LatAm Tech Weekly
Powered By Nasdaq - #57: PIX, Credix, Y Combinator, Hashdex goes global... and much more!
Happy Sunday!
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In-person events are back! Latitud will be hosting its first Vamos LatAm Summit on September 22nd. VLS is a full-day event for tech startup founders, investors, and builders from all over Latin America to connect. I will be there, if you are too - don’t be shy, come over and chat!
Cubo Itaú, the biggest tech ecosystem in Latin America, is also doing an event on September 28th. CuboConecta is back - and you can join live from anywhere by signing up here. If you are a venture capital fund and would like to join in person, respond to this newsletter!
This is not a “current events” newsletter - but I could not go without mentioning the loss of Queen Elizabeth II we had this week. Please see the quote of the week below in her honor.
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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.
During these past few weeks I have been receiving a lot of questions on the Brazilian PIX - mainly from US and European based investors. Indeed, PIX is a very interesting achievement by the Brazilian Central Bank. If you have been subscribed to this newsletter for a while now, it is no news for you that I am a great fan of PIX and Open Banking. So, I am happy to see the increased interest on the theme and also glad to discuss this here. Taking the opportunity that Benedict Evans also talked about it in a Twitter post , here are some stats for you:
PIX is currently used by around 60% of the Brazilian population
By July end there were 478 million keys registered - double the size of the country’s population. (note that one individual can have more than one key)
95% of the existing keys are from individuals (as opposed to businesses or entities)
In less than two years of launch, PIX is doing USD180mm per month in volume
Now on to the usual market overview - this week Pitchbook launched its Greater China Venture Report. VCs invested only USD 28.6 bnin Greater China in the first half of 2022, continuing a slowdown since late last year. With fundraising continuing to fall, and the region's dry powder decreasing to USD $122.7 bn - concerns about long-term capital availability, especially if investors outside the region face more hurdles to entering the market are raised. Why are the findings very relevant for us? This could mean that more VC capital will be focused in Latin America, which is good news for our ecosystem!
Another Pitchbook report that is worth mentioning out recently is the Quantitative Perspectives report. It is no news that dealmaking this year has swung in favor of VC investors due to high demand for capital and lower valuations. The report shows this in a very interesting graph that analyzes the trends in term sheets seen this year. Strong capital demand is a leading factor in the shift toward investor-friendliness since Q4 2021:
Now to end the intro with a VERY good news: LatAm is the world’s leading region for female applicants for tech roles, according to new data from a SF-based recruitment agency BairesDev. Argentina and Uruguay lead the way not just within LatAm, but around the whole world; women in these countries comprise ~45% of applicants, compared with ~33% in the US and UK.
Evino, one of the biggest wine e-commerces in Latin America announced a partnership with startup Bebida na Porta. The company operates as a delivery platform that promises fast deliveries of more than 200 options for alcoholic and non-alcoholic items. The initiative is part of Evino's ultra-fast delivery strategy, which has just hit the market and hopes to help Evino reach the BRL10mm in sales mark next year.
According to The Information, JOKR, which operates in Latin America under the name “Daki” is talking to investors and negotiating a USD1.3 bn pre-money valuation. That is a slight increase from the previous valuation of USD1.2 bn last December. Global venture capital firms G Squared and GCV Capital, which have previously invested in JOKR, are expected to lead the new round along with Tiger Global, Greycroft, Activant Capital, and Balderton Capital.
Credix, Brazlian DeFi credit marketplace, raised a USD 11 mm series A round led by Motive Partners & ParaFi Capital, with participation from Fuse Capital, Valor Capital, Victory Park, among others such as Marcelo Claure. The Solana-based company matches lending fintech in emerging markets with institutional investors, enabling them to convert their receivables and real assets into investment capital.
Clip, fintech that provides a digital payment platform to businesses in Mexico which allows them to interact and transact with its consumers effectively via customer service, giving them the ability to accept all payment methods digitally raised a USD 50mm line of credit from HSBC, JPMorgan and Morgan Stanley.
Default in Brazil: For the second consecutive month, the shares of families that declared themselves indebted and in default reached a record, according to a recent survey: the share of those who declared themselves indebted was 79% in August, above the 78% in July and the 72.9% seen in August last year. It was the largest figure yet of the historical series of the survey, which started in 2010.
