LatAm Tech Weekly
#141- Powered by Nasdaq: Tech Events Radar, Carta's Q1 24 Private Markets Report, Deals of the week... and much more!
Happy Sunday!
I'm thrilled to share that the new section of the newsletter was a huge hit! This past week, I received information on over 10 additional events to include in the Tech Events Radar. Keep them coming! Got any new ideas or suggestions? Drop me a line if you do.
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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 my readings of the week, the highlight was Carta's Q1 2024 Private Markets Report. Although Carta's data is predominantly U.S.-focused, it offers valuable insights for drawing parallels with the LatAm tech ecosystem. Please find below the highlights:
Fundraising Trends:
Q1 figures were in line with expectations: 1,064 total rounds and $16.3 billion in cash raised. (Note that these figures might change slightly as startups continue to report their rounds with a certain lag.)
With the final data, Q1 will likely look similar to fundraising numbers from each of the past few quarters. When looking at the graph, it's evident that quarterly fundraising numbers from 2023 resemble those of 2018, 2019, and the first half of 2020. This confirms that the bull market of 2021/2022 was an outlier, as mentioned several times here.
On to the basic numbers:
Deal count (1,064) dropped 29% QoQ, marking the sharpest decline in the early stages.
Seed and Series A deal counts dropped by 33% and 36%, respectively.
Bridge rounds remain a popular fundraising option for founders at every stage: 42% of all rounds raised by seed-stage companies were bridge rounds; 43% of Series A deals were bridge rounds, the second-highest rate since the start of 2021; and 26% of Series D deals were bridge rounds.
Despite a reduction in deal count, the total cash invested rose to $16.3 billion (vs. $16.1 billion in Q4 2023).
Series C stages saw a notable rebound with a 130% increase in new capital and a 14% increase in deal count, marking the busiest quarter for the stage since Q2 2023.
The figures above reflect robust investor confidence at later stages, which is important for overall market sentiment. Median valuations at the seed and Series A stages remained resilient, demonstrating sustained investor interest in early-stage ventures despite the deal count drop.
Valuation Trends:
At the seed stage, Series A, and Series B, median valuations have been much more resilient than deal count over the past two-plus years. For instance, the median pre-money valuation at the seed stage declined just 0.2% between Q1 2022 and Q1 2024, while deal count fell by 43.5% over the same period.
At the later stages, however, the trend is reversed: At Series C and Series D, round counts have been more resilient than valuations. The median Series D valuation dropped by 71.8% from Q1 2022 to Q1 2024, compared to a 58.9% decline in Series D deal count.
The scale of the decline in median valuation since the start of 2022 also correlates with the venture timeline: The later the stage, the larger the decline.
Looking at the bright side… (you all know I am an optimist)
Series B valuations have bounced back significantly over the past two quarters. The median valuation in primary Series B rounds jumped by 33% between Q3 and Q4, then rose another 15% in Q1.
The median valuation for primary Series C rounds rebounded notably in Q1, rising to $195.7 million, up 48% from the prior quarter.
The median valuation in transactions at Series E and beyond has now increased for four consecutive quarters, rising to $841.2 million in Q1. This represents a 37% increase compared to the previous quarter and a whopping 236% year-over-year increase (note that this data is based on a relatively small sample of deals, but still…).
Furthermore, a recent survey by Pitchbook also collaborates with my optimistic side. According to the H1 2024 Tech Survey analyst note, venture GPs are more optimistic about fundraising and the IPO market compared to a year ago. They largely expect asset valuations to become more attractive in the coming months, which is supporting market activity, though still at subdued levels. While AI remains a significant focus, investors are concerned about potential overinvestment.
Interest rates continue to be a key factor in market activity, along with the need for founders to moderate their valuation expectations. Although several managers have delayed fundraising plans or decided against opening another fund, the majority reported no changes to their current fundraising strategies.
Employment and Dilution Terms:
While layoffs continued, they showed a declining trend by March 2024, suggesting some stabilization in the job market. Additionally, employee stock option exercise rates increased slightly for the first time since 2021, indicating renewed employee confidence in the market.
Median dilution in venture rounds declined in Q1 at every stage from seed to Series C. Lower dilution means that founders are selling off a smaller percentage of their company’s equity in new funding rounds. This could be due to either a) the valuation of the round being lower than what the founder anticipated, prompting them to sell less of their stake as they believe the company is worth more, or b) founders regaining confidence and wanting to hold more of their stake in their companies.
