LatAm Tech Weekly
#68 - Powered by Nasdaq: Creditas & Zap+, Cloudwalk's InfiniteBank, PIX breaks another record, deals of the week and much more!
Happy Sunday!
World cup & 2022 coming to an end: but still lots of tech news! Look out, there will be a very special edition to close off the year in style. No spoilers as of now - but if you are reading this, and not yet a subscriber - I promise it will be worth 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.
Private equity firms have been historically increasing their investment pace in venture deals as an objective to diversify their activities, even though this figure has slowed this year with the downturn. Acording to a recent Pitchbook report, so far in 2022, PE firms have invested in 4,201 venture rounds worth a total USD 192.1 bn. Looking ahead, this pace should be in line with the VC industry momentum as a whole. Therefore, if things get better next year, as I anticipate (always an optimist) - the trend will continue upwards.
Speaking of momentum for the industry, it will be interesting to see the changes between SVB’s report on H1 2022 State of the Markets and the H2 2022 edition, expected to be published in Q1 of 2023. Data from H1 2022 showed that: (i) companies were raising significant amounts relative to their ARR, (ii) crossing the USD 100 mm in ARR is a very significant threshold take in average 7+ years, and (iii) profitability for high-growth companies declined the most.
Still on the (iii) trend, according to Kroll, a business valuations consultancy that advises companies on their internal valuations, known as 409A valuations, many late-stage and pre-IPO companies are failing to hit their revenue projections. Kroll affirms that they have advised ~40%-50% late-stage and pre-IPO companies to cut their valuations—at least in part because many are falling short of their own performance targets. Consumer-facing companies are the most affected as they are more susceptible to economic declines. Concurrently, startups selling software infrastructure and cybersecurity to other enterprises have generally been performing according to their financial plan.
Creditas and Zap+, OLX’s real estate division, entered into a partnership to integrate financial services to their websites. In practice, it means that the user will be able to search, choose, negotiate and buy a residential or commercial property digitally without leaving the platform. Real estate agents that advertise on the portals will be able to offer any of Creditas' services, such as credit for acquisitions, advance sales and "home equity".
SP Ventures and Domo led a BRL 10mm round in Brazilian agtech ERural, specialized livestock platform.
Fligoo, startup from Argentina based out of the Silicon Valley with expertise in advanced analytics, decision science, and predictive algorithms, announced the acquisition of Brazilian Mobi2buy, triplicating its size after the transaction. Mobi2buy is a digital engagement company. The terms of the transaction were not disclosed.
The number of unique Brazilians who actively consent to Open Finance clauses grew to 9.6 mm – up 43.3% from the figure seen by the end of June (6.7mm).
Closet BoBags, Brazilian e-commerce & rental platform focused on second hand luxury items launched an investment vehicle focused on luxury brand handbags. That is, the founder, Bel Braga, had the idea of creating an investment vehicle of BRL 1mm offered to a restricted group of investors. The proceeds of the fund are used to buy new bags – and every month, with the appreciation of the underlying assets, investors get the return. From July to August the fund had a net return of 4.87%. The idea is to eventually have more “selected vehicles” to test the model and eventually an actual investment fund.
AgTech Garage, startup that provides technological solutions to agribusinesses, was acquired by PwC by an undisclosed amount.
Research showed that Pix represents more than 30% of payments made by Itáu Unibanco customers.
Default rates in Brazil continues to increase - this month it broke a record high of 64,8 million brazilians.
Netzun, Peruvian online education and learning management platform for enterprises raised a seed round of USD 1.4mm with Grupo RPP and other undisclosed investors.
Sequoia Capital apologized to its fund investors for the USD 150 mm it lost on crypto exchange FTX.
Brazilian unicorn Cloudwalk announced the launch of InfiniteBank. The objective is to expand the financial services offered to SMBs going beyond the POS InfinitePay. The company recently recieved the authorization from the Central Bank to operate as a payment institution.
