LatAm Tech Weekly Powered by: NASDAQ
#54 - Alura&FIAP, Mercado Coin, Endeavor Scale-Up Summit... and much more!
Happy Sunday!
Busy week in tech - interesting deals and controversial investments. I will start out by highlighting the ones involving my new partner, Nasdaq.
1. It was seen in Times Square! Alura, Brazilian edtech focused on programming courses and FIAP, Brazilian company that offers undergraduate, graduate, and short courses also in tech announced a successful merger. By joining forces, they create the biggest ecosystem for tech education in the country, with a projected revenue of BRL420mm in 2022. The move was supported by two funds: Seek and Crescera. Itau BBA acted as a financial advisor to FIAP and UBS/BB to Alura. Congrats to everyone involved!
2. Mexican digital and banking services platform Covalto will list on Nasdaq through a special purpose acquisition company (SPAC), the first time a Mexican fintech trades publicly on a U.S. stock exchange. The deal puts the company, formerly known as Credijusto, at an implied $547 million pro-forma enterprise value and could generate up to $177 million of capital before expenses..
3. XTAGE, digital assets trading platform, leverages Nasdaq’s technology to debut in the Brazilian market.
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Now on to usual market overview: according to CB Insights, Q3 VC activity is looking soft. Global venture funding is at just ~$41 bn midway through the quarter. If the pace is maintained, the quarter is projected to have ~USD82bn across 7k deals. For context, Q1 had USD 142bn and 9k deals and Q2 had USD 111bn and 8.2k deals. Of course it is early to tell, but if this materializes, it would represente a 24% decrease QoQ and a 50% decrease YoY. Let’s see - time will tell.
On to fundraising and dry powder - according to Pitchbook, private fundraising totaled USD639 bn in the first half of the year, roughly on pace to reach last year’s figure. Looking ahead, the uncertain exit landscape, coupled with portfolio markdowns, is also putting pressure on VC fund returns, which may slow new fundraising through the rest of the year. Dry powder looks to be on the decline, falling 13% from 2020’s high to a total of $3.2 trillion as of June 30th, with the trend falling more sharply in private equity.
Finally, it is no news that markets are harder for equity rounds. With that, venture lending/debt instruments has attracted growing interest in recent quarters as fast-growing companies seek the debt market for capital, hoping to buy themselves more time before engaging on a new equity round.
P.S - Be sure to look at the new and revamped Job Posts section!!!!
WeWork founder Adam Neumann raised a pre-seed round of USD 350mm from Andreessen Horowitz for his new real estate company, Flow, reportedly at an over $1 billion valuation. It was A16z’s biggest ever cheque in a single round to any founder. (not actually LatAm, but could not leave out)
Bionexo announces its 9th acquisition and advances in its plan to become the largest healthtech in Latin America. The company acquired Pernambuco startup Síntese B2B, which operates in the North and Northeast regions in Brazil.
Go PIX! The number of registered PIX keys is already twice the size of the Brazilian population. According to data from the Central Bank, 478 mm keys were registered until July 2022, 95% belonging to individuals.
Endeavor held its Scale-Up Summit in São Paulo for over 500 people - mostly founders and investors. I had the pleasure of attending the event, which had keynote speakers such as Martin Escobari from General Atlantic and César Carvalho from Gympass. Congrats to the 87 scale-up startups of this batch!
Escobari said that “we are not yet at the darkest moment of the night” as he believes the US is heading for a recession, and says entrepreneurs should prepare for the worst.
César from Gympass, revealed how he saved his billion-dollar business during the pandemic, and how teamwork is key in a crisis and also that enterpreneurs should “normalize uncertainty in times of crisis”.
Banks and digital wallets had a record 20.7 million downloads in Brazil in July, according to a Bank of America survey with data from Sensor Tower.
Méliuz reported its 2Q22 results. The company faced a more adverse scenario due to the deceleration of e-commerce in Brazil as well as extraordinary expenses. On a YoY basis, GMV growth came in at 24% (down from 66% in 1Q22). Growth in total buyers also decelerated, to 19% (from 61% in 1Q22), following a 20% reduction in new buyers.
Nubank raised a USD 82.3mm in a Corporate Minority - P2P round with Softbank Group.
