Why we invested in Flink
I remember my feeling going out of ALLVP’s office on a Sunday morning, the 25th of October 2020.
I had just spent 2 hours over breakfast with Sergio and Ricardo, Flink’s co-founders. We spoke about their recent and explosive growth, about how they saw Flink going forward, and what were our commitments as investors at ALLVP. As the discussion went on, we were all fully aligned on what our partnership would mean. We ended breakfast with a handshake, and at that moment I knew we were going to be part of this fascinating story!
As a young investor, I had never seen an investment process going on like this before, neither had I worked so hard on a deal. In less than 10 days, we’d spent hours with Sergio, Ricardo, called experts, and built our 80 pages investment case. And here we are.
A few months after starting to work with their team, we are more than excited to announce our investment in Flink’s Series A alongside Accel Partners. Launched in mid-2017 as a challenger bank, Flink has positioned itself as the indisputable leader in access to fractional-shares investing in Mexico. The company aims to democratize investment access in Latin America with its now core product launched in summer 2020, a zero-commission trading application for retail investors.
Here are the main reasons why we partnered with Flink, and why we’re convinced they will make a true impact in Mexico and across Latin America.
Flink is now bigger than the entire retail market in Mexico and is growing rapidly.
Traditionally, buying and selling stocks for a retail investor has been expensive, outsourced, and/or inaccessible in Mexico. Only 300,000 investors were active ending 2019 according to the CNBV, representing less than 1% of the population having an investment account. And yet, Sergio, Ricardo, and their amazing team acquired one million (!!) new users on their brokerage product in less than 8 months after lunch. Most were first-time investors. By offering a product that wasn’t accessible before, Flink suddenly became one of the fastest-growing fintech startups in Mexico and even reached the #1 position in the Mexican Google Play store in January 2021.
We believe Flink is different from players in more established markets because of the maturity of its customer base: Flink is creating a market.
Robinhood’s success story, as well as its peers around the world, has been well documented and is well-known in the fintech industry. It would be easy to put Flink in the same category. However, we believe that challenges and opportunities they face tend to be different than for players in the US for example, where 32% of the population already has an investment account. As we mentioned, this proportion used to range below 1% in Mexico, and most people had never invested before. With Flink, they were suddenly able to invest in the stock market starting from 30MXN! We believe this approach is going to be transformational for personal finance management across LatAm, and create a whole new market.
Flink is in the business of making sophisticated tools and value creation opportunities available to a market that has never had access to these offerings until now. It is a huge opportunity that also comes with a lot of responsibility to do it right.
By transforming the way people invest and by creating a new market, Flink truly has the potential to reshuffle the cards of financial inclusion in LatAm. This comes with considerable responsibilities, like educating their customers, allowing them to navigate the markets, and giving some guidance when the market dynamics could put its Flinkers at risk. We were proud to witness Flink’s reaction to GameStop’s recent volatility, and the markets’ as a whole a few days ago.
We believe our market opportunity with Flink extends beyond Mexico to other emerging markets like Chile and Colombia.
The preconditions are now in place for us to offer this quality of service across all markets. Smartphone penetration has been growing at a huge pace in the past decade, reaching 90%+ in LatAm. There are now financial services platforms to tie into, and the market has been seeking savings and investment solutions. Every day, Flink is receiving demands from customers from places like Chile, Colombia, and Central America, and intends to seize the opportunity and the challenges that will come along with it.
This Tuesday, we got together (virtually) with Flink’s team to celebrate them reaching 1M users. As Sergio, Ricardo, Pamela, Jesica, Jimena, Pete, Sofia, and Gustavo were raising toasts, remembering Flink’s first moments and many challenges, I realized that while ALLVP seeks the right opportunities, the right market, at the right time, in the end, it’s all about the humans behind the product. And rest assured that Flink’s team is a unique group of humans indeed.