LatAm Tech Weekly
#125- Powered by Nasdaq: State of SaaS LatAm 2024, Venture monitor, deals of the week... and much more!
Happy Monday!
Better late than never! While Brazil is buzzing with Carnaval celebrations, the tech world keeps rolling along. This past week was pretty exciting, with some cool content dropping. SaaSholic launched its first-ever State of SaaS for LatAm 2024, and Pitchbook came out with its latest NVCA Venture Monitor, now spicing things up with league tables of the industry's top movers and shakers. The vibe's definitely getting better, and deals are starting to pick up again. So, let's get right to it and see what's up!
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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.
While I highly recommend the full read of the LatAm SaaS Report, here are some key themes that I enjoyed. Latin American tech companies distinguish themselves from their US counterparts in several key aspects. One notable difference lies in the availability of capital. While there have been improvements in recent years, access to capital in Latin America is not nearly as robust as it is in the US. Consequently, companies in the region tend to adopt leaner operational approaches to navigate this challenge effectively.
This difference is particularly evident in the realm of Software as a Service (SaaS). In Latin America, the average Customer Acquisition Cost (CAC) payback differs significantly from US benchmarks, with a notable 32% lower CAC payback rate. For instance, DocuSign, a US-based company, demonstrates a CAC payback period of 79 months, whereas its Latin American counterpart, ClickSign, boasts a substantially shorter payback period of 5.6 months.
Moreover, Latin American SaaS companies operate with a different mindset regarding fundraising. Unlike their US counterparts, they do not assume that capital can be readily raised at any given time. Among local companies generating over $1 million in Annual Recurring Revenue (ARR), Latin American companies typically enjoy a 15-month longer runway compared to their American counterparts, highlighting the necessity for resourcefulness and financial prudence in navigating the regional business landscape.
Now moving to Pitchbook, the latest PitchBook-NVCA Venture Monitor showed that overall, 2023 experienced a bit of a slowdown in terms of activity. The deal count for the fourth quarter stood at approximately 3,934, marking a nearly 28% decrease from the peak quarter in 2022. However, this number still surpassed the activity of any quarter prior to 2021, with the exception of Q1 2020. In the U.S., public markets ended the year on a positive note, suggesting that economic strains might be easing. Inflation continued its downward trajectory, and there's a possibility that interest rates could see reductions in 2024.
Despite a challenging environment overall, VC firms continued to look for deals across all stages. The report shows us the most active ones:
General news:
Itau closed 2023 with a profit of R$ 35.6 billion, which is 15.7% higher than the previous year and in line with market consensus.
In the fourth quarter, the profit was R$ 9.4 billion. The annual ROE was 21%, and the quarterly one was 21.2%.
Unico appoints Sergio Chaia as CEO. The Founder will lead global expansion efforts and has been serving as an advisor to Unico for the past year.
Deals:
Traive, Brazilian developer of a finance platform intended to connect the entire agricultural chain to the capital market, raised a later stage round of USD20M led by Astella.
FUNSES1, a Private Equity Fund created with resources from the Sovereign Fund of the Government of Espírito Santo, has just announced its four new investments. The chosen companies are: Multifidelidade, naPorta, Conecta, and Frota 162. The amount invested in these companies totals approximately R$ 2.7 million.
General news:
Itaú Prepares a Super App: The bank announced its preparation for the launch of a super app, with a potential user base of over 15 million customers.
Mevo, a healthtech offering digital prescription solutions and online medication purchases, holds optimistic prospects for 2024. Driven by continuous investment in technology and recent portfolio expansion, alongside a potential investment round expected to conclude in the coming months, the company aims to double its revenue by the end of the year compared to 2023 results.
Digital brokerage unicorn, American Webull, is set to Launch Operations in Brazil. The fintech has acquired Brazilian brokerage H.H. Picchioni to secure licenses and awaits approval from the Central Bank to finalize the deal, but a Brazilian version of the app is already available for download
Deals:
Master Bank is acquiring Voiter Bank (formerly Indusval) in a transaction that adds R$ 800 million to its equity. Master closed last year with an estimated equity of R$ 2.7 billion, R$ 6 billion in revenue, and an estimated net profit of R$ 500 million.
