Nubank raises Buffett megabucks

The digital bank from Brazil gets Berkshire Hathaway backing

💰The big deal

Brazilian digital banking startup Nubank announced on Tuesday that it raised $750 million in new financing, increasing the company’s valuation to $30 billion. What’s most interesting is not necessarily the amount raised but who invested, as Warren Buffett’s Berkshire Hathaway agreed to buy $500 million of the startup’s shares.

The new money was an extension to a round of funding that the startup announced in January. With the additional funds, Nubank will look to accelerate growth and launch new services in the three Latin American markets that it already operates in—Brazil, Colombia, and Mexico—while possibly expanding to other countries in the region.

Nubank was founded in 2013 and launched its first product—a no-fee credit card managed via mobile app—the following year. Since then, the company has aggressively expanded its product offerings to include a digital bank account, debit cards, peer-to-peer transactions, and even personal loans, life insurance, and small business banking services to customers in its home market of Brazil.

According to a report in TechCrunch, the company still only offers credit card offerings in Mexico and Colombia, but you can probably expect that to change with the new funding.

The investment by Berkshire Hathaway is notable, as Warren Buffett’s company has historically been averse to investing in fast-growing, loss-making tech startups. Instead, Buffett and his partner Charlie Munger typically prefer to put their money into slow-growth businesses with predictable revenue streams.

That said, Buffett isn’t completely allergic to betting on tech—after all, Apple stock makes up about 40 percent of Berkshire Hathaway’s current portfolio. And his company made an investment in cloud data company Snowflake at the time of its IPO.

Berkshire Hathaway’s interest in Nubank could stem from the digital bank’s moat1, particularly in Latin America. Nubank is already the largest neobank in the world by number of customers, with 40 million across the three countries it operates in.

Nubank founder and CEO David Velez also noted in an interview with the Wall Street Journal that there are 60 million people in Brazil and 250 million in all of Latin America without access to financial services. So the opportunity is huge, and it doesn’t seem like anyone is even close to catching up in the LatAm market.

It could also be that Buffett and Berkshire Hathaway view Nubank less as a “tech company” and more as a “financial services company.” Next to Apple, the next two public holdings in the Berkshire Hathaway portfolio are Bank of America and American Express, so it’s not like he’s a stranger to investing in the sector.

Or maybe Buffett just inherently understands that in the future, every bank will be a neobank and this is his way of getting into the market early. We’ll see.


💸 Money moves

Relativity has a bold plan to take on SpaceX, and investors are buying it [Ars Technica]
Relativity has raised $650 million in funding to fuel its ambitious agenda of 3D printing large, reusable rockets. The round was led by Fidelity Management with participation from BlackRock, Centricus, Coatue, Soroban Capital, Baillie Gifford, K5 Global, Tiger Global, Tribe Capital, XN, Brad Buss, Mark Cuban, Jared Leto, and Spencer Rascoff.

AI-powered transcription startup Verbit raises $157M [VentureBeat]
Sapphire Ventures led Verbit’s Series C round, with participation from Third Point, More Capital, Lion Investment Partners, and ICON fund, as well as existing investors such as Stripes, Vertex Ventures, HV Capital, Oryzn Capital, and CalTech.

Whatfix nabs $90M to help workers onboard and get the most out of their IT stacks [TechCrunch]
SoftBank’s Vision Fund 2 is leading the round, with Eight Roads Ventures, Sequoia Capital India, Dragoneer Investment Group, F-Prime Capital and Cisco Investments also investing.

Uber veteran Raquel Urtasan launches self-driving startup Waabi with $83.5 million round [Forbes]
The Series A round is led by Khosla Ventures and includes investment from Uber, Radical Ventures, 8VC, OMERS Ventures, BDC Capital, Aurora Innovation, and AI experts Fei-Fei Li, Geoffrey Hinton, Sanja Fidler, and Pieter Abbeel.

Airbase raises $60M as the corporate spend market segments, matures [TechCrunch]
The Series B round was led by Menlo Ventures and values the company at $600 million.

Faux-chicken maker Simulate valued at more than $250 million in new funding [Bloomberg]
The round was led by Reddit co-founder Alexis Ohanian’s venture firm Seven Seven Six, and included investors Chris Sacca and Crystal Sacca, Nomo Ventures, McCain Foods, Imaginary Ventures, and Day One Ventures.

Blockdaemon raises $28M to scale up enterprise blockchain infrastructure [SiliconAngle]
The Series A round was led by Greenspring Associates and joined by cryptocurrency lender BlockFi Lending, Goldman Sachs, Warburg Serres, Uphold, Voyager Digital, Illuminate Financial, and Hard Yaka.


🧘‍♂️Your moment of zen

1

Buffett loves a good moat.