LatAm Tech Weekly
#159 - Powered by Nasdaq: Q3 Venture Figures, Is the Startup Friendly Environment back?, Deals of the week... and much more!
Happy Sunday!
Just yesterday, I turned 35! It’s official—now I’m counting my age backwards. :)
I wanted to give a big thank you to everyone who remembered and sent me a message. It really means a lot!
And just like that, Q3 is in the books, and we’re heading into the final stretch of the year. Even though the quarter ended on a high note with the Fed's interest rate cut, venture numbers still lagged behind. But Q4 is expected to pick up, with a more stable macro environment likely to boost public markets, spur IPOs, and deliver that much-anticipated liquidity to investors. Fingers crossed for a strong finish to the year!
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Opinions expressed here are solely my own and does not represent those of people, institutions, organizations that I may or may not be associated with in any capacity, unless explicitly stated.
Moving on to the data, Pitchbook, Carta and Sling Hub provided good reads this week. Venture exit activity is still finding its footing. Despite some lingering uncertainties in global markets, VC-backed IPOs and M&A managed to generate nearly $40 billion in exit value in Q3. While the market remains slow, LPs are approaching new commitments thoughtfully, waiting for the right moment to re-engage.
Global VC deal activity has experienced a slight cooling for the third consecutive quarter as well. In Q3, 7,227 VC deals closed, marking a 26% decrease from the same period last year. In terms of volume, $70.1 billion was invested worldwide—a 23% drop YoY, but there are still plenty of promising deals emerging in key markets.
Focusing on Latin America, the activity also took a bit of a breather. The region recorded $680M in equity investments for the quarter—the second lowest figure since Q1 2023. Seed-stage rounds were the most impacted, with just 38 deals, marking the lowest point in the past 22 quarters. Looking at the year so far, we’ve raised $3B compared to $3.7B by this time last year. Here’s to hoping for a strong finish in Q4 to bring us closer to last year’s totals!
Despite the modest numbers, VC dealmaking is gradually swinging back in favor of startups after leaning heavily towards investors in 2022. PitchBook’s VC Dealmaking Indicator uses detailed deal-level data to gauge how startup-friendly the fundraising landscape is, factoring in deal terms, attributes, fundraising, and deal flow. This indicator provides insights into the dynamics of early-stage, late-stage, and venture growth stage deals. A higher value signals a more investor-friendly environment, so the current shift is a promising sign for founders seeking capital, since we are seeing a downward trend.
For several years, startups held the upper hand in the market. From 2010 to 2015, late-stage deals were notably more investor-friendly compared to early-stage ones. However, by 2015, deal terms and characteristics began to converge, leading to a race towards startup-friendly terms across all stages, which accelerated post-mid-2020. But in 2022, this trend reversed sharply as many startups, having raised significant rounds in the previous two years, returned to the market seeking additional funding. Now, the tides are shifting again.
Looking at the demand vs. supply of capital dynamics, the demand for capital has significantly outpaced supply recently. Later-stage deals are seeing the highest ratio of capital demand to supply (2.2x), while early-stage deals are a bit more balanced at 0.9x.
Finally, looking at Carta, startup valuations are trending downwards as the time between funding rounds increases. The median Series A valuation in Q2 2024 was 2.8x higher than their seed valuation—down from 4.9x in 2022. For Series C, valuations showed a 1.6x increase compared to 2.5x two years ago. The gap between rounds is widening too: Series C rounds now take a median of 822 days to close, compared to 522 days in 2022.
On another note, the folks at WebSummit released the fifth edition of their women in tech report. It’s crucial to highlight this data so we can collectively drive change and create a more inclusive environment.
Key Findings:
Sexism in the Workplace: A significant 50.8% of women reported experiencing sexism at work—a number that has remained relatively unchanged in recent years.
Family vs. Career Pressure: Nearly half (49.1%) of women in tech feel pressured to choose between family and career, reflecting a 7% increase compared to last year.
Perceived Need to Work Harder: Over 75% of women feel they have to work harder than their male counterparts—an ongoing trend that hasn’t seen much improvement.
Top Challenges: Respondents cited unconscious gender bias, balancing career and personal life, a lack of female role models, imposter syndrome, limited support networks, and difficulties in securing funding as their most significant obstacles.
