LatAm Tech Weekly
#43 - Investors pullback? Crypto, deals of the week and more!
Happy Sunday!
“Another week, another drama” as winter continues to be here. Flat rounds are starting to appear, as VC funds say that down rounds should be happening soon. On one end, we hear that major hedge funds who were very active in VC rounds recently saw redemptions from disappointed LPs as returns decline 60%-70% due to these tech deals from vehicles that were not fully dedicated to the strategy. On another end, this same firm plans to raise a new fund for private investments only as public markets sour….
Are investors actually pulling back? Curiously, far from pulling back on the number of investments they’re making, the most active startup investors in recent years have done more deals this year than last. That is, SoftBank Vision Fund, Tiger Global and Insight Partners are all up significantly when you count the number of deals they did between Jan. 1 and May 24, 2022, compared to the same time period in 2021. Granted, as mentioned last week, these deals were certainly closed around 4 months ago.
As crossover investors cease to look at the private market, there could be an opening for venture capitalists to lead startup investing once again, perhaps investing in lower valuation which could lead to a great vintage looking ahead. As mentioned in a Crunchbase article, Accel, Andreessen Horowitz and Index Ventures are showing increase in their investing pace this year, though not as dramatically as the leading growth investors. Sequoia Capital and Lightspeed both remain on pace with 2021.
Some firms, on the other hand, have already shown dramatic drops in the number of deals they’ve led so far in 2022 compared to last year. D1 Capital Partners, Qiming Ventures, Coatue and General Catalyst are each down by more than 40% for deals led. Contrast this with Jan. 1 through May 24, 2021, where each of these investors led more deals than the prior year for the same timeframe. The table below illustrates the comments above.
Now, let’s go ahead to this week’s news…. Please note the new section on what I learned from readers - continue to send interesting articles my way!
Views expressed in this newsletter belongs to me, and not to any organization, affiliates, or employees.
When C6 Bank launched a wireless payment tag for toll roads linked to their digital account, it helped attract many customers to their digital banking product. Since then, it has been offered by several fintechs and even traditional banks, who see the tool as a way to help with customer engagement and loyalty. Brazil has almost 60 million vehicles, but only 12 million have tags, that is, the room for growth is large. That's why the dispute to offer the service has been intensified, even more considering that the adhesion has grown a lot in the pandemic, since the device does not need physical contact. Recently Itau, Grupo Ultra and others have launched similar products. We should see more solutions emerging a intense competition in the product.
Brazilian firm, Naia Capital, focused on venture debt, launches a BRL150mm fund. The product is showing increasing demand due to the current scenario.
Almost half (49.88%) of Brazilian startups prefer to raise funds via angel investment, while only 19.71% opt for large venture capital funds. The data is from the Investment Report 2022, a study carried out by the Brazilian Startup Association (Abstartups) and the BR Angels association. A minority (13.30%) prefer investments from micro VCs, (7.13%) from government funds or entities and (9.98%) from other means. The study was carried out in May 2022, and included 257 startups from across the country, positioned between early-stage and Series A.
Pier, Brazilian digital insurance distribution platform, raised a $8.42M in debt.
Agrotool, Brazilian agtechraised BRL 85mm in a round led by Inovabra. Use of proceeds will be towards M&A and internationalization.
Clubbi, Brazilian startup focused on helping local mom-and-pap supermarkets raised BRL 62mm in a round co-led by NFX and ALLVP.
Bolivia’s Fintech Koban Raises $2.3M, the Largest Pre-Seed in the Country
The startup will accelerate key hires, increase tech stack and product development, and expedite its marketing. Koban offers a platform that allows end-users and SMEs to carry out a variety of financial services, including payments, money transfers, budgeting tools, and credit solutions.
Brazil’s Delivery Giant iFood Launches Electric Motorcycles for Delivery.
New e-motorbikes are part of a broader project from iFood to reduce carbon emissions.
Mobile identity pioneer Incognia, company founded by brazilian Andre Ferraz, announced it raised USD15.5mm in Series A funding led by Point72 Ventures. Within 18 months of launching in the U.S., Incognia is now protecting more than 200 million mobile users in more than 20 countries, and the new funding round will support Incognia’s continued growth. Incognia addresses the balancing act between friction and security for user authentication and fraud prevention on mobile applications, across industries including fintech, crypto, gaming, delivery and social.
2TM Holding, owner of the Mercado Bitcoin, laid off 90 of its 750 employees. In a note, the company attributes the lay offs to the “change in the global financial scenario”, marked by high interest rates and higher inflation. The company says that these changes in macroeconomic conditions primarily impact high-growth companies in the technology sector, so 2TM will need to look for a new growth and investment equation.
Yummy, Venezuelan local, on-demand delivery and transportation company and eCommerce platform serving consumers through its super-app, offering groceries, drugstore items, drinks, apparel, electronics, and more in under 15 minutes raised a USD 47mm Series B with funds such as Anthos Capital and Y Combinator.
Cubo Itau, Latin America’s biggest startup hub made two announcements this week: the arrival of Paulo Costa, the new CEO and its new ESG vertical.
Stone made a couple of headlines this week:
Co-founder Eduardo Pontes wants to transfer class B shares, with super voting power, to class A. With that, Stone will no longer have a group of shareholders with more than 50% of the voting capital. André Steet will continue as a reference shareholder.
Stone reported better-than-expected 1Q22 results after the market close. Better revenues driven by a higher take rate more than offset the increase in operating expenses. Adjusted net income of BRL 132 million beat our expectation of BRL 108 million – a significant improvement from 4Q21 and an even better guidance for 2Q22.
Stone sold part of its position in Banco Inter, exercising the cashout option the bank offered to its shareholders as part of its restructuring and listing on Nasdaq.
What did I learn from readers?
Fidelity Investments is said to severely cut several closely held tech companies, including social media platform Reddit (REDDIT) and unicorn payment provider Stripe (STRIP).
Fidelity funds marked down stakes in Reddit by more than a third in April from March and cut Stripe by 13%, according to a Bloomberg report from Tuesday, which cited company filings and data compiled by the news service. Fidelity also cut the valuations for Instacart (ICART) and Bytedance (BDNCE), the parent of TikTok.
The valuations cuts come after the Nasdaq 100 dropped 21% through the end of April. Online message board Reddit (REDDIT) confidentially filed to go public, submitting a draft registration statement with the SEC in December.
Source: Seeking Alpha
What am I reading?
What did I listen/watch?
Youtube Video: Andreessen Horowitz said it raised a $4.5 billion crypto fund — the industry’s largest to date
JOB POSTS
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Quote of the week:
“Success in investing comes not from being right but from being wrong less often than everyone else.” Aswath Damodaran
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Ground-level weekly observations often capture reality long before quarterly reports smooth everything into clean charts. That gap between local truth and macro narrative keeps creating asymmetric opportunities.