Nubank raises US$400 million, possibly a decacorn now

Contxto – A few weeks ago, we covered Nubank’s potential SoftBank funding. It now seems as though the deal has fallen by the wayside seeing that the company has raised US$400 million in a new Series F round led by TCV.

As a result, Nubank is reportedly valued at US$10 billion, making it Latin America’s most valuable private tech company. In other words, it’s now a unicorn with 10 horns, the mythical decacorn.

Out with the old, in with the new

With that said, the US$1 billion SoftBank deal at a US$10 billion valuation will probably not happen anytime soon. Rather, this US$400 million round will be placed at the same valuation, being Nubank’s largest investment to date.

Joining TCV was also GIV Private, the Singaporean sovereign wealth fund. Original backers are also presumably following through on their investment commitments. These include Tencent, DST Global, Sequoia Capital and Redpoint Ventures.

“We stand firm in our mission to combat complexity and give people control of their finances,” said David Vélez, founder and CEO of Nubank. “With this new investment from TCV and our existing investors, we hope to contribute to significantly change this situation by accelerating our growth in Brazil and supporting the launch of our new Latin American markets.”

This is TCV’s first significant investment in Latin America, according to a Nubank press release.

The more horns, the merrier

Following the broken deal with SoftBank, this new proceeding marks a potentially new era for Latin America’s startup ecosystem. Based on the recent influx of mega-rounds, there may be a new trend in the making – the first wave of decacorns.

While unicorns are companies worth over US$1 billion, decacorns are those valued at more than US$10 billion. If this deal shapes up, then Nubank would become Latin America’s most valuable private scale-up.

Over time, Nubank’s product portfolio has also evolved into personal loans with debt functions for consumers and small businesses, credit cards, as well as a reward program.

A quick reminder about Nubank

Born in Brazil, Nubank has expanded across Latin America’s largest markets in what some call an “aggressive” manner. First, it turned to its southern neighbor, Argentina, and then headed north to Mexico. Though still not confirmed, the company may land in Colombia next.

To date, Nubank has raised US$820 million over seven rounds. Its last reported funding was in October when it raised US$180 million at a US$4 billion valuation led by Tencent. As a result, this firm acquired a 5 percent stake of the company in the process.

Since then, Nubank’s customer base has more than doubled, reaching over 12 million in its native Brazil. Today, it is Brazil’s sixth-largest financial institution and stands committed to improving the system.

“Although technological change has been transformative for most industries worldwide, the majority of bank consumers continue to pay interest rates and absurd fees to receive very poor financial services in return,” said Vélez. “In addition, more than two billion people still do not have access to basic financial services.

Fun fact, Tencent invested in Ualá a couple of weeks ago, even after Nubank announced its plans to land in Argentina.

Whether Tencent believes the market is big enough to have multiple participants or it’s actually diversifying to stand by the ultimate winner, it is certainly an interesting strategy worthy of reflection.

Meanwhile, I’m still super curious to know why the SoftBank deal didn’t go through. I will update as soon as I find out more.