Could Brazil be a model for SEA fintech?

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Hello reader,

There’s a scene in Fast Five – the fifth installment in the Fast and Furious franchise – that became rather well-known when the movie came out.

You can check it out here. The full clip is about three minutes long, but the specific moment to note is at around the 1:40 mark, where lead protagonist Dominic Toretto refuses arrest by going: “This is Braziiiiiiiiiil.”

Cue dozens of locals pulling out their guns.

It’s a fun little scene, even if it doesn’t really make sense and is only done for the cool factor. But that’s it – that’s about the extent of the impression I have of Brazil, as it’s a country that has very little overlap or impact in my daily life here in Southeast Asia.

It’s likely that there are many founders in the region who are in a similar position, given that we don’t really hear about them making moves in the South American country. However, Looi Qin En, partner at Saison Capital, points out that Brazil has lots to offer to Southeast Asian startups, especially those in the fintech sector.

Today we look at:

• What Southeast Asian fintech firms can take away from Brazil
• Indonesia’s bet on EV batteries pays off
• Other newsy highlights such as GXS Bank’s latest capital injection and Samsara Eco’s US$65 million series A+ round

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This is Braziiiiiil

Image credit: Timmy Loen

Just going off of demographics alone, Brazil and Indonesia are rather similar – both have a rapidly growing population, high mobile internet usage, and a strong fintech sector. With this in mind, could some of Brazil’s wins in the vertical be applied to Southeast Asia?

• 50-50: According to Looi, many of the Brazilian VCs that he spoke with have fintech firms making up 40% to 50% of their portfolios, similar to Southeast Asian investors. Many of these fintech startups are in need of credit, but getting capital is a “chicken and egg” situation.
• Same same but different: Brazilian startups also had a hard time raising funds due to the tough macroeconomic environment. In response, the country introduced a model called the FIDCs (Fundo de Investimento em Direitos Creditórios), which are standalone legal entities that allow companies to access capital markets and save on tax.
• The overseer: Strong regulators are a must in this situation to bring stakeholders together. Brazil has that, leading Looi to believe that Southeast Asian investors can consider Latin America as a target for diversifying their portfolios, starting with Brazil.

Read more: Brazil offers road map for SEA fintech to escape credit crunch

An electrifying payoff

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