Deal Terms:
There was an increase in structured deal terms such as liquidation preferences, indicating stronger investor leverage. This trend underscores a cautious investment environment where investors seek additional protections. Liquidation preferences (over 1x) appeared in 8% of the deals in Q1; participating preferred in 6.2%; and cumulative dividends in 9.5%.
***if you like this theme, be sure to read the section “What did I learn from readers” as I will share an interesting reflection by Rafael Campos, Partner & Venture Capital Director at VOX Capital.
Runway; M&A terms and IPOs:
Startups that raised a primary Series A round in Q1 had waited a median of 766 days since their seed round, the longest interval of any quarter since the start of 2019. For companies raising a Series B, the median interval between rounds was 824 days, also the longest it’s been in the past five years.
Remember, more time between rounds means more runway is required.
The number of startups exiting through M&A has remained quite steady over the past several quarters. Q1’s count of 151 transactions represents a 5% increase compared to the prior quarter and a decline of just 1% compared to a year ago. In both 2022 and 2023, Q1 was the busiest quarter of the year for startup M&A activity. Activity in the IPO market has picked up a bit in 2024. Through the end of April, U.S. stock markets were on pace for nearly 150 new listings this year, compared to 108 in 2023. So far, that uptick in the most high-profile corner of the exit market hasn’t correlated to an increase in M&A.
General news:
Argentinian fintech Ualá announced a 9% workforce reduction, citing regional role duplications following recent investments in Argentina, Colombia, and Mexico. The layoffs, impacting 140 employees, aim to enhance efficiency and product development, according to a company statement.
Ivo Mósca, former Itaú executive, assumes the role of innovation director at Febraban. With 20 years of experience, Ivo previously served as Superintendent of Regulatory Strategy and Innovations at Itaú Unibanco.
Brazil has overtaken Belgium as the largest export market for Chinese new energy vehicles, industry data showed, as Chinese carmakers increase sales to non-European markets amid European Union's anti-subsidy probe into Chinese electric vehicles.
Zé Vip, a Brazilian startup specializing in automotive cleaning delivery services, has invested in the franchise sector and now operates in five cities across the Southeast and South of Brazil. The platform participated in the 2023 Sebrae Entrepreneur Fair and has confirmed its presence at the ABF Franchising 2024 event.
Deals:
Consignei, a startup from Amapá, has raised R$ 3 million and currently has R$ 30 million available for lending in the Amazon region. The company specializes in payroll loans for public sector employees and aims to move R$ 100 million by 2025. The funding was provided by the investment management firm Bertha Capital.
Flokzu, a Uruguayan Business Process Management (BPM) platform that entered the Brazilian market in April of last year, has been acquired by Hyperclear Global Investments, a holding company based in Mauritius, Africa. The transaction involved 100% of Flokzu's shares and aims to accelerate the international expansion of the business.
Fintech company Yolo Bank has been selected by the accelerator Antler to join its fourth cohort of resident startups.
General news:
Milton Maluhy Filho, CEO of Itaú, the largest bank in Latin America with nearly R$ 2.8 trillion in assets, has been named "Executive of Value" in the Financial Services category of the Valor Economico Award.
OpenAI Establishes New Committee to Assess Safety and Security. OpenAI has announced the creation of a new committee dedicated to evaluating safety and security issues, particularly in light of its recent advancements in artificial intelligence. This initiative follows the company's involvement in a legal dispute concerning the voice assistant Sky and actress Scarlett Johansson, related to the new GPT-4o AI model.
Freelaw, a company that connects law firms with professionals, announces Matheus Palermo, formerly of Loft and Banco Inter, as its new Head of Sales. This investment in the executive is part of the brand's growth plans.
Deals:
Accountfy announced the start of its Series B fundraising with Redpoint and HDI. Financial management platform has already raised $6.5 million in the round to expand its product and service portfolio.
Digital bank Inter, which already held a 50% stake in the acquiring company Granito, announced the purchase of the remaining 50% from BMG bank. With this R$ 110 million transaction, Inter becomes the sole shareholder of the business, founded in 2015.
General news:
Strengthened by capital increases from the group and LuizaCred, MagaluBank, the financial arm of the retailer, is investing in digitalization and launching new offerings like a Buy Now Pay Later product.