The change in benefits’ regulation in Brazil which will occur in May 2023 will increase competition in the space. Estimates show that after the reform, the segment will have an estimated volume of BRL 150bn. Similar to what is seen with credit cards, the benefits will now be divided into open and closed payment arrangements. In the closed loop, which is the traditional model in this market, issuance, accreditation and card branding are all done by the same company. Today, this market is dominated by Alelo, Sodexo and Ticket, which has around 80% of the market. The remainder is spread across nearly 180 local and regional companies. Things should change as the open loop comes into play and becomes a possibility.
A new venture capital in the region: Supera Capital, led by co-founder of Volanty Mauricio Feldman and former Igah Ventures Luis Felipe Magon will be focused on early stage deals, agnostic as for sector, with an average check size of USD 1mm. The investors are reportedly already advanced in selected companies’ analysis and should announce new investments soon.
Brazil’s PagSeguro revenues rise by 45% in Q3 - The company saw revenues climb to BRL 4 bn reais (USD 746.3 mm) in Q3, an increase it attributes to focusing on larger customers and also due to cost control.
Talently, career-accelerating platform startup from Peru raised a seed round of USD 800k with the Inter-American Development Bank.
Recent research shows that PIX surpassed both credit and debit card transactions. In Q2 of 2022,, there were more than 5.4 bn transactions through Pix, compared to almost 4 billion payments made with credit cards and 3.8 billion with debit cards. In September, two months before turning two as mentioned last week, Pix reached the mark of BRL 1 trillion transacted in just one month. The number of individuals registered reached 127.8 million while the numer of companies reached 10.5 million in October.
GoTrendier, Mexican e-commerce platform. for second-hand clothes, raised a USD 13.5mm Series C round with investors such as Bonsai Partners, Creas, IDB Invest, IDC Ventures and JME Venture Capital.
CVC as a Service in Brazil: Valetec Capital reached the mark of BRL1bn under management. The company is responsible for the CVCs of Brazilian companies such as Dexco, Anima, Locaweb and ArcelorMittal.
Mexican Baubap, startup that offers a leading mobile microloan platform to obtain loans without consulting a bureau, raised USD 20mm in a debt round with Park Cities Asset Management.
Brazilian health platform Bionexo acquired Avatar, company that delivers specialized solutions in revenue cycle management. The terms of the transaction were not disclosed.
According to SVB’s November "State of Fintech" report, about 44% of fintechs with under USD 10 mm in annual revenue has less than 12 months of runway as of the end of Q3 2022.
What did I learn from readers?
This week marked the release of The Digital Health Report produced by Aggir Ventures (Brazilian healthtech-focused VC) in partnership with consulting firm EloGroup. It is a benchmark report about the healthcare sector, with inputs from multiple stakeholders and descriptions of the Most Valuable Opportunities for digital health application.
After dozens of interviews with key leaderships and an extensive research, the Digital Health Report identified 10 major areas of opportunity in the healthcare market (referred to as the Most Valuable Opportunities), which were categorized into 3 groups:
New Healthcare Models
1) Guiding, retaining and engaging patients placed in appropriate lines of care.
2) Multidisciplinary approach with partial digitalization of the healthcare team’s journey.
3) Expansion and qualification of access to health.
4) Pharmacies as hubs of care.
Efficiency and Digital Transformation
5) Relationship between service providers and payors
6) Process conformity and interpretation of standardized indicators for performance monitoring of health organizations
7) Optimization of the R&D process for new drugs and treatments with AI and other technologies
Decentralization of Care
8) Personalization of employees’ health journey by HR departments
9) Growth of new home-based healthcare models for patient convenience and follow-up
10) Tech-enabled patient omnichannel experience
In short, the Supplementary Health System provides a wide range of opportunities – boosted by new available technologies – but is structured on inadequate foundations. As such, the report points out new foundational trends on top of which a digital health ecosystem could be built with the aim of reducing costs and inefficiencies, improving access and quality of care delivery and making treatments more personalized and accurate.
What am I reading?
ZeroHedge: I am still obsessed with the FTX saga, so I am reading the blog everyday :)
Money Times – The 5 challenges for fintechs in 2023 (PT only, by Marilyn Hahn, Co-Founder at Bankly)
What did I listen/watch?
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Quote of the week:
“All the benefits in life come from compound interest — money, relationships, habits — anything of importance.” Naval Ravikant