Venture Capital

LatAm Tech Weekly: Fundraising & Deal Insights

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.

I'm just now recovering from the whirlwind of events that unfolded during Tech Week in Sao Paulo. It all kicked off with an insightful breakfast hosted by Itau BBA in collaboration with Cubo and Carta. The gathering provided a wealth of fundraising insights drawn from Carta's proprietary database (details below).

Thanks for reading Weekly Tech Update - Julia! Subscribe for free to receive new posts and support my work.

On Tuesday, the dynamic partnership of Itau and Cubo continued with the hosting of Future Day. Then, on Wednesday, the much-anticipated Diversity VC Report on LatAm was launched. This report is a crucial resource for understanding the staggering inequality prevalent in the VC world (more details below and click here to see it).

Closing out the week with a bang was Latitud’s Vamos LatAm Summit, attracting over 5000 attendees. Esteemed speakers like Ben Horowitz, Sebastian Meija, and Hernan Kazah shared valuable insights. I also had the privilege of taking the stage to discuss the State of Crypto. As you can see from the photo below, I was all smiles during Tech Week! 😊

Converence

Share Weekly Tech Update - Julia

Follow me on LinkedIn Instagram or Twitter for daily updates!

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.

For my readers, it's no secret that we've come a long way from 2021, but according to Carta's data, there's a silver lining. Although I've previously emphasized that, with the exception of 2021, things in the venture world are relatively stable compared to historical figures, it's truly enlightening to have concrete figures and numbers that validate this perspective.

A long way from 2021

Another piece of data that caught my attention was the fact that the time between rounds have increased 20%-30%. That is, in this current market, founders should plan proceeds to last around 30 months (versus the 18 months of runway in the recent past).

Bridge rounds

Shifting gears, last year, Diversity VC initiated a project to map the Latin American venture capital ecosystem, using secondary sources to grasp the overall workforce composition. Crunchbase data revealed that 23.8% of venture capital (VC) investors and 14.8% of Partners are women. This year, their Latin America chapter released the inaugural report, "The Equity Record Latam," delving into the intersectionality within these identities.

Globally, there's a noticeable shift toward greater diversity and inclusion. The venture capital sector, however, remains notably homogeneous and challenging to access without specific credentials. The following piece of data caught my eye. Yep - there is a long way to go. I invite you to question yourselves what you are doing to improve such scenario…

Gender (all funds)

Monday

General news:
  • Yaya Capital, backed by the Moll family, which controls Rede D'Or and invests in healthcare companies, has already established a portfolio of 12 startups with $21 million in private capital from the partners. Now, the firm, led by partners André Moll, Jorge Moll Neto, Pedro Moll, and overseen by Marcus Pratini, plans to raise $99 million by year-end to invest in up to 20 companies

  • With a $500 million fund, Salesforce places AI at the center and advances its investments. After doubling the size of its AI fund, the CRM giant states it is "actively investing" in disruptive startups.

  • Quero Passagem, a bus ticket marketplace operating throughout Brazil, has initiated its international expansion with a launch in Mexico, where it will operate under the brand "Viajo Mucho." For this expansion, the company has invested over R$ 5 million.

  • After building teams for companies such as Visa and Amadeus in LatAm, Remoti, total talent platform that connects the workforce in Latam to opportunities in the US and Europe, are finding that many of the users/ candidates have seen an increase in their income. With that, the company is currently building a market place to connect these users with Insurance and wealth management products.

  • Maxmilhas, a subsidiary of the recently-bankrupt travel platform 123milhas, filed for bankruptcy protections in Brazil as contagion from its parent company’s collapse spreads. The company stated that, despite being a separate legal entity from 123milhas, the fallout from its parent company’s bankruptcy caused revenues to plummet 70% and triggered insolvency of its already-shaky financial position. In legal filings, Maxmilhas requested protection from debts totalling $45mn, bringing the total amount of debt between the two companies to $513mn.

  • Mexico’s FEMSA hires former Nubank executive to head digital segment. Juan Carlos Guillermety replaces José Antonio Fernández Garza-Lagüera, who will assume leadership of FEMSA’s retail business.

Deals:

  • Biolinker, operator of a biotech platform designed to discover, develop, and produce proteins by cell-free synthesis, raised angel funding from Fabricio Bloisi. Amounts were not disclosed.

