Key Takeaways:
- Mexican fintech Kapital has attained a $1.3 billion valuation, thus creating the first LATAM AI unicorn.
- The $100 million Series C round was led by Tribe Capital and Pelion Ventures.
- Kapital uses AI to transform small business lending across Mexico, Colombia, and the U.S.
Table of Contents
The Worldwide AI Race
Mexico’s Kapital has shattered records by becoming the first LATAM AI unicorn following a successful $100 million Series C funding round that subsequently valued the company at $1.3 billion (prior AI unicorns in LATAM raised funds just before the hype of artificial intelligence rose to its peak). Investors took notice of this new development, further accelerating valuations significantly.
Fintech companies in LATAM usually get less in secondary funding rounds compared to in prior rounds, but Kapital is different; a third round of capital, $100 million from Tribe Capital (as lead) and Pelion Ventures (as co-lead) but also financed by Y Combinator and others, valued Kapital at $1.3 billion, and made it a record in AI unicorns.
Closing Real Gaps
Kapital’s position as the first LATAM AI unicorn emerged from recognizing, and subsequently solving, a key regional issue: the extreme funding gap of small and medium-sized businesses (SMBs). Since traditional banks in Latin America historically haven’t been willing to serve SMBs due to excessive risk absorption and high transaction costs, Kapital utilized AI in new ways with the intention of mitigating certain risks taken by traditional banks while taking advantage of the wealth of alternative data available to us (such as tax information, electronic invoices and real-time payment flows) to determine creditworthiness faster while increasing accuracy when compared to traditional lenders.
Kapital’s First LATAM AI Unicorn Journey
The growth of the company has been extraordinary. Kapital has gone from little to a $3 billion balance sheet and served over 300,000 customers spanning Mexico, Colombia, and the U.S. The fintech was also profitable in under two years, which is uncommon for fintechs, particularly growth-focused companies. Perhaps most importantly, after its recent acquisition of Intercam’s banking operation, Kapital will be able to move from being a lending company to a complete financial group.
The Bottom Line
This achievement, as the first LATAM AI unicorn, represents a new chapter of technology investment in the region. It shows that Latin American startups not only have the capability to build world-class AI tech, but also to deploy it and scale it to solve real problems in the economy.
Funding will help accelerate Kapital’s expansion of its unified financial ecosystem and may open doors for AI to impact financial inclusion in emerging markets.
Final Thought: To this point, Kapital’s status as the first LATAM AI unicorn confirms that the most valuable applications of AI are not always the most sexy or glamorous, but they are, sometimes, those that help small businesses access capital they would not otherwise have access to.
FAQs
What is an AI unicorn?
A company valued at over $1 billion, with the majority of its value ascribed to proprietary artificial intelligence technology.
How does Kapital utilize AI?
By analyzing alternative data (such as tax records, invoices, payment flows) so it can make faster and more accurate lending decisions for small businesses.
Why does this matter for LATAM?
It reinforces the notion that the region can produce world-class tech companies that solve problems in our own backyard, bringing investment to the region and driving financial innovation.
For more AI-related investments, read: Microsoft & Meta’s AI Investments: How $648 Billion in Market Gains Redefine Tech’s Future
