Don't worry, we speak : Español (Spanish), too!
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Contxto– If you haven’t heard about our podcast En Contxto, I have to be honest with you, I’m very disappointed. However, this is not about me, but about you and how you can’t miss the enlightening interview we had about a month ago with Pierpaolo Barbieri, the Founder of Argentine fintech, Ualá.
With an empathetic outlook of Latin America’s people, this Harvard graduate shared some amazing insights as to his perspective leading one of Argentina’s most well-known fintechs.
If you haven’t listened the episode, you can find it here, or at the end of this article. Keep in mind that it is in Spanish.
Fine, if you still refuse to listen to the live interview, I transcribed it and translated it for you.
P: Yes, a month and a half or so, we announced it in December. And the truth is, it fills us with joy to receive the trust of users of that caliber to continue creating a product that is inclusive, versatile, [and] that’s completely transparent. And thus, contribute to changing Latin America’s finances.
C: Tencent had previously invested in 2019, right? At the end of April.
P: Yes, the truth is that we had been meeting with the Tencent fintech team for over a year. They were about to participate in our B Series, which was led by Goldman Sachs. But finally we went with Goldman and the truth is that we didn’t know each other very well. But it required a process to get to know each other, from their trips here to Buenos Aires [and] from us to China.
We understood that we had very aligned visions on how to build the best product, how to achieve banking inclusion in Latam, and financial services through a really differential platform for end users. That’s how they began to invest in April, with the goal of starting little by little and getting to know each other and when we raised the round, towards the end of last year.
The truth is that they were always very open to lead the round. It was an honor for us that they could do it.
C: Tell me what is like Tencent as an ally once they invested in Ualá, [and] joined your vision of reducing unbanked population levels.
P: Yes, they have no direct impact. What they share is a vision of how to bring financial services to people in emerging markets.
When it comes to banking inclusion, I do not believe that there is a more valuable experience throughout the world as what happened in China within the last 10 years. There, WeChat, is the leading Tencent product which has more than one billion active users, and Alipay which is Alibaba’s e-commerce platform product. Through incredible leapfrogging, they have made payments in China go from cash to payments directly by cell phone.
That experience has been extremely valuable for us who are trying to provide financial services in a continent where we are also lagging behind. We are also an emerging market [and] we also have a very large social debt because in Argentina more than 50 percent of all its people had never paid with a method that was not cash.
That experience, that capital, that know-how, and that talent helps us build better products, evaluate the new initiatives that we’re developing in Ualá, [and] in the new business units that we are launching. Having Tencent‘s support also validates that vision that you, César, were talking about. How to create the best product for an increasing number of users and provide banking services to more people.
C: Tell me about how you managed to get SoftBank on board with this Series C.
P: Well, we had also been talking with SoftBank[because] it had established a fund for Latin America. Which I thought was a great initiative because, beyond my role at Ualá, I see the entrepreneurial ecosystem in the region and I think there is a lot of space to invest in excellent companies in Brazil, in Mexico, in Peru, in other places.
Then we got to know each other. I believe they are a great team with great capital led by five partners. They invested in other amazing startups like QuintoAndar in Brazil or like Rappi in Colombia, who are friends of ours. Being able to meet them opened the door to talk to people who had much more experience in the region.
Tencent had only made one other investment in the region and that was in Nubank, which is a great player in Brazil that we respect and love. To see the way in which SoftBank views the region, how it’s thinking of tendering to solve the problems here in Latin America was very interesting for Ualá. And the power to have Tencent and SoftBank who had never invested together in this region.
And the truth is that for SoftBank to invest for the first time in Argentina filled us with pride.
As a result, having both their visions involved and having them lead the round honestly fills us with confidence for the upcoming battle to build a good product [and] add on more Argentines.
At the moment, we already have over 1.5 million cards issued in a country where there are 44 million people. That means almost 5 percent of Argentina already has Ualá.
We are achieving a product market fit in which we have to add a lot of services. We have a very ambitious roadmap for 2020 and 2021 to reach the product vision that we have and that our investors share.
P: It’s always a pleasure to be connected with other people in the entrepreneurial ecosystem and we work with many of them, even before the investment takes place.
Nowadays we have several campaigns in conjunction with Rappi in Argentina, where if one pays Rappi with Ualá, they obtain special discounts. This came before working with SoftBank. Obviously it has been boosted by SoftBank‘s investment.
We are in good terms with the Uber’s people in Argentina where in several provinces of Argentina it’s already legal to use Uber and there are already many people who pay with Ualá.
We are also WeWork clients, which is a great investment for SoftBank. They provide us with many solutions for our growth because it is not easy to go from 60 people to 250 people in the team in less than a year, which is what has happened to us lately.
