LatAm Tech Weekly - Special Edition II
#88 - Powered by Nasdaq: Web Summit Rio & LatAm Tech #'s for April
Happy Sunday!
I am well aware I had mentioned there was a possibility of not having newsletter this week… but – thanks to my collaborators and several flights – I was able to put together another Special Edition. It is true that given the several events, I was unable to track daily tech news. Therefore, in this edition you will see an overview of the Web Summit and also updated venture numbers for the region in April: investments, M&As and general trends.
Let’s dig in!
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WEB SUMMIT RIO DE JANEIRO
I was so happy to see one of the biggest tech events being hosted in my town, and even more glad I had the chance to be a panelist. The Rio Web Summit over delivered: sold out tickets, +20,000 people, 91 nationalities, and all of the key decision makers of the LatAm tech ecosystem present. Itau BBA was present with a hub that offered great content along the days, and a full team talking to clients, fostering connections and doing business! The bank even announced its new partnership with Accountfy – called “Gestão Integrada”.
If you were not able to make it, don’t worry! Here you will find the key themes of the main panels, and insights that were discussed. I would like to thank my friends and co-founders of SaaSholic for helping me with this edition. For those who don’t know, SaaSholic is a local early-stage VC fund focused on SaaS. The fund was featured on local portal Brazil Journal this week, where they explained what a “jabuticaba” is: unique or unusual technology solutions or market specific adapted specifically to Brazil. They're typically driven by local regulations, culture, or preferences, these tech "jabuticabas" are like their fruit namesake: native to Brazil and happen to be great investments. I recommend the read of the full article.
Anyways, William and Gustavo were also present in the Web Summit, and today I will share with you their notes, coupled with a couple of my own insights. So, if you didn’t come – no worries, we got you back 😊
If you are not interested in the Web Summit, scroll down for the most updated venture numbers in LatAm.
Web Summit Rio, day 2.
Investing in Latam
Eric Acher, Founder & Managing General Partner (Monashees ); Edith Yeung, General Partner (Race Capital); Renata Quintini, Co-founer (Renegade Partners), Ricardo Amorim, Co-founder (AAA Inovação)
The speakers believe that the next 10 years will be better for the region, with opportunities for investment in various industries using technology to solve problems.
Latin America has interesting characteristics that make it a viable place for investment, including a high level of internet penetration and social engagement.
The potential for Latin American startups to utilize AI to improve efficiency, generate global innovation and the economy, and then expand internationally is vast.
It is important to have big ideas, patience, resilience, and support within the ecosystem for the success of Latin American startups.
How To Understand VC In Latin America
Rodrigo Baer,co-founder & Managing Partner (Upload Ventures); João Chebante, Owner & CEO (Sinergis)
Latin America is a first-generation market for startups, and investors outside the region may not have the same references and expectations as in the US or Europe.
Finding LPs to invest in Latin American startups is a challenge.
Local investors may want their money back quickly, putting pressure on startups to show liquidity early on, while US foundations and endowments invest with a longer-term perspective.
There is a shift towards less capital-intensive startups with recurring revenues, and due diligence is crucial before taking on investors or advisors.
The key to success is develop the product and have strong unit economics couple with a clear vision, especially during tough times.
How To Choose a VC Fund That Fits Your Needs
Rodrigo Menezes, Partner (FM Derraik); Joaquim Lima, Partner (RIverwood); Frederico Greve, Managing Partner (DGF) Gustavo Cavenaghi, Head of investments (Kortex Ventures); Daniel Izzo (Co-founder, Partner, DIrector & Chief Executive (Vox Capital)
Different investment firms have different focuses, such as growth capital, early-stage tech companies, and impact investing.
Investors prioritize scalability, strategic alignment with LPs, and measuring impact in addition to financial analysis.
The decision to invest is based on the founding team’s potential and their product’s potential to scale and become a significant market player.
Passion and dedication of the founder and the business model’s distribution potential are key points for investment models.
How To Build a Successful Fintech Company
Pete Casella, Founding Partner (Point 72 Ventures); Vitor Torres, Founder & CEO (Contabilizei)
The importance of embedded financial services in business software to provide seamless and accessible financial products for businesses was discussed, particularly in emerging markets where businesses may be underbanked or have difficulty finding financial products.