Leadership Aspirations: Despite these challenges, 76% of women said they feel empowered to pursue or hold a leadership position.
Representation in Senior Management: Over 80% of respondents reported having a woman in senior management at their company, with 68.2% noting that a woman holds a C-level role.
This data not only highlights persistent issues but also shows positive signs of representation and aspirations for leadership roles among women in the tech industry.
General news:
Invisto, the asset manager founded by João Vianna (former Loft), has hit R$1 billion with its second fund. The firm focuses on buying old properties in Florida’s prime neighborhoods and replacing them with high-end residences. This month, Invisto opened a new fundraising round targeting R$850 million. Notably, the minimum investment has been reduced to R$100,000 for Brazilian investors, while direct international investments require at least $250,000. The first fund, launched last year, returned around 16% annually in USD, and the second fund is attracting strong interest from both domestic and international investors.
Cubo Itaú has opened its first international office in Uruguay, marking its expansion into Latin America. The innovation hub aims to connect startups, investors, and corporations across the region, fostering local talent and boosting competitiveness.
inDrive has launched inDrive Money in Colombia, enabling drivers to access loans through a partnership with fintech R2. Available in 17 cities, the service allows drivers to request cash loans of up to $1,000,000 for 3 to 5 months, based on their earnings from the app.
BlackRock has appointed Bruno Barino as its new CEO in Brazil, filling a position vacant since June. Barino brings over 26 years of experience, including 13 years at UBS, where he led the multi-family office, and 13 years at HSBC, where he served as CFO of the asset management division in the Americas.
Cerebras, an AI chip startup, has filed for an IPO, aiming to challenge Nvidia's dominance in AI computing. In its SEC filing, Cerebras revealed a net loss of $66.6M on revenue of $136.4M for the first half of 2023, showing substantial growth from 2022. The company is known for its CS-3 system, designed to handle AI workloads and power supercomputers.
Brazil has the potential to emerge as a global leader in green energy by aligning its vast renewable resources with the increasing energy demands of the tech sector. As data centers and AI systems require uninterrupted power, Brazil's investments in wind and solar energy position it strategically to meet these needs sustainably.
Deals:
SMU Investimentos has acquired two investment crowdfunding platforms, PrimeCap and Organismo, as part of its strategy to expand in the B2B market and attract institutional investors. This move supports the launch of SMU Prime, a platform tailored to investment advisors.
Rockhead Studios, a Porto Alegre-based gaming company, secured a R$ 1 million investment from Google via the Indie Games Fund for Latin America. The funds will be used to enhance existing games and develop Starlit Adventures 2, a sequel to its popular mobile and console game.
General news:
The recent 0.25% increase in Brazil’s Selic rate, marking the start of a new interest rate hike cycle, is already impacting fintechs. Higher borrowing costs are pushing up loan rates and service fees, including card machine fees. Many fintechs face the challenge of either passing on these costs to consumers or absorbing them to maintain market share. This creates pressure on profitability, with analysts warning of a potential slowdown in demand and rising operational risks. Investors may also shift focus to safer assets, further affecting fintech valuations.
Inspira, the Brazilian legaltech that won the 2023 Web Summit Lisbon PITCH competition, has raised its first institutional funding round. While the amount was undisclosed, investors include Wayra Brasil and angel groups like Urca Angels. Inspira aims to expand its AI-powered tools for legal departments and law firms, adding features like automated text review and document drafting. With over 170 clients, including Vivo, the startup plans to double customer acquisition channels and explore international expansion in Portugal by 2025.
The rise of online betting in Brazil has been largely driven by Pix, the instant payment system that facilitates easy transactions for betting companies. A Gmattos study indicates that nearly all deposits and withdrawals use Pix, which is favored for its usability and lack of chargebacks. The government has listed 89 authorized betting companies while urging consumers to withdraw funds from unauthorized sites.
Melvi, a healthtech startup that offered affordable specialist medical consultations, has officially ceased operations. CEO Mariana Paixão announced that while the platform provided significant value to patients and the medical community, the business required more time and investment than the current startup market could support.
Base39, a fintech using generative AI to revolutionize credit decisions, has reduced loan analysis costs by 96%. Supported by AWS, the platform, which processes over R$300M annually, was selected for the AWS Global Generative AI Accelerator. The program provides up to $1M in AWS credits and mentorship, enabling Base39 to scale its technology.
