycle you think we're in down in Brazil, because I think that the ability to connect all the ecosystems with the Central Bank kind of encouraging the innovation is going to create something really, really interesting that I certainly can't predict, but I am actively trying to predict and look for things in that space.
Will Beeson:
Fascinating. Excellent. Well guys, look, I really appreciate your time. A huge, huge pleasure to connect and I hope it won't be the last time. Congrats on all the amazing work you have been doing in Latin America over the past few years. It sounds like you're in really exciting positions.
Michael Sidgmore:
Thanks so much for having us. We really appreciate it. Always happy to talk about this topic. It's certainly a exciting time.
Will Beeson:
Michael Sidgmore and Mike Packer, thank you very much for joining us today.
