LatAm Tech Weekly
#91 - Powered by Nasdaq: Diversity VC, Median Valuations Q1 23, Deals of the week, and much more!
Happy Sunday!
Let’s start with an important invitation to everyone: Be part of Diversity VC’s first report in Latin America. Diversity VC is a global non-profit partnership, made up of interested individuals working in venture capital, who seek to increase diversity of thought in the industry. It recently launched its Latin American chapter, and is preparing to launch its first report on diversity and intersectionality within the Venture Capital ecosystem in LatAm!
Whether you are a GP/Partner, an investment team member, or a non-investment team member, your voice matters. By participating in this survey, you are actively contributing to the advancement of diversity in the venture capital ecosystem. Also, stay tuned this week because I got a special invitation from the organization - that I will be able to share with you on Tuesday!
Note that all data is confidential and will be analyzed in aggregate. Let’s push for diversity in the sector as it is a super important theme.
Participate here. It’s very fast: bit.ly/DVCLatamSurvey
Questions or concerns? Email latam@diversity.vc
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.
On to the usual market update, this week CB Insights launched its Tech Valuations Q1 2023 report and the results were mixed. Median tech valuations recovered slightly in the first quarter of the year when compared to Q4 2022 for Series A (+12%), B (+9%), and C (+7%). These rounds experienced QoQ valuation growth for the first time in more than one year. While median valuations were still below last year’s peaks across all stages, early-stage still shows some resilience. Tech company valuations for seed/angel rounds were only down 11% when compared to Q1’22 while Series A contracted just 5%. On the other hand, mid- and late-stage valuations fell between 33% to 42% YoY.
As for deal size, the global median for late-stage (Series D+) tech startups returned to pre-pandemic levels – USD 50mm for the second straight quarter. As I have mentioned here before, the current scenario is more “investor friendly”, and this is also evidenced in the report. Namely, 64% of US late-stage deals were negotiated with seniority or tiered liquidation preferences — the highest level in over 4 years.
Finally, in the world of startup valuations, there's generative AI—and everything else. Going against the general trend, compared to 2022, median pre-money valuations for early-stage rounds of generative AI companies have increased 16% so far this year, according to PitchBook data.
To wrap up, let’s talk about fundraising. This week Pitchbook released its Global Private Market Fundraising Report – and things are indeed more difficult. The pace of capital commitments in Q1 already suggest that 2023 is well behind last year. On venture capital, several funds have slowed down the pace of deployment and pushed back the timing of their next fundraise in hopes of seeing a better environment next year. Quarterly capital raised experienced a decline of 72% when compared to Q1 2022, settling at $29.5 billion. When looking at each of the strategies, funds focused on secondaries managed to boost fundraising. In almost all strategies, emerging managers account for a smaller share of private capital now than they did between 2008 and 2021.
General news:
Tiger Global, one of the most active investors in VC-backed companies during the pandemic-era boom, has hired Evercore to help it shop a curated portfolio of assets on the secondary market. The sale process, which kicked off months ago, is structured as a GP-led strip sale, according to sources.
Insight Partners has closed its Continuation Fund II to invest in software startups with over $1.2 billion in total commitments.
The Brazilian National Fund for Scientific and Technological Development (FNDCT) announced a new BRL 9.9 bn investment vehicle.
Manutara Ventures, early stage fund based out of Chile, announced a second fund of $28 million. The objective is to invest tickets of $1-3 million in early-stage software and biotech startups. The fund already invested in startups such as Xepelin and Rocketbot.
The Brazilian “Real Digital” will test solutions beyond payments and businesses dominated by banks. There are already more than 30 test proposals for what will be the country’s CBDC, the tokenized version of the Brazilian currency.
Remessa Online advances in "FX as a service" and enters the offshore accounts competition. The expectation is to progress in this business front, which includes the solution of "FX as a service" through APIs.
SoftBank announced a re-branding of its Opportunity Fund (Fund 2) to be called the “Open Opportunity Fund”, indicating that the fund is now open for investment from other LPs (and not only SoftBank). The fund is targeting a size of $150 million and will continue to invest in Black and Latinx-led startups.
