LatAm Tech Weekly
#99 - Powered by Nasdaq: Investor-friendly enviornment, insights on equity dilution, deals of the week.... and much more!
Happy Sunday!
I am officially back and full of interesting data this week as my reading routine resumed. On the events side, I had the honor of participating as a speaker at E-Commerce Brazil, biggest event for the sector in Latin America. Next week, I’ll also be at a panel at Startups Fever – speaking about a very interesting topic: the new momentum in VC investing. I do have a discount code if you are in SP and want to attend!
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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 the usual market update, there were several good reads this week. The recent Q2 2023 PitchBook-NVCA Venture Monitor shed light to some data that is worth analyzing further. Even though global markets are improving and sentiment is better, raising capital is now markedly more difficult even at the seed stage, where quarterly deal value declined 26.3% from Q1. The environment continues to be very investor-friendly, as seen below. In fact, it is the most investor-friendly environment of the last decade.
However, as the optimist you all know I am, there is a good side to all of this. Despite the continued lag in deal value evidenced by the sixth consecutive quarter of deal value decline in the early stage side, venture-growth deal value actually ticked up! This all leads me to think that as public markets improve, with successful venture backed IPOs such as Cava, and several filings from tech companies, the rebound actually is starting in the growth stage, and, with time, will affect the earlier stages. So, the worst MIGHT be behind us…
Moving on, Digital Native’s edition this week was also very good. In 10 Charts that Capture How the World is Changing, he spoke about several themes – including the venture capital reset. A graph that got my attention, even though it is related only to the U.S, shows that the vast majority of startups have less than 12 months of runway. On this front, we can expect a few difficult quarters and some companies will be winding down. However, the best companies will be okay and a consolidation in some sectors should occur.
On to some actual good news - Despite a decrease in overall VC investment, LatAm and the Caribbean was the only region in the world to see a quarterly increase in fintech funding in Q2, according to new data from CB Insights. The recent FT Partners report also showed this good momentum in the sector, as despite the drop in overall financing activity, some FinTech sectors rallied in Q2 globally. Funding volume for the Financial Management Solutions sector increased more than 80% QoQ as investors set their sights on B2B FinTech plays. Similarly, the emerging focus on new generative AI technologies presents numerous opportunities for FinTech startups and established players alike, piquing investor interest.
General news:
Remittances to Latin America hit USD 145bn in 2022: With this opportunity, Mercado Libre is now intensifying its focus on remittances products, thereby putting pressure on rivals' profitability in nations such as Mexico.
The U.S. government recently launched the FedNow Service, an instant payment system designed to facilitate quicker money transfers for financial institutions. Unlike traditional banking hours, this infrastructure ensures immediate access to funds at any time of the day. The Federal Reserve has opened registration for banks and credit unions of all sizes, with 35 financial institutions and 16 service providers already on board to support payment processing.
Brazilian Omie received the authorization by the Brazilian Central Bank to act as a payment initiator in the country.
Victor Lazarte, former CEO and Co-Founder at Wildlife, become the new venture partner at Benchmark.
Agrolend issued their first batch of agribusiness letters of credit in the market, which marks the start of a new phase of the company as it becomes the first digital bank in the agro space in Brazil.
The Arena Hub, the largest sports-focused innovation center in Latin America, and Slat Catalyst, the micro venture capital arm of Slat Ventures, have joined forces to establish a fund with R$ 15 million to invest in startups with solutions related to sports.
Deals:
Future Cow, Brazilian Developer of a cellular agriculture technology intended to produce real milk without cows, raised raised BRL 1 million of pre-seed funding from Big Idea Ventures.
Agtech Argentina ZoomAgri raised US$6 million to boost its global expansion 🇦🇷. The agricultural supply chain platform secured the funding in a Series A round led by GrainCorp and GrainInnovate, with participation from SP Ventures and Artesian.
MyCareforce, a healthcare professionals recruitment startup, raised €1.2 million, approximately BRL 6.3 million, in an investment round led by Shilling, Portugal Ventures, Demium, and angel investors such as Humberto Ayres Pereira, who is part of the Accel Starter Programme, and Vasco Lopes da Silva.
Apprenty, a startup that develops a technical education platform to be the 'last mile' in preparing young people for the job market, just raised a new round. The edtech company raised BRL 8 million in a funding round led by Canary, with participation from Positive Ventures, Potência Ventures, and Latitud Ventures.
General news:
The President of the Central Bank of Brazil, Roberto Campos Neto, highlighted that as part of the innovation agenda for the national financial system, known as "agenda BC#," the institution plans various innovations related to Pix, Open Finance, and Digital Real. Among them is what Campos Neto referred to as "Data Savings," a system that aims to pay users of banks, fintechs, and other participants in the financial system for the data shared within the system.
Pix may account for 20% of household consumption in 10 years. An estimate by RD Inteligência, a consulting firm specialized in financial services, predicts that Pix is expected to represent 20% of private consumption in the country by 2033.
Venture capital transactions decrease by 33% in Colombia during 2023.
EU to invest 45 billion euros in Latin America, with a strong focus on digital transformation.
Kamay Ventures brings its Kamay Code event to Sao Paulo to connect with new startups. The event will be held at Cubo Itau.
Nubank reached 80 million customers in Brazil in July, bringing the total number of fintech customers to 85 million, including operations in Mexico and Colombia.
The Arena Hub, the largest sports-focused innovation center in Latin America, and Slat Catalyst, the micro venture capital arm of Slat Ventures, have joined forces to establish a fund with R$ 15 million to invest in startups with solutions related to sports.