Brazilian startup Griaule, known for handling the biometric data of 160 million voters for Brazil’s TSE, is expanding into Mexico's prison and criminal system, which has over 10.5 million people registered. Griaule won the contract over competitors from France and Japan. The deal will be executed in partnership with local firm Novitech.
Itaú BBA has initiated coverage of Positivo Tecnologia with a neutral stance, highlighting the company's strong positioning in high-margin markets like IoT and IT infrastructure. Positivo's diversification strategy opens up addressable markets worth R$117 billion.
Chilean fintech Neat, which integrates payments for shared expenses and bills, has launched a loyalty program called NeatClub, rewarding responsible payers with discounts and exclusive benefits.
Deals:
Brazilian embedded finance platform Baasic has secured an investment from Grupo Integrado, part of a larger funding round expected to close within 45 days. The terms weren't disclosed, but Grupo Integrado will take a seat on Baasic's board and provide mentorship. Founded in 2022, Baasic offers a marketplace for financial products and services. This is Grupo Integrado's first venture into corporate VC.
TRAG, a climate insurance startup founded by Leonardo Maia, has raised R$ 2 million in its first funding round, led by DOMO.VC with support from angel investors. The insurtech focuses on providing parametric insurance, which offers automatic payouts based on specific weather events, eliminating the need for on-site damage assessments.
General news:
Mercado Pago, the financial division of Mercado Livre, has secured approval from Brazil's Central Bank to launch its own Securities Distributor (DTVM) with a capital of R$ 4.5 million.
Wenia, a cryptocurrency platform by Bancolombia, is set to launch WeniaCard, allowing users to make payments with crypto assets at any MasterCard-accepting terminal. With over 40,000 downloads, Wenia has responded to user feedback by reducing the digital asset conversion fee from 0.6% to 0.1%.
Jon Jones, head of AWS for Startups, emphasizes that "the best AI model is the business model." After seven years leading AWS product strategy, he now manages AWS' startup program, succeeding Howard Wright, who moved to Nvidia. Jones highlights that successful startups focus on product-market fit and understanding customer needs. With AI advancing rapidly, he advises founders to stay adaptable and efficient. The AWS Generative AI Accelerator is expanding, hosting 80 startups globally, including 10 from Brazil, offering mentorship and up to $1M in AWS credits.
Layers Education, a Brazilian edtech, has officially expanded into Mexico, marking its first step in Latin America. In partnership with Lírica, Layers aims to drive digital transformation in schools across the region.
Logtech Motz, originally launched by Votorantim Cimentos, has grown 42% in revenue, reaching R$690M in the first half of 2024. Now, it aims to double its size by 2028, expanding beyond its parent company, which currently accounts for 70% of its business.
Paytrack, a corporate expense and travel management platform, has doubled its workforce to 343 employees and expanded its headquarters in Blumenau, Brazil. With over 7,000 client companies, including major firms like JBS and Hyundai, Paytrack continues to scale rapidly, aiming for 500 employees by 2025. The platform now serves 1 million users and plans to manage R$ 5 billion in corporate expenses by 2026.
Google Cloud announced two major initiatives in Brazil during the Google Cloud Summit: the temporary Google Cloud Startup Hub in São Paulo, launching this month, and the Google Cloud Space set to open in 2025. The Startup Hub aims to foster networking and development for early-stage startups, offering events and access to advanced Google technologies. Additionally, Google Cloud is donating over R$ 3.8 million in equipment to support internet infrastructure recovery in Rio Grande do Sul, significantly impacted by recent floods.
With rising demands from AI and data centers, tech giants are exploring nuclear energy as a stable, low-carbon alternative to meet their energy needs. Microsoft has struck a 20-year deal to use power from the retired Three Mile Island nuclear plant, aiming for more reliable energy than solar or wind. However, regulatory hurdles and challenges with reactivating old plants remain. Experts see potential, but results might take time due to complex obstacles in nuclear fuel supply and safety concerns.
Rocketbot has launched a new office in São Paulo to focus on developing conversational AI solutions. The Chilean startup aims to strengthen its presence in the Brazilian market, leveraging the growing demand for AI-driven customer service tools.
