LatAm Tech Weekly
#150 - Powered by Nasdaq: Market updates, Vertical SaaS, deals of the week... and much more!
Happy Sunday!
US venture capital is showing signs of revival, with startup fundraising on Carta increasing for three consecutive quarters and a slight decrease in bridge rounds. Recent data indicates VCs are calling for more capital, with SPV capital calls making up about 20% of the total, hinting at a potential resurgence in late-stage investments. Notably, the data mostly reflects capital calls from smaller funds, those with under $250 million in assets under management, suggesting different dynamics for emerging managers compared to larger firms. But, do not call it a comeback just yet… let’s not jinx it!
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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.
Continuing on the market update, recently, the 10-year Treasury yield fell below 4% for the first time since early February, when the median software NTM revenue multiple was around 6x, compared to 5x today. Despite the decline in rates from 4.5% at the start of July to 4.0% at the end of the month, multiples have remained steady. This challenges the commonly discussed inverse relationship between rates and multiples, suggesting that current market concerns could be more focused on business fundamentals and growth.
As for earnings, in the software sector, Confluent reported tougher conditions in June and July, highlighting increased cost controls among customers. So far, 56% of companies guiding for Q3 have reported below consensus. In cloud computing, Q2 results were announced with AWS growing at a 19% YoY rate, Azure at 30% YoY, and Google Cloud at 29% YoY.
Speaking of software, I read an interesting report by Tidemark in collaboration with Maya Capital , SaaSHolic and others called “Vertical & SMS SaaS Benchmark Report”. This theme continues on my “tips of the week” (follow me on LinkedIn to get these tips) which I recommended the 20VC with Ara Mahdessian, Co CEO at ServiceTitan, one of the best examples of a vertical software out there.
The report starts by stating that “vertical SaaS is just starting to unfold – and that not every company will win in their category, but those Vertical SaaS that do, can become some of the best businesses in the world”. Indeed, Tidemark is the investor of companies such as Toast and ServiceTitan…
What it takes to be a winner:
Win the Category: Occupy the Control Point – this is the vertical SaaS gravity: workflow, data, account ownership. Different control points exhibit different retention profiles; ARPA is highest for products that are focused on fintech and employee management (and they are also a common expansion product); payments boost overall platform stickiness.
Scale Locations: keep scaling locations with existing offering until you feel that location growth will start do decelerate, then it’s the time to go to step 3.
Expand Offerings: Go Multi-Product – as you hit the ceiling on locations, CAC will increase = go multi-product - POS, CRM and Practice management drive the highest median attach rates for second products. Going multi-product drives financial growth . Green (High); Yellow (medium); black (low)
Extend through the value Chain - cater eventually not only to the merchant, but to merchant’s suppliers, employees, consumers
Finally, of course, AI is a key opportunity for vertical SaaS – and there is increased retention for platforms with AI Products.
General news:
CEO Diego Barreto says iFood is more than just an app – it's a channel within a broader ecosystem. As iFood nears 100M orders in a month, Barreto emphasizes the company's shift from just food delivery to a full-service platform. From market transactions to new services like iFood Pago and Anota Aí, the company aims to integrate diverse consumer needs into its model. With a presence in over 1,500 cities and a focus on expanding verticals rather than geography, iFood is looking beyond traditional food delivery.
Chilean auto sales platform, formerly TransaTuAuto, announced its rebranding to Dily and plans to launch a pilot in Mexico by the end of the year. The platform offers digital services for dealerships and individuals.
The controversial "plural vote" is gaining traction in venture capital. This voting structure allows investors to have multiple votes per share, amplifying their influence in decision-making processes. While it offers more control and potentially higher returns for investors, it raises concerns about fairness and the concentration of power within venture capital firms. This approach is reshaping investment dynamics, particularly in high-stakes funding rounds.
Mercado Diferente is transforming grocery retail with AI. The startup has invested R$1.5 million to develop Tedi, a WhatsApp-based virtual assistant. Initially, Tedi will help users with food storage tips, nutritional info, and recipe ideas. Future plans include managing subscriptions and enabling purchases via voice, text, or photos.
Mexico, despite being a regional leader in AI research, is not prioritizing AI regulation at the moment due to the upcoming general elections in 2024. The lack of stringent regulations on AI poses risks, particularly in the electoral context where AI-driven misinformation can be a significant concern.
