Airlines, Fintech Funding, and Bolivia's Lithium

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As travel returns worldwide, we were curious to learn about the Air Transportation industry in Latin America and wondered who are its most prominent players. The region’s airline market is one of the fastest-growing in terms of passenger traffic. Before the pandemic, estimations said that the area would double its aircraft fleet by 2040.

With subsidiaries in Brazil, Colombia, Ecuador, Paraguay, and Peru, LATAM Airlines is Latin America’s biggest airline group. The airline was created through a merger between Chile’s LAN and Brazil’s TAM in 2012. LATAM Airlines has the most extensive network in the region, flying to over 140 destinations in 25 countries with a fleet of over 300 aircraft, offering more than 1,200 daily flights. In 2020, Delta acquired a 20% stake in the company; Qatar Airways also owns a 10% stake.

Brazil’s GOL and Azul Airlines started operations in 2000 and 2008. Even though they are competitors, both airlines have seen their passenger traffic quickly increase. They’ve become the largest domestic and among the top 3 most significant airlines in Latin America.

A similar competition is playing out between VivaAerobus and Volaris. Through ingenious marketing tactics — for example, VivaAerobus launched the “Spurs Force One” aircraft in a partnership with the San Antonio Spurs — both companies have grown in Mexico’s market since they launched in 2006 and joined LatAm’s top 10. On the other hand, Colombia’s Avianca, founded in 1919, is the oldest airline in the subcontinent to stay relevant after a century.

It’s an exciting time to start a fintech startup in LatAm, with 39% of the VC funding dedicated to that sector. The vast pour of capital minted six new fintech unicorns in 2021. The disruption potential is very appealing to investors, who recognize the old banks and institutions with poor customer service and antiquated technology as fintech companies’ target.

We can confirm the disruption from our own experience in Mexico: Last year, it took us 5 minutes to open a bank account with albo and a credit card with Nubank; but with BBVA, the country’s biggest bank, we were instructed to visit our local branch and wait in line to open a new account, which often takes an hour or more.

On Monday, Chilean Xepelin broke a record by receiving the largest Series B funding round by a Spanish-speaking startup in LatAm ($111M). Most of the big players have been coming from Brazil. Argentinian Ualá is the other exception, having received more funding than any current startup (Nubank isn’t counted since it’s now publicly traded).

The big three from Brazil are Neon, EBANX, and C6 Bank. Neon has had its last two rounds worth a whopping $300M each, both led by BBVA. EBANX is a digital payments solution that operates in most Latin American countries. C6 Bank has the highest seed round on the list with $96M that came from “undisclosed investors,” according to CB Insights.

There’s a gigantic lithium storm brewing in South America.

Electric vehicles (EVs) are at the center of an up-and-coming lithium boom. EVs use lithium-ion batteries, and EV sales have grown more than 2x in the last year. It’s projected that 90% of lithium demand will come from EVs by 2030. At the same time, the much-needed lithium is hard to come by, with only a few countries having reserves and even less mining and commercializing it. There’s an over-dependence on China’s mineral production for EV batteries — 80% of the raw materials needed to make batteries come from China.

Enter Latin America: About 2/3 of all lithium resources are concentrated in Bolivia, Chile, Argentina, Peru, and Mexico. The US, the world’s leading EV manufacturer, would much rather trade with its neighbors in Latin America than with China. These countries stand to win big from what is being called “white gold” mining. Prices have gone up from $10/kg of lithium in 2021 to over $50/kg, and they’re expected to continue rising.

Bolivia stands out as the country with the largest, recently discovered lithium potential. In 2019, the USGS found an additional 12M tons of lithium resources in the country, making it the largest in the world. However, Bolivia’s current lithium mining capacity is very limited, and it has more than a few hurdles to jump before companies can fully take on this opportunity:

At Latinometrics, we like to “visualize Latin America’s potential,” and we believe in Bolivia’s ability to become the lithium-producing capital of the world while creating prosperity for its citizens. Big and small companies like EnergyX are currently attempting to get past the hurdles and import the precious mineral.

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