In the Flow 12/16/2023

At Zenda, we focus on investing in entrepreneurs creating essential software that transforms how money, goods, and data are exchanged, particularly in the Americas. As experienced founders and operators, we deeply understand the challenges and opportunities in key yet often overlooked industries, and we prioritize understanding the real needs of end customers in our investment decisions.

We've expressed interest in areas like combating fraud and inefficiencies across sectors. We're expanding our research and will share our insights through this newsletter, experimenting with new formats. Your feedback and suggestions are always welcome!

What We’re Following

Hecho en Mexico / Made in Mexico by Matt Silver

• Fleeting thought: Matt’s analysis on Mexico’s record-breaking agricultural exports and the growing industrial footprint aligns with our optimistic outlook on nearshoring. In the dynamic cross-border landscape observed in Laredo, which accounts for 40% of all freight from Mexico to the US, manufacturers are increasingly channeling investments into the region to mitigate risks of disruption, diversify their supplier base, and embrace the advantages of localizing supply chain operations. Concurrently, we will see more transportation and logistics companies proactively investing into the connectivity infrastructure, like establishing new warehouse facilities and providing intermodal services at the border, to enhance the seamless flow of goods and better serve their customers. At Zenda, we continue to double down ourselves and invest behind entrepreneurs who are building out this infrastructure for the cross-border supply chain network.

What lies ahead for bank and fintech partnerships?

• Our quick 2¢: Traditional banks have long grappled with innovation barriers like legacy tech, bureaucracy and adherence to compliance, while agile fintechs prioritize user-centric innovation, unbundling a huge portion of its predecessor’s services. While the latter have attempted to (and some successfully) chip away market share from its incumbents like Nubank in Brazil, complexity arises as you get to scale. As AI and ML technologies take center stage in organizational strategies in the next few years, we advocate for synergies that harmonize the strengths of both worlds, particularly around compliance-focused fintechs who are enabling banks to better detect fraud. 

Fintech Lending 3.0 by Basile Senesi

• Our quick 2¢: The whiplash experienced in the fintech world has been real in the last year or so, so it’s interesting to hear a refreshing take on fintech lending going into 2024. From the early attempts at invoice financing to the peak of embedded lending in 2021, the sector growth was unprecedented. As we all know and felt, 2022 was a rough year as rising interest rates = increased defaults. Despite this, we believe this pending reset, in parallel with better tech, advancements in AI, innovative credit products and stable macroeconomics conditions, will set the foundation for the next generation of fintech companies, especially in the lending space.

In the past, we shared glimpses and did write-ups on areas we’re covering. Here are some of the reports we’ve done in the past focused on certain pockets of healthcare. If you’re interested in accessing, please reach out to jeff@zenda.vc or er@zenda.vc.

Shifting gears, we’ve been spending a lot of time in our research process assessing problem areas within the supply chain & logistics space. 

There has been a bunch of commentary and articles written since Convoy’s implosion and the state of the freight market, and we find ourselves knee-deep in what promises to be a protracted winter, as the rate market continues to correct and exert margin pressure on both brokers and carriers.

That being said, crises often bring opportunity, and we believe in the fundamental macroeconomic shifts that will drive the industry into a more tech-forward era. We’ve been exploring several themes across supply chain operations, some of which include building better verify-then-trust methods or leveraging AI to convert unstructured data into insights. If you know of any freight broker, shipper, or carrier who would be open to engaging with our work, please don’t hesitate to reach out.

We’ll continue to share our findings recurrently here, so stay tuned.

• We want to give a quick shoutout to our portfolio founders Jaime, Pedro and Guillermo at Solvento for securing new equity funding and a $50M debt facility from Lendable and introducing their AI-powered auditing and invoicing software, Solvento Audita, to market!

• Our Founder and General Partner Esteban was recently featured in the latest episode of Levantando Podcast, hosted by Francisco García Osuna from Bridge Latam. The conversation covers key topics such as investing in emerging managers, drawing insights from other funds, and an in-depth discussion on the current state of venture in the Americas. You can check out the interview here!