So there are many collaborative efforts, but beyond them, I believe that what matters most are an investor’s vision and bringing complementary visions of where the world is going.
In 10 years, cash will disappear from society [and] people need banking inclusion. We must provide financial services. And not only to those who have more. [As] that’s been the history of Latin America where the richest, most affluent in society have access to credit cards, loans, mortgages, a credit history, and those who have less, don’t.
So that’s what we want to change with Ualá. And we like that large international investors that are part of the world’s “A-List”, believe in that vision. Where there is collaboration, where there are alliances, we make them.
As I said before, I also believe Latam needs more investment. There is a great entrepreneurial ecosystem and there is much more to Latam than just Brazil.
To see and interact with people who are investing in Mexico, who are investing in Colombia, who are investing in companies that were born in places like Colombia or Peru and today operate throughout Latin America creates in itself an ecosystem where in the future other companies arise that also compete with Ualá.
But that’s fine. Because the more competition there is, the better product for users. And that, after all, I think it leads to breaking the lack of investment in Latam, and that is good for everyone.
C: From what I see Ualá made its moves before landing the investment, right? You did not need to make the connection with the investment fund to connect with other startups to kick off collaboration.
P: And it is very good and very positive when this collaboration happens.
I believe that for a long time there were too many gatekeepers in Latin America. There were people who were only good at introducing other people. Being able to break those barriers means more innovation, more competition, more collaborative operations, and more work from joint startups.
Today we see how there are people who approach Ualá as a startup that is no longer a startup, because we have 250 people and people who want to work with us. We always have our doors open because someone once helped us grow, innovate, [and] change. We have a duty so that our societies move forward. To promote that innovation. To reject monopolies, avoid closing ourselves off, [and] encourage competition.
I hope that many of the people who train in Ualá and work in Ualá, continue on their way, found new startups in Latin America. I want to create an ” Ualá mafia.” And that will be very positive for the entire ecosystem.
We can’t think only of ourselves. We have to consider all the other people who play a part in this ecosystem.
Also the media, like yours, that do such a good job in promoting the idea of Latin American growth and Latin American innovation, helps us with VCs, companies, media, advertising and great technology. I think we all create a great ecosystem which benefits the societies we come from, and for which we often returned from living in other parts.
C: Thank you so much! The next question is related to the Central Bank of Argentina’s request for all fintechs to place the money they manage in traditional bank accounts.
P: Yes of course. I think that the Central Bank’s norm was very misunderstood outside of Argentina.
We completely agree that if a fintech does not operate as a bank, it does not have a bank license, it should not be lending the funds of cardholders, of account holders. Because that is indeed financial intermediation and that is what a bank does: it takes Cesar’s money and lends it to Pier, or Juliet, and that’s what we don’t want to do.
So what the Central Bank dis was clarify a preexisting rule regarding the prohibition of financial intermediation from non-banking entities. And we think that’s a good thing because it creates more trust in the sector, it creates new security for users. And Ualá‘s operations didn’t really change because we didn’t do that.
We had all the money in an account at a financial institution with which we have a collaborative agreement. And that makes many users, who previously doubted using Ualá, trust us more to use us. Because they know that their money is 100 percent available, 100 percent of the time, and we operate with 100 percent of our reservations at any time.
C: That was a clarification that they had told me. The fact that is not a neobank, is a fintech.
P: Yes, I think we spend a lot of time talking about the definition of one thing or another. A singer/songwriter that I like very much says that it doesn’t matter if the glass is half-full or half-empty, the important thing is it quench your thirst.
In that sense, I think it’s irrelevant if it’s a bank or not.
What matters is whether or not it provides good service, that it is transparent, that it is easy [to use], that it is free, that it is better than what existed before, and that a more collaborative system is created.
Ualá was born as a “Not-bank” because we wanted to provide financial services with banks, insurers, MasterCard, with a lot of partners where we offer services without needing to be a bank.
The only reason we would want to be a bank is because we want to lend cardholders’ funds.
We have a business that does not depend on lending the funds of Ualá‘s users. So we don’t need to be a bank. The day we need it, we may do it.
Kind of like if one day I want to make television shows, then I will have to become a television producer to legally comply with the law’s requirements.
C: Is there anything else you want to add that you consider would add value to our audience of entrepreneurs and venture capitalists?
P: I want to say thank you very much for this forum, for this space. I read the site. I love the coverage you have on the sector. And I think you do a great service to Latam by having a medium that is international, that covers this type of news, and that provides follow-up of a sector that will only grow in the future.
I wish you the best, I thank you for all the work you do and I love the product you have, so thank you for this time and thanks for the interview.
If you changed your mind, you can find the podcast interview here: