It's often said by Brazilians that the year doesn't really start until after Carnaval. But, for me, this year kicked off a long time ago. So, to those who subscribe to that post-Carnaval start, Happy New Year! ;)
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This week has been jam-packed with fascinating reads, especially those focusing on Latin America and Brazil. So, for anyone on the hunt for local data and insights in the tech sector, this edition is going to be an invaluable resource.
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.
Kicking things off with Itau BBA’s and Sling Hub’s report, the data reveals a resilient local market. Despite global funding hitting its lowest point since 2017, and LatAm experiencing a 49% year-over-year decline with $5.7 billion raised last year in 885 funding rounds, the numbers still paint a relatively positive picture. In fact, 2022 outperformed 2018, where the total volume raised was just $2.6 billion.
Focusing specifically on Brazil, the country accounted for $3.1 billion of this amount. This represents a somewhat less drastic year-over-year decline of 42%. On the Mergers and Acquisitions (M&A) front, last year saw 213 deals, significantly outdoing the pre-pandemic total of 93 in 2019.
Breaking it down by sectors, fintech continued to lead the way, claiming 37% of total equity investments. However, a particularly noteworthy trend was seen in the Biotech sector. Not only has it climbed into the top three in market volume, reaching $262 million, but it also stood out as the only sector to see an increase in funding year-over-year – an astonishing 607% at that. Finally, on scale, 46% of LatAm rounds raised ≤ $1M, while only 3% exceed $50M in 2023.
In my opinion, the rise of biotech is a strong indicator that the region is not only expanding its technological capabilities but that its ecosystem is maturing. As always, I remain cautiously optimistic about what the year holds.
Below, you'll find some selected graphs from the report:
Moving to the Sebrae report on startups in Brazil 2023, an interesting approach was the density of startups by region. While it is only natural that the southeast region has the majority of them (32.95%), it is interesting to see that the northeast is picking up momentum with 25.77% and the south with 29.32%. These figures show that the country as a whole is on the digitalization path.
Finally, the Deloitte and ABStartups study is very complete and thrall covering several themes. However, two that stood out for me were the profile of founders and the diversity in startups. Looking at the first, currently in Brazil 19,7% are women and 79,8% are identified as men. Of this group, 70,7% identify themselves as white and 23,7% as Afro-Latino and African descent. It is clear by the study that diversity is an area we should look out for in other to foment founders with more diverse backgrounds.
General news:
iFood has announced another heavyweight in the grocery shopping segment to strengthen its presence in this sector. Two months after featuring Justo as one of its official supermarkets within the app, Daki has now also partnered with the delivery platform.
Banco BV announced that it is starting to use open finance in its platform for vehicle financing.
BHub is venturing into insurance and other financial services. After securing its 2nd partnership in a year and tripling its customer base, the "backoffice-as-a-service" startup is exploring new frontiers.
Celcoin - a financial infratech company specialized in empowering businesses through the provision of modular solutions for companies in various sectors - had a historic year in 2023. Its revenue more than doubled in the fourth quarter compared to the same period in 2022, reaching R$ 64 million compared to R$ 31 million in the same period the previous year, an increase of 106%.
The Ribbit-backed Brazilian fintech, Stark Bank, doubled its profit while maintaining cash reserves. Rafael Stark, the founder, mentioned that 30% of its employees are engineers, with Jeff Bezos’ family office among its investors.
Deals:
Atlas, Argentinian provider of onboarding and tax compliance services intended to support international contractors raised USD 2.75mm led by Hi Ventures.
Endeavor Promessas, their accelerator incubator from Brazil, announced undisclosed rounds to three startups: Blipay, Datanomik, Payface, 88i and Bilipay.
General news:
Frubana, a Colombian startup that developed a solution to connect rural producers with restaurants, is going all-in on Brazil to secure its position in the market. To achieve this, the company announced the suspension of its operations in Mexico.
DrumWave hires futurist for global advisory board. Michael Clark, Global Director of Digital Transformation at Mastercard and author of books on the data revolution, joins the team.
Launched just one year ago, Strides reaches breakeven and forecasts a revenue of R$ 10 million in 2024. The edtech offers a continuous learning model with a focus on communities for mentorship and content immersion.
