LatAm Tech Weekly
#140- Powered by Nasdaq: Tech Events Radar, Dry powder in VC,SPMC 2024, deals of the week... and much more!
Happy Sunday!
Yesterday, I went for a long run, and as usual, I had several thoughts and creative ideas. My best ideas always seem to come to me while I'm running. One thing I was thinking about was how quickly time is flying by. We're almost at mid-year, and it feels like 2024 started just yesterday. In fact, this newsletter will celebrate its third anniversary in August. Can you believe how fast time has gone by?
As my mind wandered back to the day I first came up with the idea for this newsletter (during a run, of course), I started thinking of new things for my Substack. One thing that definitely needs attention is a new layout. (If you're a designer and want to help, please reach out!) I also thought about themes & new sections… and boom, an idea came up.
As many of you know, I love attending, organizing, and especially speaking at tech events. Because of this, people often ask me about upcoming tech events in Latin America. I get at least one call about this every week. To help everyone out, I've decided to create a new section in my newsletter called Tech Events Radar
In this section, I'll list upcoming events and share relevant information on where to sign up, who will be there, and other details for anyone thinking about attending. This is where you come in: Are you planning an event? Would you like to share details? Do you know about a cool event coming up? Please reach out and let me know so that I can keep this section up-to-date and informative.
Do you like my idea? If so, read on to see what's in store!
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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.
On to the usual market update, I read a very interesting piece by Pitchbook this week called the Global Private Market Fundraising Report. Through Q1 2024, 521 private market funds raised a total of $295 billion across all asset classes, nearly matching the $298.4 billion raised in Q1 2023. However, the number of funds fell by 45.9% year-over-year, indicating a concentration in fundraising, with funds over $1 billion making up 81.2% of the total. Private equity (PE) funds accounted for the largest share of capital raised at 52.9%, followed by secondaries at 11.8%. While private debt and real estate fundraising is below historical proportions, this is partly due to large fund closures in 2023. VC fundraising is significantly down, dropping 44.2% year-over-year, the slowest since Q1 2015. Fund of Funds (FoF) continues to decline as investors shift to open-ended vehicles. Regionally, Europe's share of capital has increased to 33.6%, North America's has fallen to 53.2%, and Asia maintains an 11.4% share. The remaining 1.8% is distributed among funds from Oceania, the Middle East, Africa, and other regions.
Doubling down on the VC industry, fundraising amounted to $29.8 billion, reflecting two years of slow exits for VC-backed companies. This is a notably low figure given the market's growth over the past decade. The absence of megafunds was evident, with only seven funds closing on $500 million or more globally, compared to over 150 funds in 2021.
The difficult exit market, extending into 2024, is expected to continue affecting fundraising efforts. The average time between VC fund closings has reached its longest since 2018, as the market adjusts from the rapid fundraising pace of the zero interest rate policy era. Both established and emerging managers raised less than 17% of their 2023 totals in Q1.
With interest rates expected to remain high for longer, a significant resurgence in exit activity seems unlikely in the very short term, further delaying distributions to limited partners (LPs) that could be reinvested. Although established VCs like Andreessen Horowitz, New Enterprise Associates, and Tiger Global have raised approximately $13 billion in Q2 2024, most global LPs remain cautious about venture funds.
Another challenge is the high amount of dry powder (uncalled commitments) in the market, exceeding $700 billion worldwide. Without an increase in deal activity to utilize these commitments, LPs are reluctant to add further uncalled exposure to the VC strategy. Amid resetting exit expectations, funds targeting later stages have significantly reduced deployment, leading to notable valuation corrections. As markets start to stabilize, better prospects ahead should lead to a significant improvement in exits - and thus in fundraising exits. Let’s wait and see!
General news:
Brazlian payments fintech Pagaleve, specialized in enabling installment purchases with Pix in retail, has just raised R$ 250 million to set up its first FIDC (receivables fund), with resources from the Belgian investment platform Credix Finance.
Zenvia hires former Stone and Linx executive as new CRO. Gilsinei Hansen joins to strengthen the company's integrated offerings and drive its growth, including international expansion.
KPMG seeks Brazil's most innovative startup. The consultancy firm opens applications for global tech innovator 2024, selecting one local startup for the global stage in November.
ACE & BoostLab just announced their new batch of Brazilian startups: Beegol, Incentivar, Intuitive Care, and Regcheq. These companies will receive an initial investment of R$ 1 million each. The check may double for those that perform better.