Former Head of Startups within AWS Brazil launches his new startup: Raketo, a venture market, focused on matching founders with prospective investors – from equity crowdfunding through private placements – VCs, private equity, family offices, and corporates.
Brazilian-based Fuse Capital has started raising Fuse Capital Fund II, whose central thesis will be investing in the next generation of Web 3 startups in Latin America. The initiative comes after successfully investing in blockchain and crypto startups in their first fund, whose thesis had an agnostic approach. The goal is to raise USD 50 mm.
The bear on The Street: Apple, valued at USD 2.8 trillion, is the most valuable company in the US. However, ItauBBA analyst Thiago Kapulskis, sees the end of monetary easing as a “significant headwind in the next few quarters”, and has a sell on the stock. The team at ItauBBA also seems concerned about Apple’s growth prospects in the longer term, among other reasons.
Mercado Libre, Latin America’s largest e-commerce company by market cap, started rolling out its own cryptocurrency in Brazil. Mercado Coin can be used to make purchases on Mercado Libre and receive it as cash back on purchases. Mercado Libre expects the cryptocurrency to be available to its 80 million users in Brazil by the end of August, and said it plans to introduce it in other countries “soon,” without providing further details. Mercado Coin will be tradable on Mercado Pago, the company's digital wallet, at an initial price of 10 cents, which will be subject to market conditions
Alura + FIAP transaction announced - see above for details.
Marcelo Baldin, Stone’s CFO for the last five years, is leaving the firm. Board member Silvio Morais will take over the company’s finances temporarily.
Rebill, Argentinian startup that offers companies a single trust point and automation system for cross-country and multi-currency revenue operations, raised a USD3mm seed VC round with investors such as Tiger Global and Y Combinator.
Pomelo, fintech as a service also from Argentina raised a Series A round of USD15mm with investors such as Insight Partners and Monashees.
Prosus, global consumer internet group and one of the largest technology investors in the world, announced it has entered into an agreement to acquire the remaining 33.3% stake in Brazilian iFood, from minority shareholder Just Eat Holding Limited for €1.5bn in cash plus a contingent consideration of up to €300m.
Fudo, online software from Argentina that helps restaurants throughout Latin America to improve their services through POS and management solutions, raised USD 7.5mm in a seed VC round from funds such as A16z, Atlantico and Maya Capital.
Starting on Monday, August 22nd, UOL Edtech will expand its operations to Latin America through the launch of the international brand of Passei Direto, Studenta, startup acquired by UOL last year. My personal congrats to dear friend and founder of Passei Direto, Rodrigo Salvador, now part of the UOL Edtech team.
What did I learn from readers?
A reader sent me a great article by Tech Crunch + : Why do startup valuations go down when interest rates go up?
TL; DR: The U.S. Federal Reserve has hiked interest rates to tamp down inflation. This is just one of several factors that are driving down startup valuations these days. But why? Higher inflation directly impacts access to capital, your customers’ ability to pay, and not incidentally, the service you’ll receive from providers (which includes your own employees).
But what is the actual connection between interest rates, startup capital and valuations? Following Modern Monetary Theory (MMT), the Fed is increasing interest rates to “cool the economy” and prevent a further rise in inflation. Despite the focus on interest rates, it is the second aspect — inflation and the consequent government response — that will have the most significant consequences for founders and the public.
What am I reading?
Blockdata: Which public companies are investing in the blockchain ecosystem
Pitchbook: Q2 Global Private Markets Fundraising Report
CB Insights: The Big Tech in Retail Report: How Meta, Amazon, and Google are transforming retail
CB Insights: Unbundling SHEIN: How fast fashion is being disrupted
Viral social media marketing and data-driven manufacturing have led to SHEIN’s meteoric rise. From next-gen market research to AI-powered search & recommendation engines, here’s how companies are unbundling the $100B fast-fashion giant.
What did I listen/watch?
Podcast Itau Views: Tech Views Riverwood (Joaquim Lima) & CRM&Bonus (Alexandre Zolko)
ELVIS 2022 - Movie based on true facts
JOB POSTS - NEW FORMAT!
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Active jobs today:
Blu
Backend Developer (Remote) - Blu
Cybersecurity Engineer - Blueteam - Blu
Wahalla
Digital Channels Specialist - Wahalla
Quote of the week:
““But it remains the case that you know what is wrong with a lot more confidence than you know what is right.” Nassim Taleb
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