Tuesday

General news:
  • Unicorn CloudWalk, owner of InfinitePay, is the first fintech to offer Tap to Pay in the country, a new feature from Apple that arrived in Brazil last week. This feature allows merchants to accept contactless payments using the iPhone and a partner app for iOS.

  • Brazil sets a new record as the number of cryptocurrency investors- surpassing 4 million. Data released by the Federal Revenue Service indicates growth in both individual and corporate cryptocurrency investors in 2023.

  • With quality and competitive pricing, Zoho Workplace, a competitor of Google and Microsoft, is growing in Brazil. With 2 million Brazilian users, the collaboration platform from the Indian company Zoho is growing by more than 30% annually.

  • CEO of Uala, Pierpaola Barbieri, says in interview that the dollarization of the Argentinian economy would likely be positive as it would speed up the country’s shift into digital payments and increase long term lending.

Deals:

  • Esporte Educa, a startup that connects athletes and sports enthusiasts to scholarships in schools, language courses, and colleges across the country, has just received an investment of 1.6 million Brazilian reais to expand. Investors were not disclosed.

  • Trilogo, operator of building maintenance platform intended to monitor maintenance processes in real-time, raised BRL 4.2 million of seed funding in a deal led by A.B.Seed Ventures.

Wednesday

General news:
  • Pismo, acquired for $1 billion by Visa, highlights the global ambitions of Brazilian startups. During a presentation at Itaú Future Day, Daniela Binatti, co-founder of fintech Pismo, emphasized that entrepreneurs need to have a more global vision for their businesses.

  • Raio Capital, while working on raising a new fund, has been actively investing, and just completed 2 new investments in early stage startups: Doji and PurpleMetrics.

  • CERC signs an agreement with the fintech Adiante and registers R$ 11 million in electronic duplicates. The operation was "inspired" by the new model of the Central Bank's (BC) regulation of book-entry duplicates, which came into effect at the beginning of the month.

  • Pátria takes 100% ownership of Kamaroopin and will accelerate investments. The management company is exercising its purchase option for Kamaroopin. Now, Pedro Faria’s, who becomes a partner at Pátria, is to conclude a $200 million fundraising and accelerate investments.

  • Trace Finance partners with BNY Mellon and establishes a global account. The Brazilian fintech, which seized the opportunity created by the SVB's collapse, has entered into a partnership with BNY Mellon, a company with over $46.9 trillion in assets under custody.

  • TMC, a global, integrated media company, has named Pipefy AI as a recipient of a 2023 Future of Work Product of the Year Award.

Deals:

  • Gringo secures R$ 150 million for its 'driver super app', already boasting 10 million users. Gringo, the startup aiming to create the 'driver super app', has just raised R$ 150 million in a funding round that will accelerate its growth. The fundraising was led by Valor Capital.

  • Fintech Drip has raised R$40 million in investments from SRM Ventures, the venture capital arm of SRM Asset management for startup businesses. The platform provides a PIX installment service without interest for online purchases from over 500 retailers in the country.

  • Kovver, developer of musical platform designed to offer the experience of playing and singing, making feel like a musical star in own home, raised $1.2 million of venture funding in a deal led by Empresa Paulista de Televisão and Raketo and other undisclosed angel investor.

  • The Mexican fintech company Mundi announced a new Series A-2 financing round totaling USD$15 million, with Haymaker Ventures being the main investor.

Thursday

General news:
  • General Atlantic is reorganizing around its three core businesses to prepare for a more aggressive expansion. Martin Escobari, formerly leader for LatAm, will now oversee the entire growth equity unit. Gabriel Caillaux will head climate investing. Escobari will continue to lead the firm’s investment committee and LatAm business while Caillux will continue to oversee Europe, Middle East and Africa.

  • Latitud Finance, formerly Meridian, expands to Mexico with new features. Brian Requarth's fintech offers an international business account with integrated currency exchange services for Latin American startups.

Deals:

  • PurpleMetrics, a startup specialized in recurring branding measurement, received a $1.2 million investment in its pre-seed round. The investment was led by Astella, with participation from 040 Ventures and Raio Capital.

