LatAm Tech Weekly
#67 - Powered by Nasdaq: PIX turns two, NeuralMed, Softbank loss, VC league tables and much more!
Happy Sunday!
The Brazilian PIX turns two! It is already the most used payment method in the country, with a monthly volume of close to BRL 1 trillion. Want to know more? Take a look at the “What did I learn from readers” section, as I have received multiple reports on the theme by you! On another note, but still on the Brazil fintech theme – I will participate on a live next week about the latest industry and regulatory accounting aspects in Brazil for fintechs organized by local one-stop shop platform for business solutions, Corp Services. If you are a fintech and Portuguese speaker and want to be up to speed with these themes, subscribe for the webinar here.
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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.
Now, on to the usual market overview. It is no news that the venture capital ecosystem his going through a turbulent year. Amid macro headwinds that have left a mark on dealmaking, investors are still uncovering areas of opportunity. Pitchbook released this week he latest edition of their Global League Tables. The interactive tables break down the most active investors by region, industry, deal type and more, along with ranking advisers, acquirers and law firms. Below you will find the most active VCs globally regardless of stage alongside the number of deals.
Also, a tough year on the exit front. Wondering about yours? Here you can find the most active acquirers of VC backed companies globally YTD:
While 2022 shows fewer and smaller deals and exits—fund sizes continue to get bigger as LPs seek out experienced managers to help them weather the storm.
A recent report showed that the median size of US VC funds has grown 38.9% from last year to stand at $50 million in Q3 2022. While some of these vehicles began fundraising before the downturn, the numbers suggest that capital commitments have yet to dry up.
Looking at the more resilient sectors for investing, a recent study from CB insights showed that Investment to insurtechs dipped just 4% in Q3’22 from the previous quarter. When we compare this to the declines in fintech (-38%) and venture overall (-34%) – insuretech is in fact doing well. This is true also for startups that help reduce carbon emissions as their dealmaking and valuations is actually improving. The carbon and emissions tech vertical is on track to register a record year. Deal prices jumped across the board and nearly doubled at the early stage.
On the unicorn front, there are currently 1,204 unicorns valued at $3.9T. Full list here.
I will end the intro this week highlighting a few global tech news. Despite the fact that this is a LatAm tech newsletter, these happenings due affect the region so they are worth noting:
- Twitter: After laying off thousands of employees over the past few weeks, Elon presented something of an ultimatum to those remaining: commit to being “extremely hardcore” as “part of the new Twitter” or leave with three months severance. It is unclear at this point) how many declined the ultimatum, but all indications are that it was hundreds/thousands
- FTX & SBF: For some reason the founder of FTX — the once massive crypto exchange that imploded last week — decided to do an interview. His biggest regret in all this? Weirdly, filing for bankruptcy.
- Amazon layoffs: Rumors suggested layoffs are on the way at Amazon, with some estimates suggesting upward of 10,000 would be let go. This week the layoffs began, with CEO Andy Jassy writing in a memo that the layoffs will continue into next year.
- Elizabeth Holmes, the infamous founder of Theranos, has officially been sentenced to 11.25 years in prison for fraud. The sentencing comes months after Holmes was found guilty on four of 11 counts related to defrauding investors.
NSTech, Brazilian startup that provides a connected ecosystem of technology for logistics and mobility focused on solving current and future business pains of all links in this chain has already invested BRL 1.4 bn and is now preparing M&As abroad. Tarpon and Greenbridge invested BRL 800 mmm in the business, which already generates BRL 100 mm in net revenue per year.
The tokenization of the economy should help move a market that will reach just over USD 13.5 bn by 2030, according to a report recently released by the market consulting firm Grand View Reseach. The phenomenon refers to a new trading trend of the 21st century, through which physical goods, intellectual and artistic production and a multitude of products and services can be transformed into tokens through the use of blockchain technology.
SoftBank sinks 12% after loss and no new buyback program. Cumulative returns on SoftBank’s Vision Fund and Latin America portfolio plummeted from a gain of USD 56 bn a year ago to an overall loss of USD1.5 bn in its most recent report.
Fintechs in the Dominican Republic are showing strong growth, as the companies seek to create a regional hub.
Leadsales, Mexican company that aims to develop a customer relationship management (CRM) solution for WhatsApp and other social networks, raised a seed round of USD 400k with funds such as AngelHub, Cross Ocean Ventures, and Ganas Ventures.
Nubank shared its results for Q3: revenue increased 171% YoY to USD1.3bn, after adding ~5 million new customers (+46%). The company also turned a profit for the first time: USD 7.8mm in net profit against a consensus estimates of a USD 25mm loss.
MercadoLibre is making its first approach into proptech: a new partnership with SimpleState, a property platform that allows the average person to invest in residential and commercial real estate.
