UPDATE 1-Nubank, Sequoia partner to invest in Latam startups -sources

(Adds reason for partnership, sectors they plan to invest)

SAO PAULO, Nov 1 (Reuters) - Brazilian fintech Nubank and venture capital firm Sequoia Capital are teaming up for future investments in Latin American startups, two sources familiar with the matter said on Monday.

Best known for its purple no-fee credit cards, Nubank, which has been backed by Sequoia since 2013, has decided to invest alongside it in startups in sectors that may go beyond financial services, such as consumer internet and corporate software, both sources added.

In its initial public offering prospectus released on Monday, Nubank said it is eyeing investments in sectors such as healthcare, e-commerce and telecomunications, but did not disclose its partnership with Sequoia.

Nubank, which revealed it is targeting a valuation of over $50 billion, also said in the document it intends to challenge existing business models in those sectors.

The move by the two firms comes amid a boom in venture capital dealmaking in the region, as Latin America has minted a dozen high-return startups. Funding rounds skyrocketed to $14.8 billion in the first nine months of this year, almost tripling from all of 2020, according to CB Insights.

Sequoia has made only a half dozen investments in Latin America, including Nubank and delivery app Rappi, but it plans to ramp up money poured into the region, Sonya Huang, a partner at the venture capital firm, said in a recent interview with Reuters.

For the venture capital firm, the agreement adds a partner with a presence in four countries in the region - Brazil, Mexico, Argentina and Colombia - and with experience in scaling up businesses, the sources said. For Nubank it adds a partner with global experience in investing in startups.

Paulo Barbosa, a former vice president at Singapore’s GIC, will lead Nubank’s inroads into venture capital, and Sequoia partners Huang and Stephanie Zhan will be responsible for its efforts in the region, according to the sources.

The sources did not disclose the amount they plan to invest in the region or how they will split funding rounds. Under the terms of the agreement, both companies may also invest in startups separately.

In August, Nubank and Sequoia partnered in a $44 million funding round for Indian digital bank Jupiter, along with Matrix Partners.

One of the sources said Sequoia and Nubank have also looked at a number of digital bank investment opportunities in other emerging markets to invest jointly.

Sequoia and Nubank declined to comment on the matter. (Reporting by Carolina Mandl; Editing by Jan Harvey and Steve Orlofsky)