Deals:
IdoLink, Brazilian startup which is a developer of an online platform intended to help micro-entrepreneur build websites, raised an undisclosed pre seed round with 10xFounders and Gradient Ventures.
Portuguese startup Infraspeak, which is a platform for facilities management, raised 17.5 million euros. The initiative was led by Bright Pixel, the technology venture investment arm of the Portuguese group Sonae.
General news:
Credix, with support from Clave, launched a first of its kind, fully insured receivables pool. Inaugural investors include the Solana Foundation and
Keyrock. The receivables pool offers a revolutionary investment opportunity to accredited investors seeking up to a double-digit yield while insuring the credit risk.
Jeeves, the financial operating system designed for global companies and backed by investors such as Andreessen Horowitz (“a16z”), CRV, and Tencent, has expanded its product offering to include prepaid cards and cross-border payments.
A group led by Oscar Calçados will invest R$ 20 million in startups that address retail pain points in Brazil. Three companies, led by the footwear manufacturer from São Paulo, have joined forces to launch an investment fund for startups.
Fondo Invariantes will invest US$30 million in startups from the U.S., Mexico, and the rest of Latin America. The fund focuses on early-stage technology startups, with an emphasis on fintech, artificial intelligence, and deeptech sectors.
Argentina's IRSA launches Shefa, its corporate venture capital focused on retailtech and proptech. IRSA is the largest Argentine real estate investment company and the only Argentine real estate company listed on the Bolsas y Mercados Argentinos and the New York Stock Exchange.
Brazilian blockchain gaming startup Trexx takes second place in the Oasys Hackjam competition in Tokyo, Japan. The competition featured over 50 teams developing solutions for Web3 gaming, the new phase of the internet.
BRK Ambiental, the largest private basic sanitation company in Brazil, has adopted Fast Checkout, a payment completion solution from Flexpag, a fintech based in Pernambuco, focused on the utilities segment.
Deals:
Axur, the Brazilian cybersecurity startup headquartered in Miami, has just received a funding in a Series B round, with Igah Ventures as the sole investor. The exact amount of the funding was not disclosed, and it came from the venture capital firm's third fund of US$130 million (approximately BRL 613 million).
Spanish healthtech Healz raises US$560,000 to expand into Latin America this year. Healz offers a Software as a Service (SaaS) platform for health and lifestyle, aiming to anticipate chronic metabolic diseases.
General news:
Shein already sells nearly US$100 million through its marketplace in Brazil. In a letter, the company informed that the marketplace launched in May already accounts for one-third of the company's sales in the country.
Brazil SUS (Unified Health System) has launched a groundbreaking tool capable of recognizing and treating skin cancer on the same day and without the need for incisions. Photodynamic therapy can evaluate and treat the disease in a single procedure, avoiding painful and lengthy treatments.
Deals:
General Atlantic has announced a $160 million strategic growth investment in MAC Hospitals, one of Mexico's largest hospital providers.
Weg has announced that it has reached an agreement to acquire BirminD, a technology company operating in the industrial artificial intelligence market. The value of the transaction was not disclosed.
Deals:
Aravita, the startup with a solution that assists retailers in managing fresh products, has received additional funding from HiPartners, a venture capital firm focused on the Brazilian retail sector, in the R$12 million funding round completed by the company in March of this year. The round was initially led by Qualcomm Ventures and 17Sigma.
Positivo, the Brazilian company focused on the production and distribution of electronic products, has invested R$ 3.6 million in WE Ventures, a fund by Microsoft in partnership with Sebrae and M8 Partners, aimed at supporting startups created and led by women.
What did I learn from readers?
Good data from Carta was sent over to me this week: Insights on Equity Dilution in Fundraising Rounds for Founders. In an analysis of investor equity requests from 1,229 primary funding rounds conducted via Carta in the United States throughout 2023, it was found what is the median percentage of dilution corresponding to each venture round. For instance, it is observed that a standard Seed round typically results in the founders relinquishing approximately 20.5% of the company's equity to the investors.
However, considering only the median dilution percentage may overlook significant variances in the distributions. Thus, an additional analysis was performed to group the rounds into 5% dilution tiers. For example, 26% of Seed rounds resulted in the founders giving up 20%-24.9% in equity.
Series A and Series B rounds display the broadest distributions, indicating that equity dilution during these stages can vary considerably.
Seed rounds commonly result in around 20% dilution. Nevertheless, it is essential to consider any additional dilution arising from prior SAFE or convertible note investments (a factor not visualized in the data).
The data primarily addresses initial fundraising rounds (for instance, the first Series A round). However, should founders return to current investors for bridge funding, the dilution dynamics may alter significantly.
What am I reading?
Startups are producing real dairy without a cow in sight. [The Economist]
Dealflow BR by Guilherme Lima from Astella
CB Insights State of Digital Health Q2’23 Report.
SaaSholic is launching a series of articles named Giants of SaaS, telling the story and showcasing to the world the potential of LATAM SaaS companies. The first article is centered on the non-obvious story of Locaweb (BVMF:LWSA3).
What am I listening to?
Acquired - The story of Nike - 4 hour episode, worth every minute
Futurum Talks: Podcast I had the honor of participating together with Tio Ricco!
Open Talks Podcast: Also a great conversation I was happy to be a part of.
G2D Podcast: Omnichannel with Centauro (Fersen Lambranho, Carlos Pessoa and Pedro Zemel)
Quote of the week:
“Beating the competition is relatively easy. Beating yourself is a never-ending commitment.”
― Phil Knight, Shoe Dog: A Memoir by the Creator of Nike
Great to see your comments about the carta’s graphic, I used this in today’s kamelo news