Ualá, the Argentinian neobank, announced the acquisition of BNPL company Ceibo Creditos. Ualá achieved unicorn status last year and is still working on integrating Wilobank, whose purchase was approved by the Argentinian Central Bank earlier this year. Details of the transaction were not disclosed.
Microsoft will invest USD 850mm in Travis Kalanick’s CloudKitchens. The US startup is reportedly buying and installing ‘dark kitchens’ in Latin America over the past three years. According to the Financial Times, the startup currently operates 50 cloud kitchens spread across Mexico, Brazil and Colombia.
Brazil’s central bank chose Itaú Unibanco, the country’s largest bank, to work on a decentralized liquidity protocol.
Wall Street Banks funding more startups in Latin America: Apart from the above mentioned Clip, Xepelin, the Chile-based B2B digital bank, announced a USD140 mm credit line with Goldman Sachs. The 3-year maturity asset-backed loan will be released in two tranches and will help finance their Mexico expansion. The startuphelps users organize accounts and automate payments to suppliers.
Hashdex, an innovative global crypto-focused company based in Brazil announced that its Hashdex Nasdaq Crypto Index Europe exchange-traded product ("ETP") is now tradable on the Euronext Paris and Euronext Amsterdam under the ticker symbols HASH FP and HASH NA, respectively, and on Xetra under the ticker symbol HDX1 GY.
Mexico’s stock exchange reform aims to facilitate SME’s access to debt in the country. There are 32,000 small and medium-sized companies in Mexico that could benefit from access to the debt securities market.
Nubank adhered to open finance, a system that allows the sharing of customer financial data from one institution to another voluntarily and with consent. By joining the platform, which started in Brazil in February 2021, Nubank says that it seeks to offer greater control of financial life to its customers, through a transparent and accessible experience.
Lemon Cash, the Argentinian crypto startup, announced it is giving away Lemmy NFT avatars to Brazilian users who download the app. It also aims to launch debit and credit cards in market later this year as well as cashback in Bitcoin.
Brazil’s tax authority, Receita Federal, reported that 1.33 mm Brazilians made crypto purchases in July, up 68% month-over-month. The total number of crypto investors in the country exceeded 4.3 million in June, approximately 2% of the country’s population.
Y Combinator announced its selection of 227 companies for Batch S22, with 14 startups from Latam including six from Mexico, two from Brazil, and two from Argentina. Fintechs include Kashin, Trebu*, Drip, and Kapstar.
Salkantay Ventures, Peru-based fund manager, announced a $26 million final closing of its first VC fund, Salkantay Exponential Fund (SXF). So far, the firm has invested in 14 companies with this fund, including Prestamype, Leal, Minu, and Migrante. The fund aims to invest in a total of 25 seed to Series A companies from Spanish-speaking Latam, with a special focus on the Andean region.
What did I learn from readers?
A reader sent me good data compiled from different reports on fintech investment trends in the first half of 2022. A couple of highlights below:
There were 1,103 fintech VC deals worth USD 24.1 bn in Q2 2022 - representing a decline of 17.8% in deal value quarter-over-quarter, the largest such drop since Q3 2018.
The number of deals cut also declined by 24.4% from Q1 to Q2 2022.
Despite this slowdown, there were some notable deals during the quarter such as USD 748.3 mm Series C for expense management specialist Ramp.
The payments segment, which makes up the biggest share of deal value among fintech startups, raised USD 7.6 bn in Q2 2022, a drop of 18.7% from USD 9.3 bn in Q1.
Curious as to what falls in the “payments category”? Here are the five sub-segments: i) business products and services payments ii) cross border and FX iii) P2P and remittance iv) payment platforms and POS v) payroll and AP;AR automation.
What am I reading?
A16z Foundations for Successful Fintech Infrastructure: Marc Andrusko and Angela Strange broke down how fintechs should think through vendor selection in three areas: (1) onboarding and account opening/funding, (2) underwriting, issuing, and loan origination and (3) payment acceptance and collection servicing.
Business Insider: Startup Founders' Mental Health Is Crumbling Under Stress
What did I listen/watch?
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Quote of the week:
“When life seems hard, the courageous do not lie down and accept defeat; instead, they are all the more determined to struggle for a better future.”
Queen Elizabeth II