Raising capital for technology startups has become more challenging with high interest rates in Brazil and the United States. However, the investment outlook for venture capital funds focusing on acquiring stakes in early-stage businesses appears to be one of the most promising, according to Gustavo Ahrends, co-founder of Norte Ventures.
General news:
CloudWalk, the owner of the InfinitePay platform, has just raised R$ 1.6 billion through four new Investment Funds in Credit Rights (FIDCs) with three-year terms. The funds will be used to finance the advance payment of credit card receivables. The structuring of the funds was led by Itaú BBA.
Latin American e-commerce and fintech giant MercadoLibre Inc. is beginning conversations with Mexico’s authorities to apply for a banking license that will allow it to expand the breadth of products it offers in the country.
In the VC and PE world, diversity drives returns and exclusive deals. A new study from the Boston Consulting Group (BCG), in partnership with Cambridge Associates, found that private equity and venture capital firms with more diversity on their teams are growing faster and accessing more exclusive deals than their competitors. The research analyzed 84,000 American companies.
Brazilian company launches venture studio to create startups from scratch. The Garage operates from product inception to market launch and seeks investors to scale up.
Deals:
The newspaper O Estado de São Paulo raised R$ 160 million through debt issuances and an investment from the Mesquita family - an operation designed to strengthen one of Brazil's most influential newspapers, known for providing a counterpoint to both left and right-wing governments. SA O Estado de São Paulo, the company that controls the newspaper, raised approximately R$ 142.5 million through two debenture issuances with institutional investors and private banking.
Suno app, a music generator that utilizes artificial intelligence to produce songs within seconds - all from simple text prompts, has just announced a Series B round, placing the company's valuation at around $500 million.
Although the exact funding amount hasn't been officially disclosed, the round was led by Lightspeed.
A European healthtech company, OpenHealth Technologies from Germany, is gaining traction in the Brazilian market by providing management software for clinics, laboratories, and healthcare companies. The company has made its first acquisition in Brazil, involving a cash payment and stock exchange with Bludworks, another healthcare software developer. Founded in Brasília in 2019 by Eduardo Raggi, Bludworks has a key partnership with the Sabin Group, which generated over R$ 1.4 billion in revenue last year.
General news:
Betterfly partners with startup to accelerate women's careers. Todas Group, a solutions platform, focuses on building diversity and equity policies and processes within companies.
Elo rebrands and updates technologies to compete with Visa and Mastercard. The company is investing R$ 150 million in a project that combines its first major rebranding since its foundation with the migration of 100% of its transaction platform to the cloud.
Nagro, a fintech that provides credit to rural producers, has received authorization from the Central Bank (BC) to operate as a Direct Credit Company (SCD). In practice, the license allows the granting of credit with its own resources. With an initial capital of R$ 3.3 million, Nagro SCD's controllers are the co-founders of the agfintech, Gustavo Alves and Leonardo Rodovalho.
EcoEnterprises, an impact fund that invests in Latin America, is structuring its fourth venture capital vehicle. The goal is to raise $150 million (approximately R$750 million) and close the first round of fundraising by the COP16 on Biodiversity, which takes place in Colombia in October.
General News:
Uber announces R$10 million package to assist drivers in Rio Grande do Sul.
Advocating for a more empathetic venture capital, Darwin Startups is preparing to launch its first Private Equity Investment Fund (FIP). The fund aims to attract founders with resources beyond just money. The fund is expected to invest R$100 million in up to 20 startups.
Drex will enter a new phase of testing and is expected to launch only in 2025. According to the Central Bank, the privacy technology solutions tested so far have not demonstrated the necessary maturity.
Uber introduces electric car categories and healthcare services in Brazil.
At an event celebrating its 10th anniversary in the country, the company also announced plans to expand the taxi fleet on the app.
Deals:
PayRetailers, a Spanish payment processing company focused on Latin America, has just announced the acquisition of Brazilian fintech Transfeera, which provides payment infrastructure for businesses. The terms and values of the transaction were not disclosed. The deal is subject to approval by the Central Bank and the Administrative Council for Economic Defense (Cade).
Afya's Corporate Venture Capital Fund Leads Pre-Seed Round in Wanda. Afya, an education company focused on medical courses, has just led a pre-seed round in Wanda, a platform aimed at facilitating the hiring of nurses by hospitals. The startup raised a total of R$1.5 million, which will be used to accelerate the business and improve the product.