Foxbit launches a cryptocurrency payment card. The Foxbit Card is issued by Argentina's Pomelo and also allows digital currency withdrawals at Banco24Horas.
Open Finance Could Generate R$ 42 Billion in New Credit Revenues for Banks.
According to a PwC study, more efficient technologies and services help financial institutions mitigate credit defaults.
The 100% biodegradable and compostable bioplastic from greentech ERT Bioplásticos will be used to package computers from Positivo Tecnologia's brands. ERT is a pioneer in Brazil in producing 100% biodegradable and compostable resin on an industrial scale. The greentech receives investments and strategic support from Positivo Tecnologia through its Corporate Venture Capital (CVC) program.
Nuvei bets on the betting industry and its own acquiring services to grow in Brazil. The global payments fintech, which has been in Brazil for seven years, sees significant opportunities in the regulation of betting and the expansion of its acquiring services.
Deals:
Actiz raises R$ 1.2 million in seed round and plans expansion in the quality control market. The Capixaba startup received a new investment led by InvesTech and aims to strengthen its presence in various industrial sectors.
General News:
Ice Capital launches an offer to bring Brazilian animation to the big screen. The Ollie Project will explore new technologies and work with a lean team to deliver a 50% return to early-stage investors. The funding will be raised through non-incentivized Audiovisual Investment Certificates (CAV) in an offer of approximately R$ 400,000 on the alternative investment platform.
Loggi announces the appointment of Viviane Sales as the new Vice President of Sales. She will be responsible for planning, customer success and experience, operations, and commercial strategy
Deals:
Maranhão startup that facilitates surgeries raises $1.5 million.
Syn Saúde secured funding from Osten Moove, the investment vehicle of Fabiano Nagamatsu and Jorge Yamaniski. The funds will be used to expand the startup to other states
General News:
With the aim of strengthening the female innovation ecosystem in Brazil and making Venture Capital more inclusive, Sororitê, the largest network of angel investors in the country, has already invested over R$ 6 million in 16 women-founded startups.
Turbi, a 100% digital vehicle rental and subscription startup, has officially entered the offline market with the launch of a store for selling used cars. Founded six years ago, the company expects to sell 130 vehicles per month at the physical location, which will open to the general public next Monday (3/6) in São Paulo.
According to a McKinsey survey, 72% of companies worldwide are already using AI. 2024 will be the year when organizations start to truly leverage this new technology and derive value from it.
Deals:
The edtech for developers, Full Cycle, has announced the acquisition of Faculdade Nossa Senhora de Lourdes in Porto Seguro (BA). The institution will now be known as Faculdade Full Cycle de Tecnologia and will operate remotely. With this acquisition, the startup aims to expand the range of qualifications available for technology professionals. Full Cycle plans to generate R$ 38 million in revenue this year.
BeConfident: The startup, which developed an AI model for practicing English via WhatsApp, has raised a seed round of R$ 2.5 million. The round included 20 angel investors, such as Gina Gotthilf from Latitud Ventures, and executives from companies like QuintoAndar, 99, and Rappi.
Psyche Aerospace: The aerospace startup specializing in agricultural spraying solutions has received an investment of R$ 15 million from an undisclosed investor. The funds will be used to develop its product, an autonomous spraying drone.
Tech Events Radar:
All events held in the calendar year of 2024
ABVCAP Experience
Dates: June 10 - June 12
Location: Sao Paulo
Description: Major event in the private equity and venture capital sector in Latin America. This event offers extensive networking opportunities and valuable insights through various sessions and workshops. It will feature over 50 speakers and expects around 600 participants, providing a platform for knowledge exchange and fostering a comprehensive view of the alternative assets industry.
Volpe Capital Tech Breakfast
Date: June 10
Location: Sao Paulo
Description: Volpe Capital is holding a special breakfast for LPs on June, 10th to discuss trends in Latin America for the Venture Capital and technology markets. The event will take place at the Skye Restaurant & Bar at the Unique Hotel in São Paulo from 7:30 to 9 a.m.
**invite only
FII PRIORITY Summit
Dates: June 11-13
Location: Rio de Janeiro (Copacabana Palace)
Description: This event, themed "Invest in Dignity," is organized by the FII Institute and aims to explore how investments in ecological transition, technology, innovation, and social inclusion can build a new global order that prioritizes dignity for all. The summit will gather global leaders, government officials, investors, CEOs, entrepreneurs, and cultural icons to discuss critical topics.