OpenAI has launched SearchGPT, a new search engine leveraging AI to compete with Google. Currently in testing, SearchGPT aims to simplify searches with conversational interactions, similar to ChatGPT. Unlike traditional search engines, it will provide real-time information with updated links and a sidebar for additional resources.
The Central Bank of Brazil reported a security breach affecting Pix keys at three Unicred cooperatives. Personal data was exposed, but sensitive information such as passwords and financial details was not compromised.
Deals:
Indian bike-taxi platform Rapido has raised $120M in a Series E round led by WestBridge Capital, reaching a $1 billion valuation and becoming the latest Indian unicorn. Founded eight years ago, Rapido challenges Uber and Ola with its scooter and motorcycle services, operating in over 100 cities with 25M+ app downloads. With $430M raised to date, the startup has partnered with Swiggy, enhancing delivery services and job opportunities. Swiggy may increase its stake post-IPO, planned for April 2024 to raise $1.25B.
General news:
Google Pay partners with PicPay and C6 Bank to launch Pix payments in Brazil. This collaboration aims to enhance the digital payment experience, allowing users to make instant transactions directly through the Google Pay app, leveraging the popular Pix system for seamless and secure payments.
The Computers, Privacy, and Data Protection (CPDP) LatAm conference highlighted Chile's ongoing efforts in data protection. The conference emphasized the need for robust data governance to enhance democracy and innovation. The event underscored Chile's proactive stance in addressing data privacy issues.
Argentina's focus on producing unicorn startups like MercadoLibre and Globant is paying off, with effective education systems contributing to their success. Chile is also making strides in tech integration, emphasizing the importance of regulatory frameworks that foster innovation and attract investors
Cuponeria doubles down on loyalty programs, launching a new brand: LoyalMe. Noting significant growth in loyalty services, now accounting for 60% of its revenue, Cuponeria decided to spin off LoyalMe. With 20 clients, including Bradesco and Natura, LoyalMe aims to double its partner base across various sectors. The company offers gamified loyalty solutions to help companies achieve goals, providing secure, white-label platforms for rewards, coupons, and cashbacks. Cuponeria continues to focus on B2C discount coupons, feeding into LoyalMe's B2B solutions.
Gramado Summit, one of Brazil's largest innovation events, is going international with its first edition in Punta del Este, Uruguay, on September 26-27. All proceeds from ticket sales will support flood victims in Rio Grande do Sul.
The Brazilian Data Protection Authority (ANPD) has launched an investigation into X (formerly Twitter) for using user data to train its generative AI system, Grok, without clear consent. This follows a similar case involving Meta. Users must manually opt out of this data collection, which is enabled by default. To protect your data, disable data sharing in X’s privacy settings.
Deals:
Argentinian paytech company Tapi secured $22 million in a Series A round led by Kaszek, with participation from Andreessen Horowitz
Nutri Co, a Lima-based producer of plant-based superfoods, has raised $2M in Later Stage VC funding led by Terraflos. The investment aims to revolutionize food production with nutritious, plant-based products.
Canva has acquired Leonardo.ai, a generative AI research startup, to enhance its AI capabilities for designers and businesses. This acquisition brings Leonardo.ai's 120 employees, including its leadership team, under Canva's umbrella. Leonardo.ai will continue to operate independently, focusing on innovation and expanding its API solutions.
General news:
EmCasa is now a partner of QuintoAndar. Both companies share the mission of transforming the real estate market through technology, providing an improved experience for clients.
Argentina has seen a significant increase in digital wallet usage, with nine out of ten Argentinians under 40 using these platforms for transactions. This surge is supported by widespread smartphone and internet access, promoting modernization in financial services.
The Brazilian government launched ProCred 360, a credit program for micro-entrepreneurs (MEIs) and small businesses with annual revenue up to R$ 360,000. Offering R$ 5 billion in credit, with R$ 1.5 billion in government-backed guarantees, it features reduced interest rates tied to the Selic rate plus 5% annually. Loans can cover up to 30% of the previous year's revenue, or 50% for women-led businesses, with repayment terms up to 60 months. Banco do Brasil and Caixa Econômica Federal are participating, with other banks expected to join.
Brazilian payment processor PagBrasil partnered with Wipay and Paybyrd to offer the Pix payment system to Brazilians living in Europe.
A study by Serasa Experian reveals that fintechs and payment companies in Brazil could expand their credit offerings by up to R$ 9 billion. The research indicates that clients with only digital accounts have significant potential to acquire and use credit cards.