4 out of 10 organizations in Brazil use training with gamification to develop employees. This is according to a survey carried out by Gupy, Brazilian technology company for human resources.
NeuralMed, Brazilian company that uses proprietary algorithms to mine and refine structured and unstructured patient data by developing AI solutions that analyze images and texts in real-time to impact the efficiency of the patient care journey, raised a seed round of USD600k with GK Ventures. Personal congrats to my dear friend and investor of the firm Raphael Falcioni!
Brazilian banks should close the year with an investment in technology of around BRL 35 bn . Of this total, approximately BRL 3.5 bn should be allocated to the area of information security.
Latin American corporate payments provider Tribal announced its acquisition of Paykii, a B2B cross-border bill pay platform.
The brokerage firm Avenue has just completed the acquisition of the myProfit platform, which helps investors understand and automate income tax in financial transactions - one of the main items that scare off those interested in buying shares abroad due to the lack of know how in taxes. The two companies had already worked together in 2020, with myProfit offering the service directly to Avenue customers in a white label product. This relationship directly influenced the closing of the transaction, which was made 70% in equity and 30% in cash, in an undisclosed amount.
Trully, Mexican collective intelligence identity enrichment platform, raised a USD 4.1mm seed round with Costanoa Ventures.
Arklok, Brazilian company that provides IT outsourcing services such as pc as a solution (PCaaS) and hardware as a solution (HaaS) raised an undisclosed amount by Vinci Partners.
Stone reported good and better-than-expected 3Q22 results. Adjusted net income came in at BRL 163 mm (vs. BRL 77 million in 2Q22), beating estimates mainly on a combo of higher take rates and surprisingly low financial expenses. Operationally, Stone gained share thanks to SMB advances while continuing to adjust prices upward. Revenues rose 9% QoQ, well ahead of volumes (3%), bringing significant cost dilution.
Payment via Pix at Itaú’s acquirer Rede increased by 70% in the amount transacted – considering those made by individual customers (CPF) to legal entities (CNPJ) – and 124% in the number of transactions in the third quarter of 2022 compared to the same period of 2021.
Itaú Digital Assets, the business unit responsible for the bank's crypto asset tokenization and infrastructure, hired José Augusto Antunes to lead the operation. Guto Antunes, as he is known, will replace Vanessa Fernandes. He is a former institutional vice-president of Crypto.com in Brazil and holds experience at 2TM, the holding company that owns Mercado Bitcoin (MB).
In an interview with Bloomberg Línea, Airbnb’s co-founder Nathan Blecharczyk acknowledges the importance of the Brazilian and Mexican markets and aims to focus and expand operations in the region.
Brazilian benefits startup Flash enters another billionaire HR segment after getting expenses under control. Flash created a business unit that will have a SaaS platform for HR, increasing the startup's addressable market by over BRL 10 bn.
Finkargo, Colombian company that develops a software platform for import financing that is intended to speed up and fund international trade processes for SMEs in Latin America, raised a credit line of USD75mm with Community Investment Management.
Zulu, a Colombian digital wallet builder, raised a $5 million seed round.
Whatsapp for Business: People will now be able to search for a brand or small business directly on WhatsApp, either by browsing a list of categories or typing in a name. Brazil debuts the strategy.
What did I learn from readers?
PIX turns two!!!
Pix has more transactions per capita than any similar system in other countries.
Until October, it has accumulated 101 annual transactions per capita, against 49 in Denmark, and 31 in the United Kingdom, where a similar tool has been used for 11 years. According to the Brazilian Central Bank, at the end of 2021, Pix was already the most used electronic payment method in the country and, in 2022, the amount of transactions continued to grow rapidly. Transfers between people are still the largest share of transactions (67%), but payments from people to companies are gaining relevance every month (from 5% to 23% of transactions), with the use of the QR Code becoming popularizing each day (from 6% to 19%).
PIX also has an evolutionary list, such as its function similar to automatic debit. This functionality will make it easier to make recurring payments, giving users greater convenience, reducing bad debt and eliminating the need to enter into bilateral agreements, as currently occurs with direct debit, which will provide greater ease and cost reduction for receiving companies. In addition, there is also another possibility in the future: the interconnection with payment systems in other countries.
Very happy to see PIX evolving so fast! Go Brazil!
What am I reading?
Comp: How much does founders of VC Backed Companies Get? (PT only)
How tech is making women’s healthcare more equitable and accessible
What did I listen/watch?
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Quote of the week:
“The creator economy is booming, and it’s not just Instagram models posting selfies on a beach in Ibiza. Developer-influencers — a strange new type of creator, like the vloggers and streamers before them — are a very real thing. Projects serve as their content and monetization rolled into one.” - Ben Stokes