VC Vision by Cubo
Dates: June 14th
Location: São Paulo - Cubo ItaúDescription: Cubo for Investors' flagship event of the year, bringing together experienced GPs and LPs from the region. This event will address two key challenges for the industry of Venture Capital in Latam: fundraising and liquidity. There are 2 sessions: a Keynote with an international Limited Partner and a panel about liquidity with 3 different perspectives: IPO, M&A, and Secondaries. Besides this, there will also be roundtable sessions for partners in VC Firms and Institutional Investors.
World Agri-Tech South America Summit
Dates: June 18-19
Location: Sao Paulo
Tech Trends Sao Paulo 2024
Dates: June 25-26
Location: Expo Center Norte - São Paulo-SP
Description: The Tech Trends São Paulo 2024 is the meeting point for those looking to turn ideas into actions through technology and innovation. The event integrates the entire innovation ecosystem, bringing together government, market, startups, investors, and academia. Connections, business opportunities, and high-quality content all in one place! Learn more:
Febraban Tech
Date: June 25-26
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
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
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
Location: Rio de Janeiro
Description: Part of the global DevOpsDays series, this conference focuses on IT improvement, featuring sessions on DevOps culture and practices.
Colombia Tech Week:
Dates: August 26 - September 3
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.
Chief Data & Analytics Officer Brazil Live:
Dates: September 10-11
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.
Sao Paulo Tech Week
Dates: Sept 16-22
Location: São Paulo
Description: Several events focused in LatAm Tech taking place in the city.
MMA INNOVATE BRASIL 2024
Date: Oct 22
Location: Sao Paulo
Description: MMA Innovate Brasil 2024 is poised to be a significant event in the marketing and technology landscape of Latin America. The event focuses on exploring the intersections between technology and creativity, featuring some of the most innovative thinkers in the industry, including CEOs, CMOs, and high-level executives from various industries, as well as academics and technology specialists.
#fswk24 - O Momento Atual dos VCs na Saúde
Date: November 6
Location: Rio de Janeiro
Description: This event focuses on the current landscape and opportunities for venture capital investments in the healthcare sector. Attendees will gain insights into the latest trends, challenges, and strategies for investing in health tech startups and innovative healthcare solutions.
What did I learn from readers?
My friend & avid reader of the newsletter, Rafael Campos (Partner/ Venture Capital Director at VOX Capital) shared with me a very interesting reflection on a theme I mentioned above: bridges & liquidation preferences.
In Venture Capital in 2024, bridges have expensive tolls!
“Recent data from Carta indicates that bridge rounds tend to carry higher liquidation preferences than conventional rounds.
A "bridge" round in venture capital is a type of interim financing that aims to provide additional capital to a startup while it prepares for a larger investment round or a liquidity event, such as an acquisition or an IPO. These rounds are designed to "bridge" the gap between the company's current financial situation and its next phase of growth or fundraising. Bridge rounds may be necessary when the company faces product development delays, needs to adjust its market strategy, or simply needs more time to reach important milestones that attract investors for a subsequent round.
Liquidation preferences tend to be higher in bridge rounds compared to conventional rounds due to the greater risk associated with this type of investment. Investors participating in bridge rounds are generally aware that the company may be facing significant challenges and, therefore, require more favorable terms to compensate for the increased risk. These more favorable terms often include higher liquidation preferences, ensuring that investors recover their capital before other shareholders in the event of liquidation or sale of the company.
During the recent decline in VC transaction volume worldwide, observed since mid-2022, the number of bridge rounds has increased. Part of the cost of these tolls will be charged in subsequent rounds of these startups, and we will certainly see impacts on the negotiations of future transactions. Perhaps the only beneficiaries will be the law firms, as transactions carrying these bridge terms will be somewhat complicated...”
What am I reading?
Benjamin Robinot’s substack - great read on macro themes & current events
The 2024 Private Equity and Venture Capital Outlook - S&P Global Market Intelligence
What am I listening to? What am I watching?
DOM - Amazon Prime series based on true events about Pedro, a boy from Rio de Janeiro's middle class who is introduced to cocaine in his teen years, putting him on the path to becoming the leader of a criminal gang that dominated the tabloids in Rio in the early 2000s.
Quote of the week:
“Sometimes the road less traveled is less traveled for a reason…” Jerry Seinfeld