This week I was part of two interesting events. Itau BBA hosts a monthly woman only lunch called “Mulheres em Foco”. The theme of the month was Corporate Venture Capital – and I had the honor of being the host. I invited Ilana Horta, seasoned corporate venture capital investor who has passed through several companies, the last being Faber Castell and Marie Timoner, Head of Business Development and RX Ventures at Renner, one of the biggest retailers in Brazil. It was great to see over 70 attendees and discuss the market as CVC becomes increasingly important in the region. Currently, close to 49% of big corporations in Brazil have a structure in place for such investments.
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I was also a panelist at Gramado Summit, alongside Diogo Garcia (KPMG) and Rafael Campos (VOX Capital) talking about State of Venture in Brazil and Latin America. We discussed Q1 numbers, prospects for the industry and trends given the current market environment. I would like to thank Gustavo Brigatto and Startups.com.br for the invite!
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 the usual market update – Crunchbase released its most recent rank of most active global investors YTD. A16Z and General Catalyst are at the top of the list this year. Names such as Tiger Global and Softbank Vision Fund seem to be taking a break after their recent investment spree as they were not even among the top 20. As mentioned last week, it is true that volume of investments decreased. But, while many of the busiest investors in Q1 are mostly backing fewer rounds than they did a year ago, several have actually picked up the pace. Below, you can see the 10 most active lead or co-lead venture investors in Q1:
On to another theme – it seems like the trend of “opportunity funds” is somewhat fading. According to Pitchbook data, a total of $9.4 billion was raised across 70 VC funds that had the word "opportunity" or "select" in their name in 2022. But only six such funds have been raised so far this year, and investors expect this figure to stay low for a while. With the rise of interest rates and publicly traded tech stocks seeing lower valuations, investing in mature private startups becomes more challenging. With that, late-stage investing has dropped, and early-stage investors suddenly found that fewer of their portfolio companies were on a path to receive large valuation step-ups. The result: Fewer opportunities for opportunity funds.
There was also last week a Venture Debt Conference in New York. I was able to talk to some of the participants, who mentioned that the prevailing sentiment from panelists was that demand for venture debt is increasing everyday. This is expected due to recent events. The ecosystem actually needs these lenders with high-level expertise. But, the selection bar for borrowers has also risen significantly.
Finally, even though I did mention the region’s numbers for Q1 last week, I did not elaborate. Therefore, let’s now take a deep dive using this week’s Crunchbase article:
What happened?
An important point to note in 2023 is the extent to which previous active investors have cut back. Softbank, which participated in 34 rounds in 2021-2022, joined just two this year, while Tiger who was previously very active, did not participate at all YTD.
Large rounds of USD100mm + were also inexistant in Q1 2023. Last year, Softbank participated in 6 deals of such size. For Q1, late-stage and technology growth investment was down 87% from a year ago. Also, going against what the general market is saying – data showed that early stage did took a hit in Q1. Per Crunchbase data, reported seed investment was down 73% YoY. Note that it is expected that this decline will likely get a bit less pronounced over time.
But, as always - I will end on a postive note. Investors continue bullish on Latin America - and they should be! Positive indicators continue to appear such as the recent ~USD1bn raise by Kaszek in two new funds. Keep the good news coming!
General news:
The Brazilian Central Bank informed a new record for daily PIX transactions: 122,4 million operations with a volume of BRL 62.9bn. This occurred on April 6. By means of comparison, the last record was on December 20 when 104 million operations occurred.
The Brazilian Central Bank also announced that the discussion on regulation for cryptocurrencies and tokenization of assets is a priority for 2023. The entity conducted a conference call available to the public focused on the “Real Digital”, confirming that the blockchain used will be Hyperledger Besu due to the fact that it is compatible to the Ethereum Virtual Machine.
Web Summit Rio will have more than 15k attendees and 750 participating startups. The event happens from May 1st through May 4th and has sponsors such as Itau Unibanco, Magalu and Petrobras.
KPTL, Brazilian VC, announced that they are shutting down their crypto focused strategies.
Deals:
Rappi announced the acquisition of Box Delivery, a Brazilian last-mile delivery service that generated BRL200m in revenues last year. Terms of the deal was not disclosed.
ZI, Brazilian fintech that offers a digital wallet for teenagers raised a BRL54mm round co-lead by Homebrew, Parade Ventures e Kindred Ventures.
BB Ventures, CVC arm of Banco do Brasil, announced the investment of BRL 4mm in PayFy, platform for expense management and mileage reimbursements for businesses.
Radar, fintech from Chile that offers a payout application programming interface (API) that enables automatic payment disbursement, raised a USD300k seed round with Irie Investments, Seedstars, and Vertical Partners.
General news:
WhatsApp is introducing the ability for users to directly pay businesses through chat in Brazil. This means that people in the country can have end-to-end shopping experiences, from discovery to payments, within the app. This move finally unlocks the merchant payment market in Brazil for WhatsApp.
Take Blip, Brazilian platform with solutions to create conversations between companies and customers optimizing for automated and human service, launches their operations in Mexico.
Agtech: Superbid Exchange buys Canal do Campo and targets a BRL 5 billion market. With the acquisition, the company, owner of a platform that enables auctions and B2B transactions, strengthens its presence in agribusiness.
