Warren Buffett puts US$500m into Nubank, pushing valuation to $30b

This article was originally published in Chinese on Momentum Works’s WeChat platform. Translated into English by Joyce. 

Nubank, Brazil’s challenger bank and Latin America’s largest unicorn, has just raised another US$750 million as an extension to its Series G in January this year. Its valuation has reached US$30 billion. 

Adding that to the US$400 million announcement earlier, Nubank’s total funding raised in 2021 reached US$1.15 billion. This is a record for Latin America.  

In 2020, a total of US$11.1 billion venture capital was invested in Latin America. What we find interesting is that while the deal number dropped by 17%, the total amount grew by 15%. This is a clear indication of the concentration of investments into some larger companies:

New Investors

1. Berkshire Hathaway Corporation

In this round, Warren Buffett’s Berkshire Hathaway invested US$500 million. Although he rarely pays attention to non-public companies in Latin America, Buffett did invest in StoneCo, a Brazilian digital payment company which subsequently went for IPO on the Nasdaq in 2018.

In fact, StoneCo and Nubank are highly similar in one aspect: after a highly oligopolistic market opened up, they quickly seized the opportunity and grew rapidly.

Berkshire Hathaway started talking with Nubank in March and a trigger of the deal was the rapid growth of Nubank Vida, a high growth insurance product.

2. Sands Capital

A US venture capital fund focusing on information technology, healthcare, financial services and other fields worldwide. This is also Sands Capital’s first investment in Nubank. Overview of Sands Capital’s investment portfolio:

New Blood in the Team

In addition to new investors, Nubank has also recently expanded its leadership with new members.

Matt Swann became Nubank’s CTO. He was previously CTO of Booking.com and StubHub, and as the Chief Information Officer (CIO) of Citibank, responsible for the growth of the global market. This probably fits Nubank’s new agenda of regional expansion.

Arturo Nunez, who once served as the Marketing Director of Apple (Latin America) , became CMO of Nubank.

As we mentioned in a recent article,  Nubank prioritised customer experience over any type of marketing. Word-of-mouth marketing is achieved by investing in technology, data and customer service and understanding customer needs accurately.

Now, according to Nubank, its users have grown from 34 million in January to 40 million.

Nubank, which started as a credit card issuer, has become a full-service bank. Although the market capitalisation of Itau, Brazil’s largest private bank, is double the valuation of Nubank, it is difficult for them to compete effectively with Nubank due to its shareholder structure and historical issues.

Facing the vast market in Latin America, Nubank actually has pretty good prospects.