LatAm Tech Weekly
#131- Powered by Nasdaq: startups shutdown, spike in capital calls by GPs, Reddit IPO, deals of the week... and much more!
Happy Sunday!
This week, I had the incredible privilege of both attending and speaking at South Summit Brazil 2024. It was an amazing event, attracting over 23,000 attendees, including more than 3,000 startups and over 900 investors. On stage, I had the opportunity to speak alongside Fersen Lambranho, President of the Board at GP Investimentos/G2D, and Patricia Moraes, Founding Partner at Unbox Capital. We engaged in a thought-provoking discussion about the critical roles of diversity and technology in addressing today's pressing challenges.
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The week was full of great reads, so we have a lot to cover. To start off, Peter Walker from Carta shared an interesting post. Data shows that in the early months of 2024, the startup ecosystem experienced shutdowns, particularly reflected in the activities of companies listed on Carta that had secured a minimum of $5 million in priced equity. The first two months saw 61 startups ceasing operations, a number surpassing the total closures in the last quarter of 2023, even before March figures were included.
This period marked a significant milestone for startup evolution:
January emerged as the peak month for closures among startups in the Seed-stage, Series A, and Series B categories on Carta. For those in Series C and beyond, February was particularly challenging.
The start of 2024 saw a higher number of closures among startups that had raised over $10 million and $20 million, compared to the last quarter of 2023, which previously held the record.
Fintech, SaaS, Healthtech, and Medical Device sectors experienced their most challenging two-month period in terms of shutdowns, according to Carta's records.
Analyzing these trends reveals several factors at play. Seasonal influences may have contributed, as founders might have set the end of 2023 as a deadline to explore alternative strategies. Additionally, some variability can be attributed to the lengthy process of company shutdowns.
Structural changes within the startup landscape also played a significant role. In 2023, numerous startups were sustained through bridge financings provided by investors. As the focus shifts back to primary financing rounds in 2024, companies that struggled to establish themselves are finding fewer options available.
It's important to note that these figures may not fully capture the complete picture, as some companies cease operations without immediate notification. Moreover, mergers and acquisitions offer another pathway for startups, although those seeking this option as a last resort often face challenges.
Overall, these developments reflect a dynamic phase in the startup sector, highlighting the importance of adaptability and strategic planning in an ever-evolving business environment.
On a more positive tone, still by Peter Walker, VC funds on Carta called more capital to put to work in January 2024 than at any point since mid-2022. Capital has to be called by these fund managers before it is available to be invested into startups. So you can think of this like a staging area, where the GPs take possession of the capital for a little while as they get ready to invest into companies. Good sign!
On the same tone, the most awaited IPO of Reddit happened this week. Reddit priced at $34 per share, which values the social media company at approximately $6.5 billion. The IPO brought in $519 million and involved the sale of 15.28 million shares by Reddit itself, along with another 6.72 million shares sold by existing shareholders. When the market opened, Reddit shares soared, opening 38% above the IPO price. This valuation put the social media platform at approximately $8.87 billion. By the end of the first day of trading, the stock settled just under $50 per share. Over the course of the week, Reddit’s stock continued to be volatile, but it had a strong debut overall. The closing price at the end of the week was $50.44 per share, 48.94% relative to IPO price. Are tech IPOs coming back????
General news:
Mercado Libre Doubles Investment in Mexico, Focusing on Credit Offerings. The company has doubled its investment in Mexico for 2024, increasing its commitment to the country – where they are experiencing the highest growth – to approximately $2.45 billion.
Betterfly Launches Gamified Platform Fusing Insurance, Benefits, and Social Impact. Chilean startup reaches one million paid users in just three years, celebrating with personalized platform integrating wellness and rewards.
Brazilian neobank in the US closes accounts and exits B2C. Onyx Private, backed by Y Combinator and which raised $4.1 million in funding, is changing its business model.
Deals:
Amartech Nemu raised R$ 1.3 million in a pre-seed round that saw participation from the Mexican fund H20 Capital and even founders. Among the investors are Guilherme Bonifácio (iFood), André Siqueira (RD Station), Diego Libanio (Zé Delivery), and former B2W Marketplaces head Raoni Lapagesse.
CredMei, a company specialized in receivables anticipation for SMEs, has just completed a fundraising of R$ 15 million through debentures via the AmFi platform. AmFi connects originators and investors through blockchain technology.
Positivo Tecnologia is paying R$ 235 million for the managed IT services vertical of Algar Group, doubling down on a segment with higher margins, recurring revenue, and an addressable market of nearly R$ 50 billion.
General news:
Buser, a bus travel platform, has just reached the milestone of 11 million registered customers and expects to grow revenue by 30% in 2024, maintaining positive margins month over month and an increasingly sustainable expansion. Although Buser is not yet officially at breakeven, achieving profitability for the business is already "on the horizon.
