PRNewswire
Sao Paulo [Brazil]/Singapore, April 28: Latin America and Southeast Asia, home to over one billion people, are emerging as global economic powerhouses -- driven by investments in infrastructure, middle-class expansion, and digital transformation. This is according to a report by Valor Capital Group and Credit Saison, which highlights that despite their readiness for growth, both regions continue to face financial inefficiencies and regulatory barriers. Developed by Valor Capital and Credit Saison, study points to a massive $1.67 trillion financing gap for SMEs and MSMEs in both regions, which can be unlocked by digital finance, cross-border collaboration and blockchain.
The first-of-its-kind comparative study calls for increased investments in digital finance, cross-border collaboration, and blockchain to unlock their full potential, emphasizing how these regions are reshaping global trade and finance. While economic expansion is evident, countries in LATAM and SEA remain financially fragmented -- limiting access to credit and hindering commercial integration.
"Latin America and Southeast Asia are no longer just emerging markets; they are defining the future of digital finance, trade, and economic collaboration," says Bruno Batavia, Director of Emerging Tech at Valor Capital. According to him, unlocking their full potential will require regulatory modernization, regional partnerships, and financial innovation to be central to the agenda. "The next decade will be crucial in determining whether these regions can overcome their historical financial limitations and emerge as fully integrated players in the global economy."
Small and medium-sized enterprises (SMEs) are the backbone of these economies, but 87% of their financing needs in Latin America remain unmet, resulting in a $1.4 trillion financing gap. In Southeast Asia, 51% of micro, small, and medium enterprises (MSMEs) face difficulties accessing financial services, creating a $272 billion deficit. Traditional banking systems, still reliant on outdated credit assessment models and manual processes, are unable to keep up with growing demand, stifling the growth of millions of businesses.
"This report serves as a critical blueprint for stakeholders seeking to harness the immense potential these regions offer. Credit Saison has been in Brazil since 2023, and has been present in Southeast Asia for over ten years, with the unique ability to deploy investments via private credit and venture capital to support the growth of fintechs and founders in both debt and equity. Through our experiences as an operator in global markets with steep Japanese heritage, partnerships and knowledge exchange are critical to navigating and adapting to local nuances and forming successful strategies in the market. For Credit Saison, it's always about winning together with our partners. We look forward to deepening our engagement in both regions to collaboratively unlock pathways to sustainable growth," said Qin En Looi, Partner at Saison Capital, the corporate venture capital arm of Credit Saison.
Cross-border payments represent another significant challenge. Remittance fees in both regions average 6.1% -- more than double the United Nations' Sustainable Development Goal (SDG) target of 3%. This translates to an annual cost of $7 billion for consumers, reducing disposable income and limiting financial mobility. Additionally, international payments can take up to five business days to settle, undermining the efficiency of global trade networks.
Venture Capital and Fintechs Driving Change
In response to these challenges, innovation in the fintech sector and the rise of venture capital investments are transforming the financial landscape. Southeast Asia created 151 new venture capital funds in 2021, while Latin America peaked at 69 funds in 2019, indicating strong investor confidence. The total number of funding rounds nearly doubled in Southeast Asia, while in Latin America, the total volume of investments grew 8.7 times, underscoring the rapid evolution of the financial ecosystem.
This influx of capital has led to significant acquisitions in the fintech sector, expanding the region's appeal to global investors. Notable examples include Visa's $1 billion acquisition of Brazilian fintech Pismo, TikTok's $1.5 billion investment in Indonesia's Tokopedia, and PropertyGuru's $1.1 billion acquisition in Southeast Asia. These transactions highlight the increasing volume of investments in financial infrastructure.
"In Brazil, although we lead in fintech innovation, we have one of the world's most complex currency exchange systems, requiring over 100 transaction codes for financial operations, which creates operational inefficiencies. In Mexico, the lack of local debt funds forces fintech startups to rely on equity financing, which hinders their scalability," explains Bruno Batavia, Director of Emerging Tech at Valor Capital.
About Valor Capital Group
Founded in 2011 and with a presence in New York, Silicon Valley, Rio de Janeiro, Sao Paulo, and Mexico City, Valor Capital is a pioneering Venture Capital and Growth Equity fund manager with a "cross-border" strategy, aiming to act as a bridge between the technology markets of the United States and Latin America. Its funds invest in transformative businesses, from early-stage startups to expansion-stage companies. Valor is committed to the success of its portfolio companies, offering capital, operational support, and global connections. Learn more at valorcapitalgroup.com.
About Credit Saison Brazil
Established in 2023, Credit Saison Brazil (CSBR) is a financial company with a mission to bring people, partners and technology together, creating resilient and innovative financial solutions for positive impact.
CSBR provides a comprehensive offering of both credit and equity investment opportunities to support the innovators and builders of Brazil, and is committed to being a transformative partner in creating opportunities and enabling dreams.
The company is part of Credit Saison Co. Ltd. from Japan, and Saison International as its international headquarters in Singapore with core businesses in lending and corporate venture capital. Founded in 1951, Credit Saison Co. Ltd is one of Japan's largest non-bank financial companies with over 70 years of history and listed on the Tokyo Stock Exchange. The Company has evolved from a credit-card issuer to a diversified financial services provider across payments, leasing, finance, real estate and entertainment.
Over 1,500 employees work across the company's markets (ex-Japan) of Brazil, Mexico, India, Indonesia, Vietnam, Thailand and Singapore.
About Saison Capital
Saison Capital (saisoncapital.com) is an early-stage venture capital fund (pre-seed to Series B) with a focus on emerging markets. The firm backs ambitious founders at the pre-seed or seed stage and focuses on web3, fintech and commerce.
Operating from the Asia Pacific region but deploying capital on a global scale, Saison Capital harnesses Credit Saison's extensive financial services operating background and resources across key markets, including Singapore, Indonesia, India, Vietnam, Thailand, Philippines, Cambodia, Japan, Brazil and Mexico. Saison Capital is a wholly-owned subsidiary of Credit Saison.
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