Vitor Torres shared his journey in founding Contabilizei and how they integrated accounting with banking solutions to provide a full-stack experience for their customers.
It is of extreme importance to find the right partners and investors for a company at different stages of growth and how investors can help founders by pointing out the risks that need to be addressed and providing guidance on how to solve them.
It is very important to identify risks in order to build a business. The healthy shakeout of the investment industry in Brazil and Latin America will lead to a better opportunity for founders to build successful companies.
From Silicon Valley to Rio – The Globalization of Venture Capital
Mathias Schilling, Co-founder & Managing Partner (Headline); Romero Rodrigues, Managing Partner (Headline); Artur Búrigo, Reporter (Folha de S. Paulo)
Headline Ventures is a global venture capital firm with a portfolio of notable companies, focusing on building companies with the Silicon Valley idea around the world.
Brazilian entrepreneurs can adapt better to the challenges of the market and understand customer pains earlier than others, but access to lasting capital and reliance on “tourist capital” are obstacles to growth.
Brazil is still at an early stage of its ecosystem compared to markets like China and the US, but it has a huge market with many inefficiencies that provide opportunities for entrepreneurs to create businesses that solve problems and can eventually expand globally.
The cost of capital has gone up, and digital markets have returned to normal market sizes, leading to a new environment of lower valuations and less money in the market.
Startups should be cautious about their cash position, focus on capital-efficient business models, and adopt a global mindset to compete on a global scale.
Web Summit Rio, day 3.
Responsible tech in an era of hostile tech
Rebecca Parsons, CTO (Thoughtworks.)
Rebecca emphasized the importance of responsible technology and its impact on society and the environment.
The responsible tech playbook is introduced as a tool to help companies incorporate responsible tech practices into their operations.
Strategies for promoting responsible tech include changing methodologies, data protection, transparency, minimizing environmental impact, diversifying the workforce, and designing for accessibility and inclusivity.
Lack of awareness, organizational resistance to change, and competing priorities are some of the reasons why companies struggle with responsible tech.
The responsibility lies with the technology industry to make simple changes to maximize positive unintended consequences and mitigate negative ones.
How to build a product-market fit “engine”
Rahul Vohra, founder and CEO (Superhuman).
Rahul Vohra, the founder, and CEO of Superhuman, presented his method for systematically identifying and increasing product-market fit (PMF), which he calls the PMF engine. This process helped transform Superhuman into an efficient email experience, reducing inbox management time and increasing productivity.
The PMF engine operates in five steps: surveying users for their experience and disappointment level with the product, segmenting customers based on these responses to identify high-expectation customers, analyzing the survey results to understand the product’s benefits and its shortcomings, implementing changes based on the analysis, and continually tracking PMF scores to measure progress.
The PMF engine stresses the importance of balancing the development focus between enhancing what users already love about the product and addressing their main objections. This balanced approach prevents stagnation and helps protect against competition.
Since implementing this PMF engine, Superhuman’s PMF score rose from 22% to 58% over several quarters, demonstrating the effectiveness of this system. Rahul encourages other companies to implement this methodology to better understand their users and improve their products.
Creating a seamless customer experience in SaaS
Edith Harbaugh, CEO/Co-Founder (LaunchDarkly) and Caleb Silver, Editor-in-chief (Investopedia)
The panel started with Edith Harbaugh, CEO/Co-Founder of LaunchDarkly, discussing the growth of the SaaS market, which is estimated to reach $462 billion by 2028.
Key capabilities of SaaS platforms include reliability, security, scalability, and the ability to solve customer needs.
Enterprise SaaS platforms cater to larger organizations, while consumer-led platforms focus on individuals and small businesses.
Edith shared her experience in scaling a company and emphasizes the importance of finding passionate talent.
The session also mentioned the importance of building trust with customers and using content marketing for SaaS solutions.
How can startups effectively manage the SaaS products they use
Don Muir, Co-Founder and CEO (Arc); Bianca Martinelli, partner (Alexia Ventures); Harry McCracken,Global Technology Editor (Fast Company)
Bianca Martinelli, partner of Alexia Ventures, emphasized that the adoption of SaaS products is increasing due to digital transformation, with trends including AI integration, verticalization, low-code communities, and product-led growth.