General news:
Uber reported a profit of $1.43 billion in 2023, marking its first annual positive result as a public company. For this year, the company projected continued growth in the first quarter, signaling the end of an era where the ride-hailing and food delivery company prioritized growth over profits.
Deals:
The waste management startup Vertown announced the raising of R$ 7 million from Corporate Venture Capital (CVC) funds Açolab Ventures, from ArcelorMittal, and Irani Ventures. The funds will be used to invest in the company's ambitious plan to increase its revenue tenfold over the next three years.
General News:
Jojo Todynho Becomes Advisory Counsel at Caju. Influencer to Join Meetings with C-Levels at Benefits Startup and Assist in Strategic Decision-Making.
Deals:
Cogtive, a platform that collects and organizes data to provide diagnosis and action plans to clients in the virtual factory industry, attracted a R$ 10 million investment from Indicator. In addition to addressing visibility issues, Cogtive also provides diagnostics and action plans based on the collected data.
Plano, a Brazilian fintech aimed at transforming financial education in the country, has received an investment of R$ 2.2 million. This investment marks the first phase of the company's seed round, with participation from groups such as Anjos Do Brasil, Poli Angels, FEA Angels, and funds including BossaInvest, Sai do Papel, Quintal Ventures, Levain Ventures, and Westwood Capital.
Deals:
Itaú has just announced the acquisition of Avita, a judicial surety brokerage created from scratch by Prisma Capital in 2019. The acquisition value was not disclosed, but the bank stated that the company holds a portfolio of over R$ 60 billion in judicial surety and has issued R$ 400 million in premiums since its foundation.
PlayBPO receives investment from Bossa Invest. The undisclosed amount will be used to enhance the solution and further integrate with financial platforms. The round also included co-investment from DOMO.VC, RIA (Angel Investors Network, a partnership between Anjos do Brasil and the Association of Technology Companies of Santa Catarina), and follow-on from Conta Azul.
4MDG attracts BR Angels and Darwin with platform for organizing data. The company, which launched a no-code platform for data cleansing and governance for corporate clients, received an investment of R$ 4 million from BR Angels in a round with participation from the accelerator Darwin Startups
What did I learn from readers?
Insights from recent discussions with industry people on the following theme: AI investing & CVC participation.
Corporate investors are significantly investing in generative AI startups, leading to tensions with traditional venture capitalists (VCs) who are being challenged by high valuations and complex deal terms.
Last year, corporate venture capitals (CVCs) were involved in 80% of the venture capital deal value in generative AI, according to PitchBook data. This involvement raises concerns among some investors about its long-term impact on startups.
Major investments from corporates include Amazon's up to $4 billion investment in Anthropic in September, Nvidia's participation in Cohere's $270 million Series C in June, and Microsoft's $10 billion investment in OpenAI last January. Microsoft and Nvidia also led a significant funding round for Inflection AI in June.
VCs are expressing frustration over the influence of corporate investors in the ecosystem, particularly due to rising valuations and deal terms that complicate future investments. Some VCs advise startups to avoid corporate venture capital, citing problematic deal terms and potential distractions at early stages, and note that corporate investors often have different objectives compared to traditional VCs.
The competition from corporate investors leading to inflated valuations is a major concern. It's suggested that traditional VCs can help moderate these high valuations. However, concerns remain about the impact of these inflated valuations on the broader ecosystem.
Despite these challenges, the influx of corporate investment into generative AI is seen by some as a validation of the startups' efforts and a sign of confidence in the industry.
What am I reading?
PitchBook's latest Emerging Tech Research,
What am I listening to? What am I watching?
Acquired podcast on VISA (still has a bit to go, but liking a lot)
Quote of the week:
“When you are too confident, that’s when you hurt yourself” – Candide Thorax