A recent study conducted by Thoughtworks, a global technology consultancy, revealed that Brazil is the second most optimistic country about Generative Artificial Intelligence (GAI), trailing only behind India. The research, titled "Generative AI: What Consumers Desire," surveyed 10,000 consumers across 10 different countries. In the ranking, Singapore ranks third, while Germany, the Netherlands, and the United Kingdom appeared to be more skeptical about the promises of Generative AI.
Livelo and Stix have initiated a partnership to expand the possibilities of using points and provide more benefits to consumers. In the first four months, over 1.5 million transactions were made, resulting in R$ 75 million in benefits to customers. More than 45 million Livelo customers can now use their points directly at the checkout of Stix's major partner brands, thanks to PagStix, a technological solution that integrates the two companies and allows for the immediate use of points for partial payment of purchases.
Deals:
Asaas, a fintech that provides digital accounts for legal entities, has just announced the acquisition of NexInvoice, a startup specializing in accounts payable automation from the Guiando group. With this acquisition, Asaas aims to expand its presence in the financial sector and broaden the range of services offered to its over 150,000 clients.
General news:
Networkme, a Portuguese startup created with the mission of bridging the gap between higher education students and the job market, has just arrived in Brazil. The expansion is supported by an investment of €700 thousand (approximately R$3.5 million), provided by funds Bankinter, Big Sur Ventures, Valutia, Verve Capital, and Schilling.
Deals:
Addi, Developer of point-of-sale lending and consumer finance application designed to promote digital commerce with a buy now pay later facility from Colombia, raised $86M in Later Stage VC funding with the participation of a16z, GIC and Union Square Ventures
Rio de Janeiro-based venture capital firm Fuse Capital participated in a funding round led by Shorooq Partners, raising US$11 million to be invested in MANTRA, a startup based in Hong Kong, China. With this investment, the company aims to accelerate the tokenization of Real World Assets (RWA) for large-scale operations.
General News:
HubLocal was one of the startups that needed to recalculate its course to comply with the new demands of investors. The company announced this week the raising of R$ 3.5 million in its third round, led by Bossa NovaInvestimentos and GV Angels, but to achieve this, it had to reach breakeven - the long-awaited balance between revenues and expenses.
Shein says 55% of what it sells in Brazil is already locally produced. During a presentation at the South Summit Brazil, Shein's country manager, Felipe Feistler, stated that the goal is to reach 85% within two years and that they already have 15,000 Brazilian sellers on their marketplace.
Growth investors regain optimism in the country. Executives from management firms such as Riverwood, Endeavor, Volpe Capital, and Warburg Pincus reflect on the startup market and the post-2021 crisis.
Ebanx promotes two executives to vice presidents. Juliana Borges de Campos takes on the role of VP of Operations, while Eduardo de Abreu becomes the new VP of Product and Business Architecture.
Logistics technology company Freto has just raised R$ 12.3 million with the corporate venture capital (CVC) fund of Edenred and the Galló, Corrêa da Silva, and Stumpf families. The investment represents an extension of the R$ 22.5 million round carried out by the same investors in 2021.
Deals:
WeKall Acquires Mexican Startup Sirenna AI. Sirenna AI’s co-founders, Gabriela Morales and Juan Sebastián Correa, are now WeKallers.
Logistics technology company Freto has just raised R$ 12.3 million with the corporate venture capital (CVC) fund of Edenred and the Galló, Corrêa da Silva, and Stumpf families. The investment represents an extension of the R$ 22.5 million round carried out by the same investors in 2021.
General News:
Changes in Blip's senior leadership. The conversational intelligence platform has just announced the departure of Chief Financial Officer (CFO) José Carlos La Motta, who steps down after 20 years with the company. Marcelo Hein, formerly Chief Strategy Officer (CSO), will take over as CFO while continuing to lead the mergers and acquisitions (M&A) team.
The South Summit Brazil announced the names of the winning startups of the 2024 edition of the Startup Competition. Among the 10 finalists, seven are Brazilian. The event took place at the Arena Space in Porto Alegre. Read more at: https://portaldobitcoin.uol.com.br/south-summit-brasil-divulga-vencedores-da-startup-competition-2024/
Deals:
With naPorta, GVAngels surpasses R$ 1.9M in social impact investments. The group announces a R$ 400,000 investment in the logtech that delivers to communities and restricted regions.
What did I learn from readers?
A reader sent me two interesting market maps on LatAm fintech. It came from a LinkedIn post by Marcel van Oost. I thought it was worth sharing with my readers.
What am I reading?
Itau BBA & Sling Hub - Overview of the LatAm Tech Market in Feb 2024
Pitchbook’s Q1 2024 Quantitative Perspectives report explores the dynamic of SaaS and AI and machine learning.
What am I listening to? What am I watching?
Quote of the week:
“We are reminded that, in the fleeting time we have on this Earth, what matters is not wealth, or status, or power, or fame, but rather how well we have loved and what small part we have played in making the lives of other people better.”
Barack Obama