Omni, renowned for its financial services in the automotive sector, has acquired a 4.99% stake in DM, the card operator that recently acquired Credz. The partnership aims to leverage the synergy between their operations to drive growth and innovation.
General News:
inDrive Records 36% Growth in Delivery Category in Brazil and Increases Investment in the Country. The urban mobility platform, inDrive, has seen a significant 36% increase in the delivery category in Brazil. As a result, the company is ramping up its investment in the country, with a 250% increase in marketing spending to promote its services and attract more users.
Deals:
Cannect, a marketplace for cannabis products, announced plans to "burst the bubble" of medicinal cannabis after securing a R$5 million investment from 4Equity. The company shared this news exclusively with Startups, outlining its strategy to expand and innovate in the medicinal cannabis market.
Infleet, a startup specializing in fleet management and assisting drivers and companies with transportation data, risk analysis, cost analysis, and safety, has just completed a R$10 million investment round. The funding was led by Indicator Capital, a deep tech-focused (IoT) investment firm, with participation from current investors, DOMO.VC, through the Fundo Anjo, contributing R$2 million, and CV Idexo, the corporate venture capital arm of TOTVS, contributing R$3 million.
Vercel, an Argentine software startup that provides a platform for creating cloud-based web applications, announced it has raised $250 million in a Series E funding round. This latest round brings Vercel’s valuation to $3.25 billion. The round was led by Accel, with participation from existing investors CRV, GV, Notable Capital, Bedrock, Geodesic Capital, Tiger Global, 8VC, and SV Angel.
BeBook, a tourism technology company specializing in dynamic hotel rates, has successfully raised R$1 million in funding from Bertha Capital. The investment will be directed towards enhancing the artificial intelligence used for price recommendations.
Tech Events Radar:
Febraban Tech
Date: June 25-25, 2024
Location: São Paulo
Description: FEBRABAN Tech is a premier event focused on the intersection of technology and the financial sector. It serves as a critical meeting point for professionals and innovators in banking and finance. The event showcases the latest advancements, trends, and solutions in financial technology, providing a platform for networking, knowledge sharing, and collaboration.
Brazil Tech Summit:
Date: August 9, 2024
Location: São Paulo
Description: This international summit features 100 global speakers and focuses on catalyzing entrepreneurial and business ecosystems in emerging markets. It includes panels on trends and opportunities in Brazil, industries of disruption, and the role of technologies like AI and blockchain.
Digitalks Expo:
Date: August 23-24, 2024
Location: São Paulo
Description: A major event that brings together professionals from various tech sectors to discuss digital transformation, innovation, and technology trends.
DevOpsDays Rio de Janeiro:
Date: August 17, 2024
Location: Rio de Janeiro
Description: Part of the global DevOpsDays series, this conference focuses on IT improvement, featuring sessions on DevOps culture and practices.
Chief Data & Analytics Officer Brazil Live:
Date: September 10-11, 2024
Location: São Paulo
Description: This conference is geared towards data and analytics professionals, focusing on the latest trends and technologies in data management and analytics.
Colombia Tech Week:
Dates: August 26 - September 3, 2024
Location: Bogotá and CaliOverview: Colombia Tech Week 2024 is set to be a major event in the Latin American tech scene, bringing together startups, venture capitalists (VCs), accelerators, corporates, and international tech communities. The event aims to position Colombia as a hub for investment and innovation, with a focus on fostering connections and creating business opportunities across the region.
What did I learn from readers?
My friend and Investor Relations at Spectra Investments, Carolina Medley, shared a couple of highlights from their recent event, SPMC, that happened this past Tuesday:
The event brought together over 1,000 attendees interested in getting to know more about 40 privately held companies from different sectors such as sports, mining, retail, technology, among others.
At the event's opening, Spectra shared insights on the local and global private market: “The performance of private companies has a lower correlation with GDP and superior growth when compared to public companies. Furthermore, Brazilian companies invested by Private Equity managers grew 2.6x more than American companies, while American multiples increased significantly after the global crisis.”
The presented data clearly illustrates the evolution of the local private market, which has been able to generate good returns and DPI, even with the capital market closed.
What am I reading?
Carta do Condado by Faria Lima Elevator (PT only)
Synapse, backed by a16z, has collapsed, and 10 million consumers could be hurt, Tech Crunch
What am I listening to? What am I watching?
Quote of the week:
“AI will probably most likely lead to the end of the world, but in the meantime, there'll be great companies.” Sam Altman