The macroeconomic backdrop has led to decreased venture capital funding for Q1 2023, causing b2b SaaS companies to focus on becoming cashflow positive or having positive unit economics.
Managing SaaS expenses is crucial, with companies advised to scrutinize every line in the P&L and measure the depth of ROI, and have a formal process for procurement and approval.
Negotiating terms with vendors, communicating about tools being used, and providing training to team members on the software are important considerations for companies.
Companies should avoid redundancy in their tech stack, consider AI adoption, and recognize the potential for Latin American founders to compete globally in the tech industry.
How will AI help building a shining SaaS future
Ross Saario, Chief Executive Officer (Intelipost); Mada Seghete, Co-Founder and Managing Director (Branch); David Ly, CEO (Iveda); Murilo Garavello, Content creator (UOL).
The panel featured speakers from companies leveraging AI to improve business operations and customer experience.
Companies such as iVeda and Mercado Livre are using AI to analyze data and improve performance across various industries.
The speakers emphasized the importance of staying focused on customers and their needs while leveraging AI to improve efficiency and solve complex problems.
AI can be used to free up time for humans to focus on more complex tasks and decision-making.
The speakers advised caution in separating hype from reality when it comes to AI and to be methodical and thoughtful in its application.
Mastering online presence: Essentials skills for SaaS brand growth
Andrew Warden, CMO (Semrush),and Julia De Luca, Tech Investment Banking (Itau BBA).
Andrew Warden from SEMrush emphasized the importance of understanding one’s audience, investing in organic marketing channels, and adapting to macroeconomic challenges. Monitoring competitors and using tools to understand audience behavior were also highlighted as effective strategies.
AI’s role in market research was discussed, noting that while tools refreshing market research daily don’t currently exist, SEMrush is exploring AI applications for understanding audiences in real-time.
Julia De Luca and Andrew Warden stressed the importance of humanizing B2B brands, citing the effectiveness of SEMrush’s lifestyle campaign. They also emphasized the role of customer stories in brand storytelling.
The role of trust, credibility, and social media in brand growth was highlighted, along with the need to balance organic and paid marketing channels. In times of economic downturn, focusing on organic strategies was recommended to strengthen brand growth.
Why AI is improving customer experience in Latin America
Daniela Braga, Founder and CEO (Defined.ai); Murilo Garavello, Content Director (UOL).
The panel started with a discussion of the importance of leveraging AI for businesses to stay competitive.
Conversational AI is replacing the old IVR system and improving customer experience.
Ethically sourced data is essential for conversational AI, and specialized talent is required to build it.
Regulations are lagging behind in AI development, and there is a debate on what applications should be considered right or wrong.
Educating people about their data and understanding the technology they use is important, and explainability should be part of regulations.
AI: future or fear?
Sarah Al-Hussaini, Co-founder and COO (Ultimate); Aline Oliveira, Co-founder (Traive); Gustavo Ribeiro, editor-in-chief (The Brazilian Report)
A conversation about the potential of AI in different industries and its impact on jobs.
AI has the potential to disrupt certain industries, such as customer service, but changes are happening slowly over time.
Sharing real use cases and teaching teams to use AI technologies can help people better understand their potential.
Clear regulations are needed to prevent AI from reinforcing human biases.
The launch of a generative product for customer support automation by Ultimate Govt highlights the importance of customization of tone of voice for businesses and consumers, and the use of large language models simplifies architecture and speeds up innovation for NLP-based products.
WebSummit Rio, day 4.
How to make products that people love
Mikael Vardanyan, Founding Partner and Chief Product Officer (Picsart); Sarah Al-Hussaini, co-founder and COO (Ultimate); Claudia Penteado, Contributor (Valor Econômico).
The panel started discussing that AI is expected to change jobs in customer service, with automation rates predicted to increase from 45% to 60%.
However, this may not necessarily lead to job loss, as new roles like Automation Manager and Bots Manager are being created, paying 30-50% more than the average customer service agent job.
The implementation of AI for customer support requires understanding the industry’s current processes and speaking with customers to provide a better user experience.
Deep tech companies must be 100% adapted and configured to the use case they are in.
To foster a culture of creativity, innovation, and user-centric thinking, companies should run experiments and take a more holistic approach to balance the present and future.