Magazine Luiza (Magalu) has created an AI division to develop the "brain of Lu," their generative AI to enhance customer interaction. Leading this initiative is Caio Gomes, with experience at Amazon and Único. This move aims to improve product delivery times, customer communication, and personalized recommendations. This effort follows Magalu's recent tech investments, including the launch of Magalu Cloud. The company emphasizes that AI will revolutionize retail, and they aim to be at the forefront of this transformation.
Correios has launched a new superapp to centralize its key services, announced at the E-Commerce Brasil Forum 2024. The app offers package tracking, import tax consultation, agency searches, price simulations, label creation, and more. This initiative is part of the "Correios do Futuro" strategy, aiming to enhance customer experience with advanced technology.
Deals:
Saúde Trevo secures R$ 5 million in seed funding to revolutionize healthcare access in Brazil. Led by Enseada Family Office, this investment will enhance the startup's platform, integrate with more laboratories, and expand business partnerships.
General news:
Wellhub, formerly Gympass, has reached 3 million global users and 500 million check-ins with its comprehensive wellness platform for employees. Founded in 2012, Wellhub partners with fitness, mindfulness, therapy, nutrition, and sleep providers across 11 countries. The platform's growth reflects the increasing corporate focus on employee well-being, offering extensive benefits and contributing to talent retention and productivity. Wellhub's rapid expansion and high partner engagement highlight its success in the wellness industry, despite recent legal disputes over exclusivity agreements with partner gyms.
Angra Partners launches its first venture capital fund with R$200M to invest in innovation, technology, and impact-focused startups. Backed solely by Finep, the fund targets early growth stages, focusing on Series A and B rounds. Led by Murillo Vianna, the fund aims to invest in 8-12 mature startups with proven models and revenues of at least R$15M. This strategic move aligns with Angra's private equity expertise, seeking to support high-quality entrepreneurs and unlock significant value in the Brazilian market.
Anthropic's AI assistant Claude has launched in Brazil, competing with ChatGPT and Gemini. Available on web, mobile (Claude 3.5 Sonnet), and API, Claude excels in natural language understanding, problem-solving, and advanced code writing. It's particularly useful in agriculture for crop yield predictions and finance for fraud detection and investment analysis.
Widelabs has launched Amazônia IA, the first Brazilian-developed large language model (LLM). This model, created with Oracle and NVIDIA's support and backed by Brazil's Ministry of Science, Technology, and Innovation, aims to transform AI in Brazil by providing a robust, native solution for both public and private sectors. The launch highlights Brazil's growing independence in AI technology and promises significant impacts on education, health, and security. Amazônia IA will be available nationwide starting August 5, 2024.
Fintech Cumbuca will launch an intelligent Pix feature by the end of next month. This new tool will enable automatic and programmable transfers between accounts of the same holder using Open Finance technology. With just one user authorization, funds can be instantly transferred without further user intervention, enhancing convenience and efficiency. The initiative is part of Cumbuca's broader efforts to innovate within the Open Finance ecosystem.
Deals:
Monuv has secured an additional R$ 2.6 million in funding from Indicator Capital and Invest Tech, bringing its total raised to R$ 11.1 million. This new investment aims to sustain Monuv's growth and product development in AI-driven video analysis for security threat detection. The company plans to double the number of cameras in its collaborative security networks by year-end and expand its public safety model.
General news:
The Brazilian Central Bank is concerned about "immature" new payment institutions that lack regulatory understanding. José Reynaldo de Almeida Furlani, BC's Deputy Head of Supervision, highlighted issues such as insufficient reference capital and liquidity for payment accounts. These concerns arise amidst a significant increase in the number of authorized payment institutions, from 19 in 2019 to nearly 160 today. The BC emphasizes the need for these institutions to quickly address these regulatory shortcomings to avoid sanctions.
Conta Simples has appointed Daniel Moreira, former Itaú executive, as Director of New Business. With a strong background in digital channels and private equity, Moreira will drive the fintech's expansion, enhancing its financial solutions and client base. His experience includes digitalizing Itaú's ecosystem and contributing to Arco Educação's IPO. This strategic hire reflects Conta Simples' maturity and ambition to offer robust, client-focused solutions. The company aims to explore new business opportunities through strategic partnerships and acquisitions.
