Happy Sunday!
As we approach the end of the year, it is natural to reflect upon the time that has passed and also on what lies ahead. 2022 was – to say the least – intense. Nevertheless, such a challenging year teaches us lessons we should use going forward and makes our accomplishments taste sweeter.
If you don’t know me by now, I am an avid planner with clear and set goals. I define them every January and consistently look back at them throughout the year. I know, it sounds kind of obsessive. However, it works well for me.
Today I write my last LatAm Tech Weekly of the year, and I do so with pleasure and happiness as more than 50% of my goals were indeed reached. I think I averaged out alright – but still have LOTS of room to grow. I take therefore the opportunity to thank my readers for the support and continuous feedback loop. Despite the success of the newsletter, I am very self-aware and always looking to improve (and indeed think I have room for improvements here). So please, in 2023, continue sending my way ideas, articles, startups and first and foremost constructive feedback.
While the time brings closure, it also brings anxiety as for the year to come. With that, I joined forces with my dear friend and writer Lucas Abreu to produce an end of year report called “The Next Big Thing in LatAm in 2023”. It will be out next Tuesday, with lots of insights from thought leaders from several industries. After the complete report, several ones on specific themes will follow through, so if you thought I would not write until next year – you are wrong!
Finally, I would like to thank Bloomberg Linea for naming me one of the 13 finance executives to watch in 2023. It was a true honor to appear in this list alongside very experienced professionals – and most importantly to be one of the three women listed.
Let’s go then to the final market wrap up of 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.
Global venture funding reached USD22bn in November 2022, down 69% YoY. Month-over-month funding is also down by 19%. This is the lowest funding month on record since February 2020 with USD 18.3bn invested. In Latin America the scenario was no different: we had the worst month of the year in terms of total funding. With a total of USD 627mm invested, most of the proceeds went to fintechs (58%). According to Crunchbase data, this decrease was seen in all stages. Late-stage financings were at the lowest proportion (39%) in a month over the past three years. Also, around a third fewer startups were funded compared to a year ago: 2,000 unique startups funded compared to 3,500 in November 2021. Check sizes reached a low, averaging $6.4mn last month — half the 2022 average.
It is no surprise that things would tend to slow down as we approach the end of the year. However, it is expected that things pick up again in the coming year. Not in the levels of 2021, but in a more moderate pace as investors are continuously looking for new opportunities.
2022 was a year for adjustments across the board. After a record breaking 2021 in all fronts, the macroeconomic environment with higher interest rates and higher inflation affected the technology landscape globally in terms of valuations and funding. While venture capital global funding decreased close to 50% , the figures seen this year are still greater than historical levels (with the exception of 2021). In terms of valuation, publicly listed technology companies and late stage startups were more affected as earlier stages remained resilient. However, valuations also remained well above what was seen in previous years. In fact, companies with solid fundamentals continued to raise proceeds even as funds remained more cautious.
An interesting phenomenon to point out this year as the venture capital industry became more cautious, is the rise of corporate venture capitals or funds owned by big corporations. Talking specifically about Brazil, which represents roughly 60% of LatAm – in 2016 there were only 13 CVCs in the region. Today, there are 104. Data is still hard to grasp as big companies don’t disclose exactly how much they are willing to invest, however, only in 2022 12 new funds reached the mark of BRL2.5bn in dry powder. While it is true that the downtrend from tech funds gave room for these new players, we are also seeing a change in the mindset of big corporations. These companies are no longer only looking to invest in startups with a path to control – they are willing to put money in companies that will indeed remain independent but have a synergy to their core business.
NotCo, Chilean foodtech, completed an extension of its Series D round of USD70mm led by Princeville Capital and followed by Marcos Galperin, founder and CEO of Mercado Libre. The extension comes after an injection of USD 235mm concluded in July, which valued the company at USD 1.5bn.
Brazilian B2B fintech Pismo expands its presence to India. India is one of the largest potential markets to benefit from Pismo’s cloud-native, multiservice and API-based platform, thus the opening of its local office in the city of Bangalore.
Rumors in the market continue – reportedly Masayoshi Son wants his company, Softbank, to go private. The question is if he will have capital to do so.
Brazilian neobank Neon acquired Leve, fintech focused on promoting a network of financial solutions through HR departments in companies. Details of the transaction were not disclosed.
Brazilian asset manager Vectis announced Christian Egan, former Itau Unibanco, as their new partner. The investment firm has several strategies and partners such as Alexandre Aoude, Paulo Lehman, Patrick O’Grady and Ilana Bobrow.
FTX founder Sam Bankman-Fried was arrested by Bahamian authorities after the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for extradition and U.S. trial. Bail was denied and his arrest is the first concrete move by regulators to hold individuals accountable for the multibillion-dollar implosion of FTX last month.
Mercado Pago, financial arm of Mercado Libre, announced its debut in the investment world as it expands its product offerings to monetize its 35mm active users further. The company will launch 3 investment funds available to the public.
Open Banking in Brazil update:
6.7mm people consented to the share of data
Phase 4 comes in to play – period in which the sharing of information includes also investment, insurance and pension plans.
Brazilian B2B fintech Conta Simples hired Taeli Klaumann as their new CFO. Taeli was previously CFO at legaltech Docket and finance executive in companies such as Danone, Delta and Syngenta.
Talking about CVCs, Cubo Itau and Distrito joined forces to hold an event on the theme on Wednesday of this week.
Going against market rumors, members of the new government in Brazil affirmed that there is no chance that the PIX will be taxed.
OpenCo, the merger between Geru and Rebel – acquired BoletoFlex, Brazilian BNPL.
I attended a lunch hosted by Brazilian VC KPTL. The early stage fund, established in 2003, has invested in over 110 companies in the last 18 years with 20 successful exists. Looking ahead, the company intends to continue investing in its core sectors (Agtech, ClimateTech, HealthTech and GovTech) and to accelerate its crypto strategy. They expect to deploy around BRL1bn in the region in the coming years.
According to president of the Brazilian Central Bank, the Digital BRL will be launched to the population as close as 2024. Tests of the local CBDC will start in 2023 with hopes of a gradual implementation to the population in 2024.
What did I learn from readers?
I received from a reader a very interesting note: What the $6B Coupa Acquisition Means for Software Startups by Thomas Thunguz, Venture Capitalist at Redpoint. Below are the highlights.
“Coupa announced its sale to Thoma Bravo for $6.2b. The acquisition is notable for three reasons:
First, the premium to the public price is 31%.
Second, the multiple is 8.4x NTM revenues.
*Both of these data points imply public multiples have room to grow.*
Third, it’s the most substantive acquisition to announce this year after Figma’s announced its sale to Adobe. The M&A market may be thawing a bit.
Coupa’s sale continues a trend of private equity buying venture backed startups, a result of record PE fundraising & depressed multiples.
Startups should expect more private equity M&A both in the public & private markets. Over time, the M&A market activity should begin to inform public valuations. If private buyers are willing to pay premiums above the public market, then overall market multiples should rise.”
What am I reading?
My collegue Travis Foxhall from Point72 Ventures produced an interesting report on LatAm fintech infrastructure. Worth the read.
CB Insights produced 130 market maps in 2022. From AI to digital health to cloud security to supply chain tech and everything in between, it's an insane amount of info about key tech markets and the players in them. Take a look at the collection!
A16z: Introducing a16z's Guide to Growth Metrics – very interesting feature in the A16z blog that shows where growth metrics should be for every company given specific prompts. The firm also released its Big Ideas in Tech for 2023.
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Quote of the week:
“You can overcome anything, if and if only you love something enough.”
– Lionel Messi