LatAm Tech Weekly
#70 - Powered by Nasdaq: Secondary markets heat up, Thoma Bravo's largest fund, Lastro's seed round, Macrovision & Venture Capital and much more!
Happy Sunday!
OK. Not so happy if you are a Brazilian due to the recent outcome of the World Cup. But, life goes on - and the tech world definitely never stops. As the year comes to an end, many people wonder what to expect looking ahead. With that in mind, I joined forces with my dear friend and also writer Lucas Abreu, from Brazilian VC firm Astella to produce a special report! The Next Big Thing LatAm 2023 will be out on December 20th! We invited thought leaders from several industries to share with us what they believe will happen in the upcoming year in their industry. We have than 20+ themes – from fintech infrastructure to macro – and 50+ thought leaders giving their predictions. The report will be shared in our respective newsletters and in pdf. for everyone to download. We are beyond excited with this project which we are working on for two months now – and I believe it will become a tradition in LatAm Tech!
Follow me on LinkedIn , Instagram or Twitter for daily updates!
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.
The DealCould Dealmaker Pulse survey is out! In a nutshell, investment professionals, operations leaders, investor relations and fundraising specialists confirmed that recessionary risks impacted their investment strategies during the previous 6 months. 59% of the people interviewed believe valuations in the coming 6 months will be lower than current levels. Yet, 73% anticipate the same or higher volume of deal closings as both founders and investors get used to a new scenario with more rational valuations and a higher cost of capital. Respondents represent large, midmarket, and boutique firms with a global view, investing primarily in North America but also with relevant exposure to Latin America, Europe, and Asia.
It is no news that dry powder in the VC industry is at its high. But, recent Pitchbook Q3 2022 Global Private Markets Fundraising Report showed that things are more challenging in other sectors. Aggregate fundraising across the private investing universe was down 7.7% to USD 1.35 trillion in the 12 months leading up to September 30, as only those funds focusing on venture capital and real assets managed to surpass year-ago levels.
Despite this positive news, it is also true that the exit options for late stage startups are currently more limited, even more so when valuations are lower. With that, the mostly frozen secondary market trading of late-stage startups in the first half of the year is now showing signs of a reversal. Over the last couple of months, buyers and sellers have begun to agree on deals at significant discounts to 2021 valuations. The buyers, which now include sovereign wealth funds and traditional venture firms, are seeing opportunities to invest in strong companies at a large discount. Meanwhile, sellers have accepted that 2021 prices are not coming back anytime soon. While still low by historical levels, secondary market activity should increase next year as more founders, employees and early backers will look to get liquidity in companies that had been planning IPOs for 2022 and early 2023.
New research shows that every minute in 2022, 2,366 malware attacks and 110 fraudulent messages (phishing) were blocked in Latin America, with more than 1,500 in Brazil alone - which represents 65% of all cyber attack blocks in the region. The study shows the main interests in fraudulent messages:
• stealing internet/mobile banking credentials (27%);
• stealing social media credentials (22%);
• stealing credentials from online services - online stores, streams, etc. (18%);
• search for financial services topics to steal passwords (9%);
• search for payment data, such as credit card (7%).
The Brazilian Central Bank will update selected Pix rules for 2023. In order to increase the safety and security for the transactions, there will now be a limit as for the amount transferred in a given period of time and not per transaction. As for “PIX saque” (withdraw) and “PIX troco” , the new limits go from BRL 500 during daytime to BRL 3000 and BRL 100 in night time to BRL 1000.
Feel, Brazilian femtech specialized in sexual wellness, has become the LatAm startup with the highest number of female investors after its latest funding round. Despite its small size (USD 190k, pre-seed), the round was led by Sororitê, an all-female angel syndicate with an 80-woman investor network. In total, over 85% of Feel’s capital has been raised from women.
KMPG announces Daniel Malandrin, former Valetec Capital as the new partner responsible for the company’s venture capital strategy and open innovation arm.
Itau Unibanco will be one of the master sponsors of South by Southwest 2023 (SXSW). This will be the first time a Brazilian brand sponsors the event. Other master sponsors include Volkswagen, White Claw Hard Seltzer, Porsche and The Austin Chronicle. This marks another important milestone for Itau in the tech world.
Latinos’ presence on Boards of Directors in US firms shows slow advance, according to KPMG. Latinos occupy 3.7% of the positions on the boards of Fortune 1000 companies, according to a study.
Volkswagen looks to expand coding schools in Brazil and Mexico to bolster tech skills. The carmaker is already backing similar institutions in the Czech Republic and Germany.
Uala, Argentine fintech, starts to give personal loans in Mexico in partnership with ABC Capital.
Docket, Brazilian “anti-bureaucracy” startup that develops technology that optimizes the search, management, and analysis of documents with legal value raised USD 21mm in a Series A round with Gerdau Next Ventures, OneVC, Valor Capital Group, and others.
MELI filed a complaint against Apple in Mexico and Brazil for alleged competition practices that are prohibited by the laws in both countries. The complaint was presented to the Federal Institute of Telecommunications (IFT) and the Federal Competition Commission (Cofece), in Mexico, and to the Administrative Council for Economic Defense (Cade) in Brazil.