Deals:
OpenAI has raised $6.6 billion in its latest funding round, nearly doubling its valuation to $157 billion, surpassing Uber and Goldman Sachs. Led by Thrive Capital, the round saw participation from major investors including Microsoft, SoftBank, Nvidia, and Tiger Global. However, investors can withdraw if OpenAI doesn't transition from a non-profit to a profit-driven entity. The company expects a $5 billion loss in 2024, despite projected revenues of $11.6 billion, as it continues developing its next AI model, GPT-5.
Joby Aviation, a U.S. startup competing with Embraer's Eve in the eVTOL market, secured a $500M investment from Toyota, increasing the automaker's stake to 22%. This brings Toyota’s total funding to $894M.
RBS Ventures has made its seventh "media for equity" investment in Warren, a fintech with R$22B in assets under management. This strategic partnership, involving Nexpon, aims to boost Warren's growth in Southern Brazil through media exposure via RBS and Nexpon’s platforms.
General news:
At the Digital Assets Conference Brazil 2024, Central Bank president Roberto Campos Neto revealed that the massive use of Pix in retail surprised the institution, as it expected the system to be used more for large transactions. Pix now processes 240 million daily transactions, driving financial inclusion with 71.5 million new users, particularly in small towns without bank branches.
Colombian fintech Cobre is expanding to Mexico to strengthen its presence in Latin America. Founded in 2020, Cobre offers centralized treasury and real-time payment solutions to businesses. With over 8 million transactions in 2024, the fintech aims to address slow, manual financial processes in the larger Mexican market.
Former unicorn Daki, now valued at $800M, is streamlining operations to reach breakeven by year-end. The Brazilian rapid-delivery startup has reduced its dark store network and partnered with iFood and Uber to expand in São Paulo and Belo Horizonte. After aggressive early growth, Daki has adjusted its strategy, focusing on operational efficiency and strategic alliances to scale sustainably. CEO Rafael Vasto emphasizes profitability over expansion as the company aims to avoid the struggles seen in global delivery startups.
Goodmeal, the Chilean meal kit startup, is expanding into Colombia following a €2.5 million investment from Belgian fund C4 Ventures. The expansion aims to tap into the growing demand for meal kits in the Colombian market, which has seen significant interest recently.
Nath Finanças has become a partner and ambassador at Noh, a fintech providing joint accounts for couples. Nath, a well-known Brazilian financial educator, will create exclusive content for social media, develop educational materials, and contribute to improving the app.
Ahead Ventures, a corporate venture capital (CVC) firm, is set to launch a new multi-corporate fund by year-end. Specializing in creating value for companies like Renner and Embraer, Ahead Ventures focuses on aligning corporate and startup goals. According to managing director Eduardo Sperling, building strategic connections beyond financial returns is key to sustainable CVC success. With R$310M under management, Ahead Ventures also helps corporations access global tech startups, driving innovation in sectors like retail and sustainability.
Sebrae-SP is boosting Brazil's startup ecosystem with acceleration programs across sectors like agribusiness, healthcare, education, and energy. Through the "Sebrae for Startups" platform, it offers tailored support at every stage, including workshops, mentorships, market access, and funding opportunities. With over 2,000 startups accelerated and R$ 180M invested, Sebrae-SP’s impact reaches more than 160 cities.
FSB Holding, Brazil's largest PR firm, has rapidly expanded its portfolio through M&A, surpassing R$ 700 million in revenue and targeting R$ 1 billion by 2028. Since its first acquisition in 2018, FSB has grown into a major marketing and communication group, now comprising nine companies and generating 40% of its revenue from M&A activities.
Deals:
Italian group Zucchetti has acquired Brazilian digital signature startup D4Sign for R$180 million. D4Sign, competing against giants like DocuSign, will now operate under the "by Zucchetti" brand, aiming to expand its customer base and leverage Zucchetti’s 3,000 resellers in Brazil.
Brazilian payment startup Barte has been valued at R$400 million in a new funding round led by AlleyCorp, marking the firm’s first Brazilian investment. Founded in 2021, Barte has raised over R$100 million to date, including at least R$78 million in this round.
General news:
Sebrae-SP has invested R$20M in the Criatec 4 ASG Fund, which now aims to raise over R$300M to invest in up to 35 early-stage tech startups across Brazil over five years. The fund, created by BNDES, focuses on scalable businesses with an annual revenue of up to R$20M.