Deals:
Bem Agro, an agtech that combines artificial intelligence (AI) and computer vision to transform data from tractors, drones, and satellites into agronomic reports, has just closed a pre-Series A round of R$ 10.2 million. The investment was led by an international giant in the sector - CNH Industrial, owner of brands such as New Holland and Case.
The fintech Open Co announced the raising of R$ 50 million through a Receivables Investment Fund (FIDC) aimed at expanding in the small and medium-sized enterprises (SMEs) credit segment. The operation was led by Empírica Investimentos. Luiz Leite, Head of Investments at Open Co, stated that new issuances are expected to occur throughout this year.
General news:
The fintech aiming to compete with local B3 on other fronts, SL Tools, has started trading government securities in the secondary market through its platform post-Carnival and expects to obtain the license to become a new stock exchange later this year.
Leonardo Tonini, former CMO of Mondelez, and Eduardo Moraes, founder of Latinex Brands, are launching an investment firm. Emerge Ventures is born with capital from the duo and the investment thesis of focusing on emerging consumer goods brands, an area that doesn't attract as much attention from venture capital (VC) funds, which typically prioritize companies with a technological focus.
Nuvei Introduces Direct Acquiring in Colombia, Expanding LATAM Presence. Becoming the first global payment provider to offer direct acquiring services in Colombia, enhancing e-commerce operations and local payment experiences.
Petrobras announced that, together with BNDES, it has initiated studies to create a Corporate Venture Capital (CVC) fund to support small and medium-sized technology-based companies. Initially, themes related to the energy transition will be prioritized.According to the state-owned company, $100 million is earmarked for the CVC investment strategy over the next five years.
Deals:
With a new investment, Agidesk gains strength to compete with the big players. With a R$ 4.5 million check from BR Angels, the process management solutions startup aims to grow by 150% in 2024.
Simetrik, platform from Colombia for data reconciliation designed to gain control and provide visibility to companies, raised USD 55mm lead by Goldman Sachs Management.
General News:
With the boom in artificial intelligence, Nvidia triples revenue and multiplies profit by eight. The company reported positive results in the fourth quarter of 2023. Net income increased by 769% to $12.2 billion, indicating that the artificial intelligence boom remains robust.
Zoox Smart Data achieves breakeven and aims for an IPO in 2025. The startup, which manages data for a third of the Brazilian population, seeks sustainable growth while generating cash flow.
General News:
Good Karma Partners (GK Partners), the venture capital firm founded by Eduardo Mufarej, has just secured an investment from the IDB in its multi-strategy fund, which invests in companies with positive social or environmental impact. The investment arm of the Inter-American Development Bank is contributing $5 million (approximately R$ 25 million).
Invight, a financial social network invested by BTG, comes to an end. According to the company, which aimed to gain traction in 2024, the closure of operations was due to "strategic reasons."
Expanding in Brazil, Globant is classified as the fastest-growing IT brand in the world. With a new CEO in the country, the company has just acquired Iteris, a consultancy specializing in digital transformation for companies like Nubank, C&A, and PagBank.
Deals:
Backed by Bradesco, Skyone raises R$ 60 million and sets sights on M&As. The Bewater fund, led by Carlos Degas Filgueiras, Fabio Armaganijan, and Guilherme Weege, invests in Skyone, banking on cloud computing growth.
Housi secures $10 million to finance its international expansion. With the round led by Redpoint eventures and TM3 Capital, alongside Açolab Ventures, the proptech will debut in the US and Portugal, as well as invest in operations in Espírito Santo.
EDP, through its corporate venture capital arm, EDP Ventures, has invested US$ 2 million (equivalent to R$ 10 million) in Splight, a Chilean startup that develops artificial intelligence and data science technologies to promote maximum efficiency in renewable energy generation systems. This marks EDP Ventures' first investment in a Latin American startup outside of Brazil.
Banco Master has just closed the acquisition of control over the digital bank Will Bank, marking its second transaction in just over two weeks. This move positions Master Bank at another level in retail, adding over six million customers - elevating Master Bank's customer base to more than 10.5 million individuals in the country, offering services such as credit cards and insurance.
eCOMEX NSI acquires startup to streamline foreign trade. The company holds about 24% of Brazil's market share and has maintained a 28% annual revenue growth over the past five years. To automate these processes, the company is acquiring D2P, a startup specializing in foreign trade management automation, in a deal valued at around R$ 20 million