Do founders make good CEO’s?
Thibaud Lecuyer, CEO (Logg)i, Edith Haebaugh, Co- founder and Executive Chair (LaunchDarkly); Robson Privado, Co-founder and Chief Growth Officer ( Madeira Madeira)
The panel discussed when it’s appropriate for a founder to relinquish power and when it’s time to take control.
Thibaud Lecuyer, CEO of Loggi, Edith Haebaugh, Co- founder and Executive Chair of LaunchDarkly and Robson Privado, Co-founder and Chief Growth Officer at Madeira Madeira, agree that in the early stages of a startup, it’s challenging for the founder not to be the CEO, but as the company grows and matures, it becomes necessary to evaluate the founder’s ability to continue leading the company.
The importance of self-awareness and humility for founders and CEOs to manage the complexity of scaling a company was highlighted, as well as the need for identifying gaps in skills and seeking external help.
The speakers emphasized the importance of transparent and honest communication with the team to overcome adversity faced in starting a new business and create a culture of honesty and transparency.
Balancing motivation and discipline as a leader, breaking down goals into stages, and surrounding oneself with founders at similar and different stages of growth were also advised.
Tech in 2024: where is the money going next?
Fabio Carrara, founder and CEO (Solfácil); Trisha Kothari co-founder and CEO (Unit 21); Santiago Fossatti, partner (Kaszek).
The discussion was about emerging trends and sectors for investment, including generative AI, climate tech, financial infrastructure, crypto, quantum computing, and biotech.
Fabio Carrara,founder and CEO Solfácil, Trisha Kothari co founder and CEO of Unit 21 and Santiago Fossatt, partner at Kaszek. remain optimistic about the potential for technology despite market fluctuations and are focusing on more robust and profitable businesses with better value propositions.
Investors in the tech industry see high expected returns in emerging markets like Latin America and Asia.
Climate tech is seen as the biggest investment opportunity of the century and can be broken down into sub-sectors like power generation.
The lack of diversity in investments is a concern, and companies are working to increase diversity in their portfolios and support underrepresented communities.
How to build a Brazilian unicorn
Gustavo Brigatto, founder and Editor-in-Chief (Startups); Florian Hagenbuch, co-founder and president (Loft); Wagner Ruiz, co-founder and CFO (EBanx)
Brazilian startups have been successful in producing more than 20 unicorns, with factors such as human and investment capital contributing to this success.
Being a unicorn is not the ultimate goal, but rather a step towards building a successful and sustainable company.
Softbank Latin American Fund’s entry in 2019 has been a game-changer for the Brazilian startup ecosystem.
There are trade-offs and challenges that come with being a unicorn and going public, including the pressure to perform for investors and the need to adapt to new business models.
Tough decisions, such as restructuring and layoffs, are sometimes necessary for the success of a company, but success is ultimately preferred over failure.
LATAM VENTURE #’S APRIL 2023
Yes, there is some good news! April’s figures provided a glimpse of what we should expect for 2Q23. Funding volume of LatAm companies surged 78% compared to March, and represented the second most active month this year followed only by January with $733M.
However, this amount is 48% lower than April of last year and 66% lower than 2021 figures. The reduction is even sharper in Brazil, where we recorded $110M in funding this month, a 71% drop against 2022 and 2021. Here is important to point out that term sheets are usually negotiated 3-9 months prior to an actual announcement of the deal. Therefore, we need to take this into account when comparing figures.
The M&A market, which has been flattish over the past few months, saw its worst numbers for the year in terms of number of transactions.
While both external and internal environments continuing to weigh negatively on the region’s activity, we’re still seeing interest from local and international investors for attractive LatAm stories and expect to see an increase in activity over the next quarters with compression of bid-ask spreads.
Please find below the numbers for the month, provided by Sling Hub:
April Funding Trends in LatAm: 61 rounds, USD 436mm volume invested, with a USD 9.1mm average size round. Fintechs received 51% of the total followed by 23% in proptech.
April M&A Trends: 13 acquisitions ; 3 mergers
April Corporate Funding: 8 funding rounds with corp participation, with a total volume of USD 123 million invested.
If you want more details, be on the lookout for Itau BBA’s + Sling Hub’s report out this week! If you want to also receive it, please include your e-mail address here.