Marcelo Lombardo, founder of Brazilian ERP Omie, announced that the company is focused in their breakeven – without sacrificing growth. Currently, BRL 20bn per month passes through the platform. Omie has 120k clients and saw a 76% increase in recurring revenue YoY.
Mindset Ventures, Brazil based Series A venture capital firm is looking to raise USD 100mm in its new fund. Mindset is focused on tech and software investment in the U.S. and Israel.
Former CEO of Banco Carrefour, Carlos Mauad, joins Magazine Luiza to lead the company’s fintech. The inititiave has currently 8.9 million checking accounts and 7 million credit cards issued. Last year, its TPV was BRL 91bn.
AME Digital, fintech owned by Americanas, reported a loss of BRL 696,644 million in 2022.
Deals:
Suzano Ventures, the corporate venture capital (CVC) of the world's largest pulp&paper producer, closed its first investment in a startup. The Brazilian company will invest up to US$ 6.7 million in Allotrope Energy.
Infleet, Brazilian fleet management platform that makes operational control for logistics and equipment management tasks, raised USD 1mm in a convertible note issued by Citrino Ventures and other undisclosed investors.
Instaleap, Colombian SaaS platform for e-commerce orchestration raised a USD5mm Series A round with Eduardo Castro-Wright, Pegasus, and Redwood Ventures.
KIO Networks acquired Colombian IT services company Zetta Datacenter Complex. Terms of the deal were not disclosed.
General news:
The Brazilian Central Bank will select and announce the financial institutions that will participate in the pilot of Real Digital (CBDC) in May. The pilot will take place in the beginning of 2024.
Bitcoin reserves for El Salvador registers a loss of 29% despite the recent rally. The country started buying the cryptocurrency when it was close to its peak.
The software that underpins the second-biggest crypto coin Ether upgraded on Wednesday, giving investors access to more than $30 billion of the digital tokens.
Traive, fintech focused on connecting Brazil’s agribusiness credit needs with the local capital markets, raised a Series A of USD 10 million with Basf at the end of 2022. The company is now preparing for its Series B, which should take place in 2024.
Another record for PIX: its acceptance rate in the e-commerce sector just reached the 93.2% mark.
General news:
Softbank sold most of its remaining stake in Alibaba Group – going to only 3.8%.
Amazon is recruiting third parties to host models on AWS. The effort is called Amazon Bedrock, and startups are given the ability to build generative AI-powered apps via pretrained models from startups, including AI21 Labs, Anthropic and Stability AI. It is currently in limited preview.
Twitter launches bitcoin and cryptocurrency trading to over 350 million users The company announced a new partnership with eToro to allow its users to trade stocks, cryptocurrencies and bitcoin.
Mercado Pago and Mercado Livre want to consolidate themselves as only one brand. Even though they are part of the same ecosystem, the companies highlight and reinforce the partnership with a new statement: “Mercado Pago, a digital bank that is combined with Mercado Livre”. In a press conference this week, Mercado Pago announced the launch of new products (investment funds, auto loans, insurance) and highlighted the synergy between both companies in order to achieve the goal of becoming one of the three largest digital banks in Brazil in the next two years.
Deals:
InfraTI, Brazilian company that provides network infrastructure services, was acquired by Bravantic. Terms of the deal were not disclosed.
Guru CRM, Brazilian startup that offers team management solutions and integration with databases with a focus on omnichannel sales, was acquired by Spot Metrics. Terms of the deal were not disclosed.
Action, Brazilian startup that offers a consumer relationship automation platform serving brands in national and international retail, mainly in the clothing and beauty sector, was acquired by Spot Metrics. Terms of the deal were not disclosed.
Agtech: Gestao Agropecuaria, startup that develops a livestock information management software to provide actionable insights about cattle handling merged with Integrado, automation tools for producers and research institutions. The new company is called Ponta.
General news:
Deposits at JP Morgan Chase increased by $50 billion following last month's banking crisis.
Deals:
Speedio, Brazilian big data platform for business to busines (B2B) lead generation, raised USD700k with ACE Accelerator, Marcelo Baratella, TM3 Capital and Venture Hub.
Even though I did mention some stats last week, I think it is still worth sharing. Some key takeaways below:
Startups raised $58.6B in the first quarter, down 13% from Q4’22 - Take the outlier out (Stripe USD 6.5bn mega deal) and funding was actually down 22% from Q4’22.
Overall, funding hit the lowest quarterly funding total since Q4’19
Late-stage rounds accounted for just 8% of Q1’23 deals
Deal sizes getting smaller — the median late-stage deal size was actually smaller than mid-stage
-47% quarterly drop in IPOs
13 companies become unicorns in Q1’23. This was the lowest unicorn birth count in 6 years
The estimated deal count for Q1 2023 remains above 2020's quarterly figures, despite a drop from Q4 2022
Fundraising's momentum has all but come to a halt, with only $11.7 billion closed across 99 funds
Late-stage deal value has decreased to a 21-quarter low, hitting only $11.6 billion
But If your company is in a different momentum, expanding the team, do not miss the opportunity to have access to many layoff lists already in your ATS and candidates database. It will provide your Talent Acquisition team a more efficient candidate sourcing!
I’m back in read !