Social Security issue delays Mexico’s planned labor reform for delivery app workers. The Labor Ministry will send an initiative to Congress for a reform that can be applied to all the platforms operating in the country, such as Uber, Didi and Rappi.
According to the Brazilian Central Bank, payments through Whatsapp continues to be without a launch date.
Stewart Butterfield, CEO of Slack will leave his position in January and will be replaced by Brazilian Lidiane Jones, a Salesforce cloud executive.
Senhasegura, Brazilian startup that develops a privileged access management platform, raised a Series A of USD13mm from Graphene Ventures.
Altscore, Mexican company that develops B2B lending infrastructure software to build, embed, and deploy credit products, raised a seed round of USD 3.5mm with funds such as BuenTrip Ventures and Caffeinated Capital.
Thoma Bravo, a leading software investment firm, announced the completion of fundraising for its buyout funds totaling more than USD 32.4 bn in capital commitments: Thoma Bravo Fund XV, a $24.3 billion fund, Thoma Bravo Discover Fund IV, a $6.2 billion fund and Thoma Bravo Explore Fund II, a $1.8 billion fund (the “Funds”). Each fund surpassed its target- and Thoma Bravo Fund XV represents the largest tech-focused buyout fund ever raised.
Brazilians Superlogica, Cyrela and Intelbras join forces to create the superapp Gruvi. Combined, they will be able to provide a platform for condo management and all services related to people’s home.
Agtech Seedz raises a BRL85 mm Series A. Alexia Ventures led the round, which was followed by Vox Capital. Current investors of the company such as Tarpon, Volpe and Endeavor Scale Up also participated.
Brazilian unicorn Loft cuts 12% of staff In third wave of layoffs this year. The startup laid off about 312 employees on Wednesday, which it attributed to integration with acquired companies; and said in a statement that its products and services will not change.
Brazilian digital lender Nubank has announced plans to invest USD 330mm in Mexican operations via equity capitalisation to drive growth. Specifically, the investment will be used to expand the bank's product portfolio, increase reach across market segments and strengthen operations.
Carbon Credit, startup that develops a marketplace and a secondary market exchange platform for carbon credits and energy-related contracts, was acquired by Axsess for an undisclosed amount.
· On Thursday I had the pleasure of moderating a panel in Itau BBA’s Macrovision event: Venture Capital in Large Corporations. Roberto Marinho Neto, CEO of Globo Ventures and Anderson Thees, head of the venture capital strategy at Itau Unibanco participated contributing with a high level discussion on the challenges and opportunities of establishing the strategy in large corporations of different segments. We also discussed how the market was in 2020 & 2021 over heated and at times irrational - and that 2022 was an adjustment year. Looking forward, both are optimists (and my usual readers know I am too) and believe that things are in fact cyclical and that technology only tends to grow and expand. Thank you both for the participation, it was a true honor to participate in the discussion.
Note: several people reached out asking if the conversation was recorded and available. Unfortunately, for compliance reasons, we were unable to do so. If you want to read more on what was discussed in the entire event, Neofeed did a good coverage on several topics! (PT only)
Lastro, all-in-one real estate management platform with integrated payments that simplifies managing rental properties, raised a seed round of USD4mm led by Canary with the participation of QED Investors and 1Sharpe Ventures
Google Pay was authorized by the Brazilian Central Bank to operate as a payment institution, as a payment initiator. Companies in this modality initiate the payment transaction ordered by the end user, but do not manage the payment account, nor at any time hold the funds for the initiated transactions.
According to data from the recently released Digital Banking Maturity 2022 global survey, which involved the participation of 304 banks from 41 countries and investigated digital functionalities throughout the customer journey, Brazilian banks can become champions in mobile banking, designing new digitization initiatives with a focus on user experience (UX), especially for day-to-day banking, implementing features such as gamification and transaction geolocation tags. Brazil financial system & fintechs proves to be more advanced than several countries according to the survey.
What did I learn from readers?
I received from a reader a very interesting analyst note by Pitchbook called Who Benefits From Insider-Led Rounds? A couple of interesting takeaways:
Existing investors are some of the most effective resources in VC fundraising. Investors offer insightful advice, provide access to their networks and influence the due diligence process—all actions that can ultimately produce valuation step-ups in subsequent financing for startups and signal a strong preliminary investment track record to VCs' prospective LPs.
In 2022, new financing rounds led by existing investors—known as insider-led rounds—had a median deal size of USD 14.1 million, nearly triple that of the non-insider-led round median of USD 5.5 million.
From the data on returns by series, it’s clear that there is no consistent, significant advantage for insider- or non-insider-led rounds. Series A returns show non insider-led rounds squeezing out a slight edge with an annualized return of 33.1% compared to 30.7% for their insider-led counterparts. This is attributed due to the fact that Series A rounds commonly being the first round of institutional capital raised by startups.
What am I reading?
Twitter Miguel Armaza: In Nov. 2021, 6 of the top 10 publicly-traded fintechs had negative Operating Margin (median 10%), in Dec. 2022, 10/10 have positive Operating Margin (median 50%).
What did I listen/watch?
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Quote of the week:
“Be a yardstick of quality. Some people aren't used to an environment where excellence is expected.” Steve Jobs