LatAm Tech Weekly
#50 - Q2 numbers and good news; Mercado Libre; Upload Ventures; deals of the week... and much more!
Happy Sunday!
Before I dig in this week’s numbers and news, a couple of quick notes:
I am doing a quick research on the attendance at this year’s Web Summit Lisbon. Please help me out by responding to this e-mail if you intend to go!
I will (finally) take some days off - so no newsletter next week. To make it up for you, this week I wrote an “extended” version :)
As mentioned last week, Q2 venture numbers are out. I took my time to read data and articles from CB Insights, Pitchbook, Tech Crunch and Crunchbase - below is a summary and some key takeaways.
The global private markets' expansion saw record-breaking activity in fundraising, fund performance and dealmaking. The current volatility has yet to be fully captured in these three fronts. However, recent data is showing a hint of what’s to come.
Talking about fund performance, preliminary data from Q1 shows that VC returns have turned negative. However, funds continue to invest. For the first half of this year, Tiger Global Management leads the pack followed by Softbank Vision Fund and Insight Partners coming in third place.
On deal-making, globally startups raised in Q2 $108.5B in venture funding. Figure below last quarter and also south of what was seen in Q2 2021 - but still a good number when compared to all quarters of 2020, for example. As you know, I am an optimist and always looking at the bright side - below the good data from global numbers:
Funding to startups in Africa is on track to hit a new annual record.
Europe was resilient. Startups on the continent only saw a 13% dip in funding QoQ vs. major regions like the US and Asia, which saw a 25% drop each.
Median deal size was up by $1M from 2021 for angel investors, the only investor group to see positive change in 2022 so far.
Talking about LatAm, Brazil continues to be the favorite country for venture capitalists. In the first half of 2022, there were 375 venture capital investment rounds totaling USD 3.1bn. This is a 15% increase in the number of transactions despite the current turmoil, but a decrease in capital invested. Mexico comes in second with 84 deals - USD1.7bn. A 9% increase in the number of deals but a 14% decrease in the capital invested. The mega rounds are also still happening, such as Colombian Proptech Habi with USD 200mm, Brazilian software startup Mosyle with USD 196mm, and Mexican Justo with USD 152mm.
Focusing on Brazil, Q2 saw USD900mm in investments across 118 deals. Talking about stages, also suprisingly, late stage deals share increased from 14% in 2021 to 17% YTD 2022.
Finally, going into the fundraising part: we all know VC Funds worldwide raised a considerable amount of capital last year. New data from PitchBook and the National Venture Capital Association indicate that while the pace of venture capital investment is slowing, venture capitalists are sitting atop more investable capital (dry powder) than ever before.
Even more, the pace at which venture investors are raising funds is high compared to historical norms, meaning that private-market investors are in aggregate not struggling to raise, even if their portfolio companies may find themselves in a very different situation. The natural question that comes to mind: why are venture investments slowing when so much capital has been raised by VCs to invest?
According to PitchBook data, in the US (which is a good proxy for the industry as a whole) venture capital raised but not disbursed - “U.S. VC capital overhang” — reached USD 198 bn in 2020, USD 234 bn in 2021 and USD 290 bn at the end of the second quarter of 2022.
It is important to note that the mega-rounds are a huge portion of the value of the venture capital market in recent years, but, these rounds are seeing a pullback - so naturally dry powder is (as of now) here to stay…
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Carbonext, Brazilian startup focused on assisting companies in the areas of climate change and GHG emissions offset by purchasing and selling carbon credits, receives a USD40mm investment from Shell.
PicPay launches a crypto exchange and will launch its own stablecoin.
Swedish payments firm Klarna raised USD 800 mm of funds at a valuation of USD 6.7 bn, down around 85% from the USD 46 bn price-tag it attracted last year.
Alice, Brazilian healthtech, fired 69 employees.
Goldman lends MELI USD $233 mm for credit growth in Brazil and Mexico:
MercadoPago will use USD $106 mm to boost its credit portfolio aimed at individuals and smaller businesses in Brazil, and USD $127 mm is earmarked for Mexico.
Brazilian Captable launches the Captable Marketplace, platform that will allow companies that were invested in the equity crowdfunding round to recieve new investments.
Brazilian ERP Omie reaches the mark of 100k customers –currently, BRL 16bn in invoices go through the platform per month.
Upload Ventures, new Brazilian VC fund composed by former early stage Softbank team led by Marco Camhaji and Rodrigo Baer combined with Corton Capital- growth fund led by Mario Moraes and Carlos Simonsen, emerges with dry powder and a portfolio of 12 startups (all investments of the previous firms). The idea is to raise USD 200mm - and do a first closing in August.
Appito, Brazilian startup that supports the amateur sports community through its tech-enabled arenas raised a USD 5mm Series A from GFC and Iporanga Ventures.
Brazilian Vibra Energia just launched its CVC strategy, Vibra Ventures, with BRL 90mm to invest in startups and scaleups that have complementary technologies to the Company.
Itaú Unibanco, plans to launch an asset tokenization platform that transforms traditional finance products into tokens and also offers crypto custody services for its customers. The new unit will be called Digital Assets.
Payments giant Stripe Inc., last valued by private investors at $95 billion, cut the internal value of its shares by 28% – from about USD40 to USD29.
Mexican fintech Stori achieved a valuation of $1.2 billion after extending its Series C with $150 million led by BAI Capital, GIC and GGV Capital.
What did I learn from readers?
This week I recieved from two sources Coatue’s most recent presentation to investors. The 42-slide presentation outlines the steps the firm took to protect its investors' capital, the challenges and opportunities it sees, and its three favorite stocks, Tesla (TSLA), Nvidia (NVDA), and Datadog (DDOG). Coatue cites Lemonade as an example of a "broken business model" and is expecting further drops, but recommends Tesla and Nvidia as good buys.
Coatue’s experts clearly outline the domino effect which is far from over, as the falls are seen in high-tech sector. Companies' forecasts for their business performance have yet to adjust to the new macroeconomic situation.
Coatue compares the current situation with the dynamics of the bear market after the dot-com bubble burst in 2000 and shows that in the first phase of the crisis that lasted between March and July 2000, there were sharp declines in "low-quality" technology stocks, tracing a parallel with high-tech companies registering losses recently. The second phase was from July 2000- July 2021, when shares of the big and good technology companies started suffering. And only then, in the third phase, was it the turn of all public companies, from the financial sector to the pharma sector, to fall. This phase was the longest of all and ended only towards the end of 2002. Therefore, if the current situation unfolds in a similar fashion to 2000, then the current bear market could last close to two years.
Needless to say, the firm is exceptional. The deck is a must-see for everyone interested in tech.
What am I reading?
What did I listen/watch?
Can Latin American Tech Sustain its Momentum? Interview with Francisco Demalde, Co-Founder and Managing Partner at Riverwood
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Quote of the week:
"Never work for other people at what you do. Always remember that the reason that you initially started working was that there was something inside yourself that you felt that if you could manifest it in some way, you would understand more about yourself or how you coexist with the rest of society” —David Bowie
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