LatAm Tech Weekly Powered By: NASDAQ
#53 - M&A hike, QED's advices, 23S Capital, PIX and much more!
Happy Father’s Day Sunday!
I am happy to announce that starting today, LatAm Tech Weekly will be featured in Nasdaq’s Latin America website - in the section News & Insights. I am honored and even more excited to share with you every week all the important news happening in LatAm.
To kick-start the support, last week Brazilian data platform Semantix went public through a business combination with Alpha Capital, a special purpose acquisition company (SPAC) listed at Nasdaq. Semantix became LatAm’s latest unicorn and made history as the first case of a technology SPAC from Brazil listed in the U.S. Since Alpha Capital went public, it took six months to find Semantix and another nine to close the deal. The use of proceeds will be to expand into new markets.
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It is true that the VC market in the U.S. is a mirror / forecast to what occurs or will eventually happen across the globe. This week, Pitchbook released data for the country covering the first half of 2022 showing that certain stages and sectors have showed resilience, while others are showing weaker numbers.
Namely, early-stage median pre-money valuations in the U.S. showed some signs of contractions, recording their first quarter-over-quarter decline in more than two years, a decrease of 16% in Q2. On the other hand, seed-stage investment has held up better than any other stage, with deal counts and sizes remaining high and median pre-money valuations up 33% this year over 2021. As mentioned here before, the later stages (growth) continue to be the most affected, as quartiles of deal size participation and valuation both fell by more than 13%.
Now looking specifically at LatAm, according to Sling Hub, the month of July saw a total of USD 845mm in investments and an average deal size of USD 13.2 mm. The volume raised was 15% higher than the previous month, as the greater part of the rounds were also on the earlier side as seen in the U.S.
An interesting data point is relative to M&A: We have seen recently an uptick in global M&A. In the last four weeks, the average volume of M&A was of USD 77bn, up from the USD48bn figure in the 4 weeks prior. This was obviously reflected in LatAm. July was also the best month for M&A in 2022 in the region, 34 startups were acquired with 18 of them being in Brazil.
Moving on to dry powder, venture capital firms globally showed a USD 538.8 bn pile of cash as of July, up from USD 432.2bn at the end of 2021, according to Prequin Ltd. The increase is naturally attributed to VCs slowing down their investment pace during the current market downturn, partially triggered due to higher interest rates and inflation.
Speaking of which, global tech investor Softbank Group reported a USD23bn quarterly loss on Monday after a never before seen investment spree. The losses are the biggest in decades for the Company, and it has already reflected in the current investment pace of the group, especially in Latin America. Consequently – amidst the current scenario – equity rounds are becoming increasingly hard.
To that end, this week I came across an interesting article on TechCrunch on QED’s recent advice for founders. The fact is that several startups are having to cut back on staff to create more runway. This reduction in force (aka RIF) is a more permanent version of a layoff as it should not be temporary. Therefore QED, known for its operators turned investors, prepared a five-page document in which they guide the portfolio companies on how to conduct a successful RIF, by planning, executing a following-up. To my founder readers – the article is worth the read.
Fintech Clara, Mexican company that provides businesses with an end-to-end corporate spend management solution, raised USD 150mm in a debt operation with Goldman Sachs. The fintech will use the cash to weather the crisis while strengthening its finance team with a focus on mitigating risk.
Astella, Brazilian VC founded by Laura Constantini and Edson Rigonatti, raised its 5th fund: USD 150mm anchored by Spectra, Brazilian fund of funds.
Loggi fired 15% of its workforce and Fabien Mendez, founder and CEO steps down being substituted by Thibaud Lecuyer the Company’s CFO.
Mexican startup Miferia raised USD 7mm in a Seed round with investors such as Bain Capital Ventures, Canary VC, Latitud and Tiger Global.
The acceptance of PIX across the main e-commerce platforms in the country reached a peak: in July, 78% of the researched stores accepted PIX, a significant increase from the 16.9% seen in the beginning of 2021. According to the research, the percentage is the same as the one represented by the Brazilian “boletos”. Now with the new product “PIX garantido”, which allows the buyer to pay in several instalments similar to the “boleto”, the figure is expected to grow even more.
Investor Andreessen Horowitz wants to launch a wealth management service for the founders it backs.
Grupo Votorantim is joining forces with Temasek to create a new growth fund in Brazil. The new 23S Capital will be led by Matheus Vilares, Temasek’s head in Brazil and will have BRL 3.6bn to invest in the region. The objective is to have 8-10 invested companies in the portfolio with an average check of BRL 300mm.
After one year, Brazilian singer Anitta leaves Nubank’s board and becomes the Bank’s global ambassador participating in strategic marketing campaigns such as the World Cup.
Mexican startup DD360 raised a USD25mm in a undisclosed round. The company offers a financial and property technology platform that facilitates financing and management of residential real estate - such as B2B mezzanine and construction loans for developers, as well as mortgage loans to consumers.
In the event Febraban Tech 2022, the BaaS theme was largely discussed as consolidated banks such as Itau, Citi and HSBC are giving more focus to the solution as a way to diversify revenues.
More Lay-offs: Brazilian unicron MadeiraMadeira fires 3% of its work force, 60 employees.
Klavi, Brazilian open banking platform that specializes in data processing and intelligence thus enabling its clients to develop financial products and services faster, raised USD15mm in a Series A round that had the participation of funds such as Iporanga Investimentos, Parallax and Vivo Ventures.
PicPay’s digital wallet started its crypto activity by selling Bitcoin, Ether and USDP through the technology from Paxos. The objective is to enable the acceptance of crypto as a means of payment to its 1.5mm SME clients.
Nubank announced the launch of its operation in Colombia.
The volume of payments using credit cards in the e-commerce market in Brazil grew 32.7% when compared to the same period in 2021. The debit card, however, showed a decline of 20.8% - thus proving that PIX is directly affecting the usage of debit cards online.
HRTech, Betterfly, announces a restructuring in its Brazilian operations. The startup is reportedly facing challenges and laid off around 30% of its local work force.
Fabio Araujo, director of the Brazilian Central Bank who oversees crypto, stated that he does not see any problems in the offering of cryptocurrencies by established financial institutions to its clients.
One year after introducing a mental health initiative aimed at tackling addiction among entrepreneurs, QED Investors today expanded the program to more than 16,000 employees at its Spanish-language portfolio companies across Latin America.
Brazil’s Central Bank president sees room for Pix sxpansion across Latin America. He will meet the Colombian Central Bank in a session to teach how Brazil constructed its instant payments system.
The venture capital fund L’Attitude Ventures, raises USD 100 mm to invest in checks from USD 250k to to several million dollars in high-potential startups founded by Latinos.
Uruguayan co- founders of PedidosYa, Ariel Burschtin and Álvaro García, launch Orok Ventures to invest in startups in the region.
What did I learn from readers?
This week a reader sent me a very useful article. It is basically a list compiled by Fast Company on the 15 best podcasts of 2022. I already started listening to some recommendations but I figure it is really useful to share with readers who like listening to podcasts such as myself!
What am I reading?
Wired: Is the plant-based meat revolution already running out of steam?
The Information: Venture Capital’s Limited Partners Warn of Fundraising Slowdown
What did I listen/watch?
A16z Episode 2 on Crypto, Web3 and Blockchain - very good listen on the basics with concrete examples and direct parallels with what we already know.
General Atlantic’s new podcast: Breakthrough Labs - Season 1, Episode 1 - Bill Ford (GA CEO) & Tom Vice (Sierra Space CEO)
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Quote of the week:
“Fathers, be good to your daughters. You are the god and the weight of her world.” —John Mayer
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