LatAm Tech Weekly: October VC Stats

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.

The October venture stats are in, and this week, we're all about unpacking what went down. Let's jump right in!

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In October 2023, global venture funding hit $21 billion, according to Crunchbase. This figure is a bit shy of the average monthly funding for 2023 so far. We're seeing a continued slowdown compared to last year, with October's numbers dropping about 24% from the $28 billion invested in October 2022.

Over in Latin America, data from Sling Hub reveals that 57 startups scooped up $442 million in funding last month. That's 21% less than the previous month and a 54% drop year over year. On average, startups in the region snagged about $8.3 million each.

Now, looking at specific countries, Colombia's funding plummeted by 80% compared to last year, while Chilean companies raised more than 5x when compared to October 2022. This surge was largely thanks to fintech giant Galgo, which alone bagged $40 million. They're planning to use this to broaden their reach, not just in Chile, but also in Peru, Colombia, and Mexico.

As for Brazil, things weren't as drastic. We saw a slight 8% dip from last year, but it could've been much worse if not for QI Tech's massive round. In a Series B round led by General Atlantic, the fintech accounted for a whopping 70% of Brazil's total investment volume.

Moving on to the Q4 2023 PitchBook Analyst Note: The Seed Blip ,  there were some interesting findings worth sharing. The latest data points to big investors really throwing their weight around in seed funding. They're not just participating; they're leading the charge in nearly a third of these deals. In fact, in 2022, they led about 35% of these seed deals. This means that they lead the way on deciding the pre-money valuation and the size of the round, usually aiming for higher numbers that make their capital work harder for them.

Despite a general market slowdown, seed deal sizes and valuations have been on the rise, influenced by large investors who shifted focus in 2020 and 2021. As of July 2023, the median seed deal size hit $2.8 million, a 260.6% jump from 2010, and median pre-money valuations reached $10.4 million, up 227.9%. This surge in seed-stage investments by large investors is due to their strategy to gain larger equity stakes and access disruptive technologies early. From 2010 to 2022, the number of large investors in seed deals more than doubled from 88 to 181.

In 2022, large investors peaked their involvement in seed with $8.0 billion across 1,080 deals, representing 35.9% of seed deal value and 19.4% of deal count. Although large investor participation in seed has slowed, seed deal metrics remain high due to the growing pre-seed market and numerous smaller VC funds. However, without renewed large-investor involvement, the growth in seed deal metrics seems unsustainable, as smaller funds will struggle to compensate for the reduced investment with new funds in a tough fundraising environment.

Monday

General news:

• Shein's marketplace features 10,000 retailers and accounts for 50% of sales in Brazil. The Shein sales platform has focused on digitizing Brás-based wholesalers to boost its growth in Brazil.

• Fintech Bamboo has just obtained its license to operate as an independent coordinator of public offerings, becoming the first startup to receive such approval. This authorization was made possible due to Resolution 161 from CVM, which came into effect in January of this year.

Deals:

• GrowinCo, co-manufacturing startup for CPG companies, has closed its seed round securing US$ 1M in funding from MANDI Ventures, Harvard Angels, and GVAngels. The funds will support the company's expansion in the US market, where demand for its services is on the rise, and speed up its platform development.

• Finkargo raises USD$20 million in Series A investment round. This financing was led by QED Investors and included participation from Nazca, as well as previous investors, including Quona, Flybridge, Maya and ONEVC.

• Extendenal, an innovative Argentine startup in the pharmaceutical industry, has secured an additional investment of USD $7.5 million to expand its footprint in Mexico and Colombia. Backed by investors from across the region.

• Agrotoken, developer of a global grain tokenization system designed to generate financial assets through the creation of stablecoins backed by agricultural commodities, raised an undisclosed amount in Early Stage VC funding lead by Visa.

• Able-On, a startup that uses AI to assess drivers' behavior, has just raised R$ 7.2 million. The company installs sensors - or utilizes existing ones in vehicles - to perform real-time data analysis. With this technology, the startup has announced a R$ 7.2 million funding round led by the Brazil-based vehicle fleet rental company ITA Frotas.

• Fintech Creze secures USD $5.7 million from BBVA Spark to expand loans to Mexican SMEs, bolstering economy and employment.

• Cannacare, a startup offering continuous care solutions through cannabis-based products, has secured its first investment of R$ 1 million in a family and friends (F&F) funding round. With this funding, the company's plan is to expand its presence in Brazil and establish a base in the United States to streamline its operational processes.

Tuesday

General news:

• WeWork has filed for Chapter 11 bankruptcy protection, listing over $18.6 billion of debts in a remarkable collapse for the once high-flying startup co-founded by Adam Neumann and bankrolled by SoftBank, BlackRock and Goldman Sachs.