According to a CB Insights report, AI startups are dominating venture capital, attracting nearly 31% of global funding in Q3 2024. Despite a downturn in the overall market, AI investments remain strong, with more than half of new unicorns being AI-focused.
Nvidia, once the top performer in AI stocks, has been surpassed by Vistra, an energy company, which surged 86% in September and boasts a year-to-date gain of 256.7%. While Nvidia's stock has risen 150.6% in 2024, Vistra's growth reflects the increasing demand for energy driven by AI and data centers.
Kapitale, a fintech founded in 2022, has launched a R$ 50 million fund to assist SMEs in the health and cosmetics sectors by providing receivables anticipation without fees. Its new service, “Pague com Kapi,” simplifies transactions by converting credit card receivables into a currency equivalent to the Real, allowing retailers to acquire goods without extra costs.
Deals:
Experian is acquiring Brazilian fraud prevention company ClearSale for R$ 2.065 billion, offering R$ 10.56 per share—a 23.5% premium. This deal values ClearSale at half its IPO market cap in 2021. Shareholders can opt for cash, BDRs, or a mix with a potential earnout. Itau BBA acted as a financial advisor for ClearSale.
Pinbank has acquired Polocred to expand its SME-focused services, now offering credit through its newly obtained SCMEPP license. The fintech aims to reach R$ 40 million in credit operations by 2025, supported by a capital investment of up to R$ 10 million by year-end. With this acquisition, Pinbank plans to enhance its credit offerings, including working capital and post-paid credit cards, targeting a 250% increase in clients.
Kelco, the parent company of Pipicat, is aggressively expanding its presence in South America, aiming to enter one new country each year. Recently, it acquired Colombian competitor Petys, enhancing its product offerings in pet care. Founded in 1982 by Ernesto Reibel, Kelco has evolved from a leather goods manufacturer to a leader in the pet industry, with operations in Brazil, Colombia, Argentina, and Chile.
If you like tech events, I encourage you to access my LinkedIn post that has the entire list!!!!
LAVCA Week 2024
Date: October 8-11
Location: Conrad NY Downtown
Description: LAVCA Week convenes leading private capital investors from Latin America and around the globe each year for a series of meaningful discussions and private meetings covering the latest trends in private equity, venture capital and other private capital strategies. Participation at LAVCA Week is carefully curated and capped. LAVCA Members, non-member private capital investors and qualified institutional investors are invited to attend. LAVCA Members have access to special early bird rates through 29 August 2024.
Snowflake World Tour - The Era of Enterprise AI (São Paulo)
Date: October 8
Location: São Paulo
Description: Snowflake’s global event gathering the technology industry to discuss innovations to accelerate AI development within enterprises. The event will have over 15 learning sessions and several networking opportunities.
AsaaS Connect
Date: October 10
Location: São Paulo
Description: This event is designed to bring together leaders and professionals interested in the latest trends in technology, business, and finance. The one-day event offers a comprehensive experience, including presentations from top industry experts, networking opportunities, and insights into innovative solutions that can drive business success. Asaas Connect 2024 follows the success of its previous edition, which attracted around 1,500 participants and featured notable speakers such as Randi Zuckerberg, who discussed the future of the metaverse. I will be a speaker… see you there?!
REC ‘n’ Play
Date: November 6-9
Location: Recife
Description: Annual innovation and technology festival aimed at fostering creativity, technology, and entrepreneurship. It brings together professionals, students, and enthusiasts through workshops, lectures, and cultural activities, providing a platform for learning, networking, and collaboration. The event highlights Recife's role as a growing hub for innovation in Brazil, connecting participants with industry experts and new trends.
Stats Conf
Date: November 8-9
Location: São Paulo
Description: Bitcoin only technology event - crypto, finance, blockchain
#fswk24 - O Momento Atual dos VCs na Saúde
Date: November 6
Location: Rio de Janeiro
Description: This event focuses on the current landscape and opportunities for venture capital investments in the healthcare sector. Attendees will gain insights into the latest trends, challenges, and strategies for investing in health tech startups and innovative healthcare solutions.
The Wall St Journal: OpenAI Nearly Doubles Valuation to $157 Billion in Funding Round
Tech Crunch: Even the ‘godmother of AI’ has no idea what AGI is
“If you are not constantly changing, you are not constantly growing” by ME :)