This article is part of the LatAm Tech Weekly Series, written by Julia De Luca and powered by Nasdaq. Through Nasdaq’s global network, we partner with Latin American companies to support their entire business lifecycle to elevate their brand and access the global markets. Learn more about Latin American Listings here.
This week’s announcements:
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Cubo Conecta 2022 is coming! The event will happen on September 28th. If you want to join us online, click here. I will be there in person, come say hi if you are there too :)
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Will you be in NY for LAVCA Week (October 10 - 14)? If yes, respond to this e-mail!
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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.
Share Weekly Tech Update - Julia
This week’s edition will be a little different. Given we had the first LatAm Tech Week here in Brazil with several events, high quality content and intense networking - I will start out with the usual market overview but then jump to a description of everything that happened. The news and deals of the week will be consolidated at the end, instead of doing on a day by day basis. Hope you like it!
Despite the global tech market correction, recent political transitions, rising internet adoption and a growing pool of tech talent are causing a surge of private market activity in Latin America. This week, Pitchbook & Intralinks released a new market brief called Private Investment in LATAM: An Emerging Market's Response To Global Headwinds. It is no news that VC activity skyrocketed globally last year. Latin America was no exception, with deal value more than tripling YoY. Several high profile investment firms are turning to the region, as other emerging markets (such as China) become more challenging to invest. LatAm startups are grasping the attention of global investors, with 2022 having the highest cross-border deal value from non-Latin American investors year-to-date (YTD) than any year prior to 2021. Although it is highly unlikely that venture dealmaking will match the unprecedented levels generated in 2021, there are still a lot of deals happening in the region with investment sentiment becoming “cautiously optimistic”. The region faces significant challenges in the near term (such as Brazil’s upcoming elections); however, the development of its tech ecosystem is a positive signal for investment activity and investors will continue to seek opportunities in this emerging market.
Speaking of Brazil, Sling Hub & VC Fellows released their new Startup Index. Using the Sling Hub Platform intel, they gathered 3.7 million pieces of data from the Brazilian innovation market and calculated the relative weight of each of these variables. The result is a robust statistical measure that tracks the ecosystem's evolution, enables quick analysis, and helps to predict trends. The image below shows how the index evolved through time. If you want to understand more on the weights of the different variables, and some conclusions drawn from the calculation, go to the link above and download the August 2022 Report.
On to a less optimistic view, Pitchbook also released its Q3 2022 report on Down Rounds, Impacts, and Exit Opportunities. The decline in public markets has left many private startups with extended valuations and no exit opportunities in sight. VC investor advice shifted from growth at all costs to a focus on breakeven. However, just 6% of completed rounds in 2022 have been at lower valuations than the company’s previous investment, the majority of them occurring at the late stage. Analyzing historical data, companies taking on a down round often continue to grow. Only 13% of companies raising a down round from 2008 to 2014 were unable to raise a new round or exit immediately after the down valuation investment. Nearly 20% of post-down round exits occur via PE buyout, which is a significantly higher proportion than what is seen in the broader venture exit dataset. Nevertheless, as a natural mechanism of a market, down rounds remain unavoidable for some companies within VC. They will likely increase in years after significant market growth, but data shows that these rounds aren’t a contagion and are limited to a few companies within a certain market. I always end on a positive tone :)
Women’s Update: This week QED Investors, Canary and Itau BBA joined forces to host a Women Founders & Investors breakfast in Brazil. The result was a group of 60 women of different nationalities networking, exchaning experiences and lessons and showing that we are super important to the tech ecosystem!
LatAm Tech Week:
The 2022 report was launched live (video in the link above) during Canary’s and Atlantico’s Tech Summit. Key topics of the report include: Tech Industry Outlook, The Future of Work, Research with Founders, Brazil’s PIX, Fintech, SMB Digitalization, Web3 and Crypto and much more. To download the full report, click here.