Chiefs.Group, a talent platform that connects C-Level executives from different industries to work on-demand for companies, is currently conducting a new round of fundraising and aims to raise BRL 1 million by June. This investment will be added to the BRL 3 million already received by the startup since its foundation in 2020.
Armatore, a startup that combines sportstech and deeptech capabilities and has sports journalist Mauro Beting as one of its partners, has just received an investment round from the Rio Grande do Sul-based accelerator Ventiur. The amount has not been disclosed
PicPay launched a credit line that allows the users to use their vehicle as collateral, which allows clients to get loans at lower interest rates.
Recent research conducted by Accenture showed that 73% of companies worldwide are focused on investing in artificial intelligence. 90% of C-Levels researched consider AI to be vital in order to improve companies’ operations in all aspects.
Research shows that paychecks for CEOs at U.S. startups have dropped to $142,000 on average, the lowest since 2020, as the time between funding rounds gets longer. The same trend is being seen in Latin America.
Deals:
Kiwi Financial, mobile app where users can apply for affordable loans to build credit based out of Puerto Rico, raised a USD 4.5m seed round with Advent-Morro Equity Partners, Altio Capital, and Independent Capital. The company also took a USD 75m credit facility with i80 Group. (I know Puerto Rico is theoretically not considered LatAm, but I wanted to mention the deal here)
Hybrico, startup that provides energy services to serve both off-grid and bad-grid mission-critical sites in the market based out of Guatemala, raised USD 2.0mm in an undisclosed round raised by Acumen LatAm Impact Ventures.
Plent, Colombian startup that offers a digital wallet that operates in USDT dollars, allowing users to buy, save and withdraw dollars safely, raised a USD 200k seed round with undisclosed investors.
Bella & Materna, Brazilian femtech, merged with Tem Saude.
Brazilian Granito Pagamentos, startup that provides payment solutions and equipment, was acquired by Banco BMG and Banco Inter at a valuation of USD 20.15mm.
General news:
Fintech-focused firm QED Investors has raised $650 million for an early-stage fund and $275 million for a growth-stage fund.
Adobe said it is adding artificial intelligence (AI) technology for generating imagery into Photoshop, its flagship software for editing images.
The Brazilian Ministry of Finance and local IRS presented changes to the current system of taxation for goods bought in international e-commerce websites. The main change will be that taxes will now need to be paid upon the act of purchase (and not upon delivery). Note that there is no creation of a new tax – import taxes continue at 60% for any merchandise worth up to USD3k and goods below USD 50 remain exempt.
Brazilian white label fintech Jazz Tech developed an online credit card only for corporate travel expenses. The company has been running the product in partnership with Visa and will now go live. The objective is to provide companies with more security and convenience when purchasing airline tickets, accommodation, car rental etc as it is already connected to the main local travel portals and agencies.
Inter’s SuperApp is adding on new functionalities. Now, the app will also have overdraft, which will be linked to the other products and services present in the app’s ecosystem. The bank is also launching a health insurance plan for pets together with PetLove.
Nubank launched a new website for end clients to cancel their checking accounts or credit cards in case of fraud.
Innogen Capital, VC early stage fund, raised US$10 million fund to invest in startups from El Salvador, Guatemala and Honduras.
Palantir announced an agreement with retailer C&A for inventory and logistics management through its operations platform based on artificial intelligence. The software notifies when replacement is needed in the portfolio of best-selling products. Over the past few months, Palantir has fed C&A data into its platform, which goes by the name of Foundry, which in turn has reconciled the variables and given the company opportunities to improve inventory management of its best-selling products.
Shein, the Chinese fast fashion giant, has rapidly ramped up its production in Brazil, with 100 factories already associated with the online retailer since it announced plans to invest $148 million in the region just a month ago. The investment is part of a broader plan to expand production outside China and take advantage of rapid growth in Latin America, according to Marcelo Claure, president of Shein for the region and a partner in the company.
