The J Curve with Lucas Vargas, CEO at Nomad : Five Big Ideas

My guest this week is Lucas Vargas, CEO at Brazilian fintech Nomad, that has recently raised $61m in an investment round led by Tiger Global with participation from prior investors including Monashees, Stripes and Globo Ventures. Prior to joining Nomad, Lucas was CEO at Viva Real which he led through the merger with Grupo ZAP and acquisition by OLX, the leading marketplace group in Brazil.

If you wonder how big financial services industry in Brazil and Latin America is, it’s MASSIVE and the opportunity for further growth is HUGE:

✅ The leading countries in Latin America by total number of fintech startups are Brazil, Mexico, and Argentina

 ✅ Brazil and Mexico concentrate most of the investments targeting fintechs, with over $2.3b gathered in 2022

✅ Brazil is a leading country in the region in terms of online and mobile banking, with digital banking penetration over 77% as of 2022

Here are the FIVE big ideas from our conversation with Lucas 🧐💡👇🏻:

1️⃣ Raising Series B+ in Latin America is never easy but during a downturn growth startups become subject to extended evaluation timelines, lower valuations and additional data scrutiny 

Pre-existing relationships with investors, pro-active cost reduction, and laser focus on delivering near-term results can increase chances of fund raise

2️⃣ Startup expansion always comes with inefficiencies. Founders should think twice before scaling the team

If CEO has to do layoffs, better do them sooner than later and during the process prioritize those employees that stay and think what would make them happy and committed to the firm

3️⃣ Contrary to common wisdom, a market downturn is THE time to pursue big, bold yet calculated risks
During adversity, it’s common for founders to prioritize cost-saving measures which may lead to stunting growth and even startup downfall. Always try to strike a balance between cost-saving measures and investing in the areas that are critical for long-term success and growth of the startup

4️⃣ The #1 competitive moat for Nomad and startups operating in ‘the red ocean’ is execution excellence

Visionary, pro-active approach to product launch, commitment to delivery of consistently high-quality service, deep knowledge of the market and regulations are mission critical

5️⃣ Financial infrastructure and government regulations are the two main pillars that will transform the whole financial services industry in Brazil 🇧🇷

PIX adoption has already created multiple changes both in terms of access to credit and enablement of other products and services

Lucas’s book recommendation is The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz

You can watch the interview on YouTube here

Listen to the episode on Spotify and Apple Podcasts

Thanks for reading,

Olga