As we figure out if any of this has damaged trust in the industry and funding for startups, adoption of crypto in Latin America continues to grow — Chainalysis puts the adoption growth number at 40%. In addition, the region represents “a 9.1% share of the global crypto value received in 2022 with remittances and high inflation the highest drivers of adoption.”
Even venture capitalists believe Latin America’s thirst for crypto. For example, former Binance executives created a fund earlier this year to pump $100 million into this region and others. VCs even believe this might be one of the regions that could stay red hot despite a crypto winter.
That’s a good indication as to why we continue to see investment going into Latin America-focused startups offering a crypto feature.
Today, Colombia-based Zulu, a digital wallet for Latin America consumers, is the latest company to bring in new funding. The $5 million seed round was led by Cadenza Ventures, which was joined by Nexo Ventures, Simplex, CMT Digital, Gaingels, and a group of startup founders, including Caterine Castillo of Neivor; Jose Jair Bonilla, Carolina García and Oscar Sarria of Chiper; Andrew Chang, former COO and Advisor of Paxos; and Man Hei Lou of Treinta.
Here’s how it works: Its platform enables Android and iOS users to save in secure digital dollars and send cross-border payments at no cost. In addition, it protects users from the currency devaluations that often occur in countries like Colombia, Venezuela and Peru, the company said.
“Zulu is a decentralized wallet where each user holds their own keys and personally custodies their assets within a great user experience and with tools that are typically provided by centralized exchanges,” Esteban Villegas, co-founder and CEO told TechCrunch via email. “Blockchain technology needs to be easier for the individual user to navigate and can help leapfrog Latin America to being one of the most financially democratized regions in the world.”
Villegas and co-founders Jaime Varela and Julian Delgado started the company in March 2022 after meeting while students at Universidad de Los Andes. Their goal was to bring web3 services to the population of Latin Americans who are traditionally overlooked by banks.
The company said it has approximately 500,000 users across Colombia, Venezuela, Peru and Mexico and has plans to expand into other LatAm countries and the U.S. in 2023.
Speaking to the ongoing challenges in the cryptocurrency world today and what it might mean for companies in Latin America trying to get funding, Villegas remains optimistic that funding will continue to flow into these kinds of companies that have demonstrated a clear path to success.
"Fundraising will be harder within our industry, but this is net-positive,” he added. “Companies and projects that had no clear roadmap or product-market fit will be removed from the scene, and companies with clear use cases and real impact will be moved to the front of the stage."
Zulu joins companies that have also taken in funding recently, including Ping’s $15 million seed round, a fairly large raise in the current VC environment, to continue developing a digital payment tool that facilitates international payments for remote workers, contractors and freelancers in both their local currency and in fiat and cryptocurrency.
In September, DolarApp announced $5 million in seed funding for its platform for users to open a bank account and move from pesos to dollar dominated stablecoin USD Coin (USDc) and back in seconds.
As to whether this could affect crypto regulation in Latin American countries, Villegas said consumers do need to be protected from fraud, but any regulations shouldn’t ultimately “stifle the type of innovation that will eventually level a playing field into the region.”
“Crypto regulation is necessary in Latin America to remove bad players, but it should be flexible enough to allow for new players who are working to create a positive impact but are not heavily financed, to thrive,” he added.