LatAm Tech Weekly
#48 - Series B is holding up, Conexa raises BRL 200mm, startup hires... and much more!
Happy Sunday!
I am trying week after week to start on a (more) positive tone, but I confess it is hard given everything that is happening in the tech ecosystem - and consequently everything that I read. This week Bloomberg showed graphically how the venture slowdown is happening across the board. Global deal activity is down 23% from Q1 to Q2 (as of June 23) this year, after staying mostly flat in the previous quarter.
Preliminary data from Pitchbook for the first quarter of 2022 also indicates that ~68% of VC funds recorded a drop in valuation from what was reported in 2021. Of these downgraded funds, the average decline was of 7.8%. If the data holds after compilation, this means that the drop in limited partner allocations is likely to be close to USD 1.4 trillion in unrealized VC fund value since the end of 2021.
But not all is that bad: according to Crunchbase, Series B dealmaking is holding up pretty well. YTD investors worlwide have poured around USD 24 bn in Series B deals. The figure is higher than what was seen in 3 out of the last 5 full calendar years. The data was kind of surprising for me given everything that is happening… So what does this indicator mean for the startup funding climate?
It seems that Series B investors seem to be really confident. We have to remember that companies raising at this point usually have proven technology or product/market fit - and are looking to scale. However, an exit is still likely years away, making factors like a shuttered IPO market less of a concern. No particular sector dominated among recipients of larger-sized Series B rounds. Focus areas range from AI to foodtech to precision medicine.
All in all, Looking at public tech valuations, crypto prices and other indicators, it sure looks like we’re in deep correction mode. Series B, however, seems to be telling us that long-term investors remain relatively confident.
Oh yes!!! I was able to at least end my intro on a more postive note :)
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!
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Conexa, Brazilian telemedicine startup, raised a BRL 200mm Series C led by Goldman Sachs Asset Management. Current shareholders such as General Atlantic and Igah Ventures also participated in the round.
A recent study conducted by Oliver Wyman in partnership with Morgan Stanley revealed that traditional wholesale banks could add up to $6 billion per year in revenue if they entered the cryptocurrency market with greater intensity and dedication.
According to the second edition of the Fintechs Digital Credit Survey conducted by PwC, Brazilian fintechs granted more than BRL 12bn in credit in the year of 2021. This represents a hike of 96% when compared to 2021, and 383% versus 2019. Looking at the numbers in more detail, the greatest expansion was in B2C lending, which accounted for around BRL 8bn of the consolidated figure.
The report “Global Startup Ecosystem Report 2022” produced by Startup Genome highlighted that North America continues to dominate the global ranking of ‘startup cities’, with 47% of the list, while Asia is in second place with 30%, In LatAm, the top-ranked city is São Paulo. São Paulo is on the 28th spot . According to the report, the “size and density of São Paulo offers founders a large market and the opportunity to connect with other innovators”. Currently, the city’s startup sphere is equivalent to USD 108 billion. The seed rounds in the region average a USD432k and Series A is of around 4.8mm. The strongest sectors are fintech, proptech,and digital solutions applied to agriculture.
Monashees, one of Latin America’s pioneering VCs, sold 3.2 million shares of GetNinjas, reducing its position to 2.15%. Shares of the company are down 87% since IPO.
Prosus, Cape-Town based investment firm majority owner of iFood, reported a 66% decrease in iFood’s core restaurant business profits - trading profit was of USD10mm in the fiscal year ending in March 2022, vs. a USD30mm figure last year. GMV and revenue, on the other hand, grew by 41% and 29% respectively.
MercadoLibre expands its insurance offerings to the unbanked Brazilian population through the MercadoPago app.
More good news: amidst constant layoffs and cost cutting, tech companies such as Omie, Shopper, CRM&Bonus and Cobli continue on a hiring spree.
Now onto the bad news: we are starting to see the down rounds. (i) Swedish buy now, pay later giant Klarna is reportedly close closing a new round of funding that would slash its valuation to USD 6.5 bn— about 1/7 of what the company was valued in June of 2021. (ii) SumUp raises $624mm at $8.5bn valuation, down from its USD 20bn valuation.
Brazilian motorcycle rental startup Mottu raised USD $40M in a Series B round of funding to help more Latin Americans become couriers. The company, which aims to give independent couriers a way to work for logistics and food delivery apps, also secured $10 million in debt financing. Base Partners and Crankstart — a San Francisco-based family foundation founded by Harriet Heyman and Sequoia Capital Partner Michael Moritz — co-led the equity portion of the company’s funding (USD 30mm). Verde Asset, one of Brazil’s largest investment management firms, provided the debt portion of the company’s latest financing.
UnDosTres, Mexican startups that offers online payments, such as mobile phone top-ups, bill payments, toll payments and cinema ticket purchases through desktop or mobile, raised a Series B of USD 30mm with the participation of IDC Ventures and A18 Ventures.
Cobre, Colombian startup that offers a payments platform that enables companies to generate any type of payment raised a USD 18mm round led by QED Investors.
Yapoli, Brazilian startup that offers an intelligent platform made for the governance, management, and distribution of digital assets for large corporations raised a pre-seed round with the participation of Darwin Startups and Bossa Nova Investimentos.
What did I learn from readers?
I recieved a very good report made by Google for Startups called The Effective Founders Project. The document digs into the seven leadership strategies to overcome the biggest risk to startup success. Founders - this is a good read for you!
What am I reading?
What did I listen/watch?
Astella Podcast: Meet Cindy Padnos, Founder & Managing Partner at lluminate Ventures.
NoMaximo20 Podcast with Carol Lacombe, from Valor Capital Group
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Quote of the week:
"Real education should educate us out of self into something far finer; into a selflessness which links us with all humanity.". Nancy Astor
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