Deals:
Ole Life, startup from Puerto Rico that operates a digital life insurance platform, raised a USD 14.7m round with AV8 ventures (please see disclaimer above)
Num Finance, startup from Argentina that provides a way to augment operations in emerging markets via returns, loans, and digital assets facilitated by local ramps and tokens, raised a pre-seed round of USD 1.5m with H2O, Matias Woloski, Reserve, Ripio Ventures, VC3 DAO.
Flexdoc, Brazilian company that develops automation solutions such as fraud analysis and back office outsourcing, was acquired by Valid Soluções.
General news:
Latin American tech startups extending their footprint into Africa: That is the case of Brazilian fintech unicorn EBANX. Last September, the payments technology company, which provided local payment solutions across 15 countries before the announcement, said Africa was its first expansion outside Latin America, taking its market footprint to 18, including South Africa, Nigeria and Kenya. The goal is to operate in 11 African countries by the end of the year.
Mexican ALLVP announced its investment program in startups linked to artificial intelligence. The first investment is a commitment to AI applied to corporations called Senzai, a platform that allows banks, telecommunications companies and corporations to implement intelligent models.
Standard & Poor's downgraded SoftBank's long-term credit rating to 'junk' grade from BB+ to BB. Credit risk has grown due to the sale of public assets, such as Alibaba Group, and greater exposure to startups with more volatile valuations. SoftBank shares lost -2.36% in Tokyo.
Revolut recieves the license to operate credit lines (SCD) by the Brazilian Central Bank.
The Brazilian Central Bank released the list of 14 projects approved to integrate the testing phase of the pilot of “Real Digital”. The list ranges from banks, such as Itau and Bradesco, to companies in other segments, such as Microsoft, Visa and B3. For the full list, click here.
Deals:
Trebol, startup from Colombia that develops an application programming platform interface to help businesses, neobanks, and lenders to underwrite their clients, raised USD 3mm in a seed round with Better Tomorrow Ventures, Canaan Partners, Soma Capital, Undisclosed Angel Investors, Unpopular Ventures, Y Combinator.
Move3, a São Paulo-based holding company specialized in logistics solutions, has announced the acquisition of another logtech. In this case, the acquired company is Levoo, a logtech specializing in last-mile solutions.
Codify, startup from Chile that operates a predictive analytics software intended for organizational strategic management, raised an undisclosed amount in a Incubator round by Startup Chile.
dex, Brazilian data engineering company that helps automate table management in the data lake, raised an undisclosed pre-seed round with Equitas ans Grao.
Telematica Brazilian startup that offers telemetry solutions was acquired by Modaxo. The terms of the transaction were not disclosed.
Generative AI company OpenAI has closed its Startup Fund on $175.25 million, according to an SEC filing.
Brazilian BeUni raised BRL1.7 million to revolutionize the gift market.
The round led by Investidores.vc will be used to leverage the portfolio of technological products and increase the team.
Kapital, startup from Mexico that offers a B2B treasury and credit platform took a USD 45mm credit facility round with Accial Capital.
General news:
PagSeguro reported good-as-expected 1Q23 results, with BRL 392 million in adjusted net profits. The overall picture is of profitable revenue growth in the acquiring business and improving trends in the bank unit. Total revenues grew 9% YoY, similar to acquiring payment volumes, as higher-ticket clients offset a lower overall merchant count.
Recent research shows that almost 80% of banked Brazilians maintain checking accounts at traditional financial institutions and digital banks at the same time. Participants have, on average, relationships with 4.8 institutions and 77% have accounts in traditional and digital banks, a share that was 70% last year. 59% of respondents use an incumbent bank as their main account and 41% concentrate their movements in the digital player.
OpenAI announced that it is now available in 11 more countries.
Brazilian Bitz Softwares expects to generate BRL 6 million serving the hospitality sector this year. The Brazilian startup has grown 184% in recent years with management software for hotels, motels, and restaurants throughout the country.