• N26 confirms the end of its operations in the Brazilian market. The German digital bank is closing its operations in the country, citing a focus on its core markets in Europe.

• KKR raised $2.8 billion for its second global impact fund, Reuters reported.

• Reuters' $100 million fund, TR Venture, aims to explore Brazil. Executives from the investment arm of the British company have visited the country in search of opportunities, with fintechs and legaltechs capturing their attention.

Deals:

• Fintech Iugu raises R$ 71 million in its second FIDC and does not rule out further fundraising rounds.

Wednesday

General news:

• Brazilian Lidiane Jones, former Slack executive, takes over as CEO of the Bumble app. Lidiane's departure from the CEO role at Slack poses a succession challenge for Salesforce's service.

• Abilio Diniz establishes venture capital firm called Altitude Ventures. The firm inherits six investments from Península Participações, and has committed capital from the Diniz family, an in-house team, and plans to invest in eight to 12 startups in its initial cycle. The fund is led by a friend I admire a lot, Laura Jaguaribe.

• Boletos with PIX QR codes have already reached 15 million payments. The 'bolepix,' a bank slip with an integrated QR code for PIX usage, is currently being tested by the market.

Deals:

• Ajinomoto do Brasil invests in foodtech Manioca, a company specializing in spices and sauces from Pará. With a revenue of R$ 3.4 billion in 2022, Ajinomoto do Brasil has established an innovation hub to diversify its portfolio.

• Needed, a healthtech that develops nutritional supplements specifically for women in the perinatal period (pregnancy, childbirth, and postpartum), has just received a $14 million investment in a funding round led by The Craftory, a company backed by G2D Investments, a subsidiary of GP Investimentos.

Thursday

General news:

• At Itaú, the new frontier of technological transformation is AI. After investing in migrating systems to the cloud, the bank is looking closely at AI, evaluating technology as the most disruptive to the banking system in history. The theme was discussed by Roberto Setubal, co-president of the board and Milton Maluhy, CEO of Itau Unibanco, during the MacroVision, event held by Itau BBA on Thursday.

• Lightspeed, in collaboration with a specialist blockchain VC, has raised $285 million for a joint venture blockchain fund. The fund, Lightspeed Faction, raised the capital by tapping into Lightspeed's network of institutional investors, including pension funds and endowments.

• Purchased by Totvs for R$1.8 billion, RD Station now bets on AI for SMEs. News were announced at the RD Summit, one of the main marketing events in the country.

Deals:

• Gopass (Financial Software from Colombia) raised $15M in Early Stage VC funding lead by Kaszek.

Friday

General news:

• Alice shifts to selling exclusively to businesses and aims for a revenue of R$ 500 million in 2024. The change in strategy comes as Alice approaches 30k users and projects a 65% growth next year.

• Liquido licensed to operate as a payment institution in Brazil 

  Liquido has been operating in Brazil for just under two years and already handles transactions equivalent to US$1 billion annually in the country alone.

What did I learn from readers?

I received from a reader a new piece by Pitchbook called Launch Report: Infrastructure SaaS. Great read - even more so if you are a founder in this sector. A couple of TL;DR bullet points for you:

• Infrastructure SaaS Vertical: Essential for modern enterprises managing data, including enterprise applications, infrastructure, and digital structure.

• Key Segments:

  • Development Operations (DevOps): Encompasses all stages and cycles of application development.

  • Application Infrastructure: Platforms and systems enabling applications.

  • Data Software & Systems: Involves capture, ingestion, and management of data.

  • Information Technology Operations (ITOps): Covers IT services, resources, and processes.

• Deployment Types: Solutions deployed as application suites or standalone products, encompassing all types of deployments (on-premises, SaaS, cloud).

• Market Analysis:

  • Encompasses over 3.6 million companies.

  • Five-year outlook to 2027 for each segment.

  • Infrastructure SaaS sector grew by 12.9% in 2022 to $401.0 billion.

• 2022 Segment Market Sizes:

  • Data Software & Systems: Largest at $119.6 billion.

  • ITOps: $115.3 billion.

  • Application Infrastructure: $62.7 billion.

  • DevOps: Smallest at $18.8 billion.

• Future Projections:

  • Market expected to reaccelerate to almost 15% in 2023.

  • Annual growth between 12% and 14% from 2024 to 2027.

  • Data Software & Systems: Largest and fastest-growing segment with a near 16% CAGR.

  • Application Infrastructure: Over 15% CAGR.

  • DevOps and ITOps: Approximately 10% growth each.

What am I reading?

• WeWork files for Chapter 11 bankruptcy | PitchBook – The Rise & Fall of WeWork

What am I listening to? What am I watching?

• Red Hot Chilli Peppers :) I attended the show this past Friday

Quote of the week:

“I was born not knowing and had only a little time to change that here and there” Richard Feynman

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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