Kickstarting the LatAm Tech Week, the summit attracted top notch founders from the region and also global funds such as A16z, QED Investors, Quona, NFX, Riverwood and others. The event started out with the launch of the report mentioned above, then highlighted founders from companies such as Alice, Loft and Gupy and finally ended with intense networking among participants.
StartSe gathered ~1500 people in a two-day event that discussed fintech trends. Topics such as Cashless economy, Crypto, C-Commerce, Open Finance, BaaS, Embedded Finance and others were discussed. I participated in a panel with Rodrigo Tognini co-founder and CEO of Conta Simples and Ricardo Figliolini co-founder of Marvin. We discussed the recent Brazilian regulation of credit card recievables, the local Central Bank’s stance focused on fueling competition and tech development and the big opportunity in B2B Banking.
Latitud gathered +1000 tech founders, operators, investors in a one-day event packed with good content. On stage, Sergio Furio from Creditas and Sergio Fogel from DLocal discussed fintech trends. Pete Flint from NFX joined Brian Requarth co-founder of Latitud to discuss main lessons for CEOs of tech startups. Closing the day Mike Krieger from Instagram described the company’s trajectory since inception in a panel moderated by Gina Gotthilf co-founder of Latitud. Great event with literally the entire LatAm tech ecosystem present, apart from the global investors mentioned above.
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Women Founders & Investors by QED, Canary & Itau BBA - 22/9
Description above on the “Women’s Update” of this week.
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Deal drivers in Brazil, H2 2022: preparing for what is ahead - 22/9
Event organized by Brazil’s M&A Community for around 150 people. Given the importance of tech in the recent M&A activity, I participated in a panel together with Karolyna Schenk, M&A Director at Totvs, Alexei Bonamin partner at TozziniFreire Advogados, an important local law firm and Edoardo Frechet, VP at Itau BBA’s IB Tech team to discuss the outlook for tech and also what drived digitalization in Latin America in the past 10 years.
Selected News
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Increasing its presence in the institutional segment, Brazilian fintech Warren announced the acquisition of Renascença DTVM, the main institutional broker for public securities in Brazil.
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Heru, Mexican tech-based tax solution that automates tax filing procedures for consumers and SMEs, raised a seed round of USD 6mm with funds such as GFC and Flourish Ventures.
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Kavak, Mexican online used car marketplace that facilitates processes and paperwork and generates a personalized financing and guarantees system for each client landed USD 810 mm in debt financing with banks such as HSBC, Goldman Sachs and Santander
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Domo Invest, Brazilian VC, annouced that it is currently raising its fifth fund of BRL 200mm and that partner Marcio Zarzur is being promoted to controlling shareholder.
On Another Note
What did I learn from readers?
I recently got to know a newsletter called Voice Bites, which delivers the most relevant developments in the conversational AI space every month. Its goal is to make voice technology, chatbots, and language models easy to bite into. Super interesting and a smooth and easy read! To sign up, click here.
What am I reading?
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Itaú BBA on Brazil Tech: If Software Is Eating the World, Tech Is Devouring Brazil
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Pitchbook: SoftBank's executive exodus leaves Masayoshi Son in a bind
What did I listen/watch?
Quote of the week:
“Hard things are hard because there are no easy answers or recipes. They are hard because your emotions are at odds with your logic. They are hard because you don’t know the answer and you cannot ask for help without showing weakness.”
― Ben Horowitz, The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
Originally published on my Substack.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Julia De Luca
Julia De Luca is part of the investment banking team focused on tech coverage at Itau BBA. With more than 10 years of experience in finance, her focus is to connect global players to the Latin American tech ecosystem – with content, intel and opportunities. Julia co-authored the book Brazil Fintech and constantly writes columns on the topics of open banking, venture capital investment, regulation and LatAm tech trends. Julia started her career as Global Investor Relations at Gávea Investimentos and also spent a couple of years at Stone Co. She holds a degree in Economics from Pontificia Universidade Católica (PUC-Rio). She is also a columnist at MIT Tech Review, ION and Inteligencia Financeira.
Read Julia's Bio