Brazilian startup Revena, which uses nurses to train AI, has attracted investments from OdontoPrev founder Randal Zanetti and former Fleury CEO Eduardo Lafraia. Revena's innovative approach integrates healthcare professionals to improve AI accuracy and efficiency. This support from prominent healthcare leaders highlights the potential impact of Revena's technology on the industry, aiming to enhance patient care and operational efficiency through advanced AI solutions.
nstech has invested R$12M in launching nsseg and nsegcorr, two platforms aimed at transforming the logistics insurance sector. These solutions offer end-to-end services for brokers and insurers, enhancing operational efficiency and integrating with over 900 TMS. nstech's expansion plans include entering the Mexican market within a year. This move follows their strategy of becoming a global logistics tech giant, backed by significant investments and partnerships with major insurers like Chubb and Tokio Marine.
The Central Bank of Brazil will start testing the new PIX by proximity payment system in November, with full implementation expected by February 2025. This system allows quick and secure payments through virtual wallets, similar to contactless card payments. Users can make transactions by simply bringing their phones close to a payment terminal.
Impacta VC launched IRSP2024, a three-month online program offering revenue growth strategies for B2B SaaS companies at a $149 monthly fee
Deals:
Mexican fintech Digitt raised $50 million in debt from CoVenture, marking CoVenture’s first direct investment in Latin America.
LAVCA Tech Brasil 2024
Date: August 21
Location: Google HQ na Faria Lima
Description: LAVCA Tech Brasil is an annual meeting of LAVCA's network of Brazil-focused VCs and tech investors in São Paulo. This year's meeting will include keynote fireside chats, breakout sessions and networking opportunities designed to build meaningful relationships amongst investors active in the region.
Cloud 9 Capital: Open Cloud
Date: August 22
Location: Rosewood Hotel
***Invite only, focused on CEOs of SaaS companies
Brazil Tech Summit:
Date: August 9
Location: São Paulo
Description: This international summit features 100 global speakers and focuses on catalyzing entrepreneurial and business ecosystems in emerging markets. It includes panels on trends and opportunities in Brazil, industries of disruption, and the role of technologies like AI and blockchain.
Digitalks Expo:
Date: August 23-24
Location: São Paulo
Description: A major event that brings together professionals from various tech sectors to discuss digital transformation, innovation, and technology trends.
Colombia Tech Week:
Dates: August 26 - September 3
Location: Bogotá and CaliOverview: Colombia Tech Week 2024 is set to be a major event in the Latin American tech scene, bringing together startups, venture capitalists (VCs), accelerators, corporates, and international tech communities. The event aims to position Colombia as a hub for investment and innovation, with a focus on fostering connections and creating business opportunities across the region.
Inteligência Artificial no Agronegócio
Date: September, 12
Location: STATE Innovation Center, São Paulo.
Description: Grão Direto, the largest digital grain commerce platform in Latin America, has partnered with Microsoft, ADM, BASF, and PwC to host a super event featuring renowned market speakers, exclusively for selected participants. Pre-register here and seize the opportunity to participate in an immersive technology experience in agriculture. The event is free!Sao Paulo Tech Week
Dates: Sept 16-22
Location: São Paulo
Description: Several events focused in LatAm Tech taking place in the city. Notably, Cubo Conecta will happen on September 18.
Bossa Summit 2024
Dates: Sept 25-26
Location: São Paulo
Description: his event is a major gathering for the Venture Capital market, featuring over 400 speakers, extensive networking opportunities, and a range of workshops and mentoring sessions. It's designed to bring together more than 10,000 attendees, offering around 200 hours of content on business and innovation.
LAVCA Week 2024
Date: 8-11 de Outubro
Location: Conrad NY Downtown
Description: LAVCA Week convenes leading private capital investors from Latin America and around the globe each year for a series of meaningful discussions and private meetings covering the latest trends in private equity, venture capital and other private capital strategies. Participation at LAVCA Week is carefully curated and capped. LAVCA Members, non-member private capital investors and qualified institutional investors are invited to attend. LAVCA Members have access to special early bird rates through 29 August 2024.
#fswk24 - O Momento Atual dos VCs na Saúde
Date: November 6
Location: Rio de Janeiro
Description: This event focuses on the current landscape and opportunities for venture capital investments in the healthcare sector. Attendees will gain insights into the latest trends, challenges, and strategies for investing in health tech startups and innovative healthcare solutions.
The VC Corner by RUBEN DOMINGUEZ IBAR.
The Little Tech Agenda - A16z
"Sleep is the golden chain that ties health and our bodies together."
— Thomas DekkeI’m a professional sleeper…. always remember to sleep!!!!!!
Very complete and relevant post. Thanks!
Muito legal a publicação, Julia!