  • Sling Hub, Brazilian data platform focused on tech, raises R$ 1.5mm, valuing the company at R$ 35 million. With these new investments, the goal is to achieve a revenue of R$ 9 million by 2024.

  • 23S Capital, a management firm created by Temasek and Votorantim, has acquired approximately 10% of Vitru Educação. The firm purchased part of the shares held by Vinci Partners, which previously had a 17% stake in Vitru and two seats on the board – now, one of these seats will be occupied by 23S.

    The new shareholder has not disclosed the terms of the transaction, but considering Vitru's current market value, it represents an investment of approximately R$ 270 million.

Friday

General news:
  • BNDES (Brazilian Development Bank) will invest R$ 638.5 million in six funds focused on startups, including four venture capital funds and two seed capital funds. After evaluating 38 vehicles, the bank selected funds managed or co-managed by KPTL, Cedro, DNA, Antler, Astella, Patagônia, Good Karma, and Noon.

  • Purina’s ‘Unleashed’ program seeks startups from Mexico and Brazil. Purina launched a new edition of its ‘Unleashed’ acceleration program to attract petcare startups from around the world and, for the first time, from Brazil and Mexico.

  • Córdoba startup program stands out in Latin America. In 2016, the Córdoba Innovate and Entrepreneur Agency was created in response to the need to foster the development of dynamic and innovative enterprises in the province.

  • Nestlé R&D Latam seeks food tech startups in the region. The purpose of Nestlé’s “Challenge: Food Tech Startups” initiative is to identify projects in advanced stages of development that are currently operating.

  • AliExpress and Cainiao launch express delivery in up to five days in new countries. The program will expand to cover North and South American countries, as well as other countries and regions in Asia.

Deals:

  • Liqi, developer of tokenization platform designed to democratize access to different types of investments with crypto assets, raised BRL 13 million of venture funding in a deal led by Galapagos Capital.

  • Startup Kenjo raises USD$9.4 million in investment round

    Kenjo achieved a successful Series A financing round, raising an investment of USD$9.4 million led by the Hi Inov fund.

What did I learn from readers?

I received a very interesting analysis produced by Wilson Sonsini called Considerations for Technology Companies in Pre-IPO Limbo. Of course, if you are lazy, you can find a TL;DR version below.

Market Reinvigoration:

  • Recent IPOs by Arm, Instacart, and Klaviyo signal a resurgence in technology IPOs.

  • Improved macroeconomic conditions and investor sentiment contribute to the renewed interest in IPOs.

Investor Demand and Success Factors:

  • Strong investor demand seen in key investors participating in Arm, Instacart, and Klaviyo IPOs.

  • Companies emphasize profitability, cost-cutting measures, and robust growth prospects for IPO success.

Profitability and Revenue Growth:

  • Recent IPOs highlight the importance of profitability, with a focus on positive GAAP net income.

  • Maintaining robust revenue growth remains crucial for investor interest.

Valuation Challenges:

  • Valuations have not fully rebounded to pre-pandemic levels.

  • Companies may need to go public at a discount to their last private valuations.

Key Investors' Influence:

  • Confidence from major investors, like AllianceBernstein, BlackRock, and strategic investors, boosts IPO momentum.

  • Indications of interest and strategic partnerships contribute to successful IPO launches.

Lock-up Structures and Employee Liquidity:

  • Innovative lock-up structures provide employees quicker paths to liquidity.

  • Instacart and Klaviyo allow stock sales as early as November under specific conditions.

Considerations for Companies:

  • Companies contemplating IPOs should focus on profitability, revenue growth, and marketable valuation.

  • Key metrics, investor education, enhanced controls, and governance structures are essential preparations.

  • Legal compliance monitoring, post-IPO governance, and considerations for financings leading up to IPO are crucial.

Conclusion:

  • The IPO market shows signs of a resurgence in 2023 and 2024.

  • Cautious optimism prevails, and companies are advised to prepare strategically for optimal IPO windows.

What am I reading?

What am I listening to? What am I watching?

Quote of the week:

“The only constant in the technology industry is change.." - Marc Benioff

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.

XP Inc. opening bell ceremony

Latin American Listings

With Nasdaq's global network, we partner with Latin American companies to support their entire business lifecycle to elevate their brand & access global markets

List with Nasdaq

Other Topics

IPOs

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