Michael Sidgmore, Broadhaven Ventures: Investing in LatAm’s Fintech Ecosystem, Ep 95

Crossing Borders with Nathan Lustig

When Michael Sidgmore thinks about investing, he thinks about making the biggest impact possible in people’s lives. His passion for economic development and financial inclusion has led him to build a career as a fintech investor and entrepreneur focused on financial infrastructure, wealth management, and financial inclusion. Today, he is a Partner and cofounder of Broadhaven Ventures, a Silicon Valley based fintech venture capital firm that has invested in 5 startups in Latin America.

Broadhaven Ventures invests globally in early-stage fintech startups but largely focuses on Latin America and the US. The fund was built out of a market leading fintech investment bank called Broadhaven Capital Partners to start to invest directly into some of the best companies they were seeing on the investment banking side of the business.

In this episode, I sit down with Michael in Mexico City to talk about his background in soccer, then in tech banking, and how an NGO inspired him to kickstart his investing career. We discuss what led him to do venture capital in Latin America, and also cover some of the biggest trends in Latin American fintechs and how these compare to Asia and the US.

“It was fascinating to see a non profit be run like a business”

While Michael studied International Relations at the LSE, he worked at Room to Read, a non-profit that focuses on improving literacy and gender equality in education in the developing world. He was not only amazed at how they built economic development in different countries, but also by the business side of the organization.

Listen to this episode of Crossing Borders to learn more about how Michael realized he could build companies with positive financial return that could also create a huge social impact in people’s lives.

Thinking about Investing in a cash-based economy

Michael stresses the importance of spending time in an ecosystem in order to fully understand it. When he started investing in Latin America, he would come down once a quarter for meetings and immerse himself in the environment. There are a number of cultural differences in the way that people think about their financial lives in Latin America that need to be understood before investing, such as the heavy dependance on cash or the lack of trust in banks.

Learn more about the different ways in which people think about money in LatAm in this episode of Crossing Borders.

The Rise of the Stealth Fintechs

According to Michael, an interesting theme in LatAm and Asia is that non fintechs are becoming fintechs. Several high frequency usage models like Rappi, Grow, and Kovi are getting into financial services by releasing their own payments platforms like Rappipay or Grin wallet. Michael considers these new players will be a defining feature in LatAm’s future fintech ecosystem.

Listen to this episode to find out what are the current trends in LatAm’s fintech ecosystem.

Michael Sidgmore is passionate about combining business with social impact. Through his work at Broadhaven Ventures he is driving financial inclusion and economic development in Latin America and the US.

Show Notes:

• [1:04] - About Broadhaven Ventures
• [2:11] - From Middlebury to London
• [2:49] - Working on both sides of the table
• [4:25] - Lessons learned from the entrepreneur side
• [5:47] - Why is FinTech part of the investment thesis
• [7:30] - A subconscious interest in LatAm
• [10:08] - Biggest surprises that you ran into looking at the fintech ecosystem?
• [11:37] - Doing business in Brazil
• [14:16] - Comparing LatAm to Southeast Asia and the US
• [23:25] - What’s next for Michael and Broadhaven Ventures?
• [27:10] - Books, blogs, or podcasts Michael recommends
• [29:20] - Advice for founder’s in LatAm pitching a VC
• [34:20] - Advice for Michael’s younger self

Resources mentioned:

• Room to Read
• Mosaic
• iCapital
• Credijusto
• Kovi
• Grow
• Pipefy
• Psafe
• Gympass
• Nowports
• Hope in the Unseen - Ron Suskind
• Leaving Microsoft to Change the World - John Wood
• Betting it All - Michael S. Malone
• The Twenty Minute VC
• Y Combinator