Deals:
Bemobi announced the acquisition of a majority stake in 7AZ Softwares S.A. (7AZ), a SaaS company specializing in recurring-payment automation for the Internet service providers (ISP). 7AZ's Total Payment Value (TPV) was BRL 1.0 billion in 2022, with revenues amounting to BRL 833k. The company registered double-digit monthly growth rates over the last six months. As of April 2023, its ARR is BRL 2.6 million.
General news:
Mexico’s bank regulator CNBV approved fintech Uala’s purchase of bank ABC Capital, allowing the fintech from Argentina to move forward with a merger that finalizes its path to a banking license in the second largest economy of the region.
Solfácil, a solar solutions company that connects integrator partners with people who want to generate clean, renewable, and affordable energy, has invested BRL 100 million in the inauguration of a Distribution Center in Jaboatão dos Guararapes, Pernambuco.
What did I learn from readers?
Lovisa Bergström, friend and investor from WebRock Ventures, sent over a great report this week from GP.Bullhound called “Latin America, an Emerging Tech Region”. Great read, I will share with you a TL;DR version.
The LatAm technology ecosystem has matured since the foundation of its first companies to the current state: 50+ Unicorns, 30+ listed companies, and more than $35bn invested. This evolution is outlined in four waves, which reflects the social and economic needs of each period.
Wave I (dot-com bubble to 2010): founding of first companies that shaped the ecosystem, such as Mercado Libre and Global
Wave II (2011-2015): Early regional VC players created. Founding of the first digital commerce and consumer-led companies.
Wave III (2016-2019): Ecosystem began to flourish, inception of Softbank LatAm Fund. Deal flow increases; fintech and payment solutions were launched; “bank the unbanked” trend
Wave IV (2020-2022): Acceleration and consolidation of the ecosystem, tech savy middle class
So: “Has the music stopped, or has it just slowed? Neither, the music has changed”
· One Region, 2 ecosystems: Brazil vs. the rest of LatAm. Brazil has reached an elevated level of maturity, receiving historically more than half of the total venture dollars directed to the region.
· Capital sophistication with a gap of opportunity between the local early stage funds and the late stage international investors. The so called “mid stage” has lots to grow.
· Shift from pre-IPO & B2C to early stage and B2B: the amount of B2B companies founded each year has grown from 30% in 2010 to 61% in 2022, while B2C shifted from 70% in 2010 to 39% in 2022.
· Software has become one of the fastest-growing markets, representing 34% of capital invested and 320 deals. New focus on B2B, development of global scalable products, with good infrastructure
The fifth wave:
· From growth mode to profitability
· Revaluation of exposure in the region by international investors
· Correction in private company valuations, shift to investor-friendly terms
· Software seeing the most volume in total transactions (38% of total)
What am I reading?
MIT Tech Review: I became a columnist! Check out my first article: An Overview of the 1st Quarter of 2023, where investments were allocated, how companies are seeking to extend their runway, the growth of venture debt, and the opportunities generated by M&A here. (PT only)
Pitchbook’s inaugural report on enterprise SaaS covers the trends, segments, top deals and investors in the space.
Inteligencia Financeira: Are tech events worth it? my article for the portal (PT only)
What am I listening to? What am I watching?
No podcasts this week - I didn’t have time. Random music while running was my vibe ;)
JOB POST // LAYOFFS:
If you want your jobs posted here, just follow the steps:
1. Create your Woke´s All in One Recruitment Platform Account - It is 100% free;
2. Sign-in and open a "new project";
3. Complete the "job Description" (Will help you be more effective);
And you are ready to go! All the new jobs created until every Thursday night will be posted!
JOBS (Still open):
Head of People - Confidential Company (Híbrido - São Paulo)
Sales Development Representative - Ouro Preto Investimentos
Especialista em Projetos Digitais - Vibra
Head of Talent Acquisition - Empresa Confidencial
Estágio - Coordenação Pedagógica - Lingopass
Quote of the week:
“Motivation gets you going, but discipline keeps you growing. That’s the Law of Consistency. It doesn’t matter how talented you are. It doesn’t matter how many opportunities you receive. If you want to grow, consistency is key.” ~ John C. Maxwell
Obrigado por mais uma semana de conteúdo de altíssima qualidade!