LatAm Tech Weekly #153

Happy Sunday!

It’s been a busy week for events, with LAVCA Tech Brasil taking place in São Paulo. Although I couldn’t make it to that one, I did attend my favorite type of gathering: the Empower Dinner for Women, hosted by Cubo Itau & LAVCA. Every time I join a women-in-VC event, I see new faces, which fills me with joy—it’s a clear sign that the push for diversity is making real progress.

 

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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.

Moving on to my usual market update, let’s kick things off with some positive news from Pitchbook! While quarterly performance might not seem like much for venture capital funds with decade-long horizons, there’s a bright spot worth noting for VCs and their LPs.

According to fresh data from PitchBook, venture fund performance ended the fourth quarter of 2023 on a slightly positive note for the first time since 2021. This uptick coincides with broader gains in alternatives, with buyout funds, PE growth, secondaries, and infrastructure all showing solid returns. VC funds managed a 0.4% return in Q4 2023, which helps push the asset class to a 13% IRR over a 10-year horizon.

 

Looking ahead, the long-awaited rate cuts by the Federal Reserve are expected to make dealmaking more attractive in the coming quarters. With capital costs set to decrease, corporates might finally be tempted to 'leave the sidelines.' Lower rates should also give a modest boost to the currently depressed multiples and valuations of venture-backed companies.

A drop in interest rates, leading to multiple expansion, will help the public markets better align with high private valuations. This could allow more companies to exit via IPO without needing to take a down round, potentially increasing public listings and reigniting investor interest in VC. But, of course, we’ll have to wait and see.

On to the 'not so good news' from Bloomberg Tech Daily—raising new funds has been a tough challenge this year. However, the major players seem to be doing just fine. Firms like Kleiner Perkins, Andreessen Horowitz, Thrive Capital, and Iconiq have all managed to secure billions in new capital. On the flip side, lesser-known funds and emerging managers are struggling, leading to a growing concentration of capital. LPs are becoming more selective and cautious, often needing to see a significant exit before committing more to a fund.

This situation creates a more significant issue, where new funds face greater hurdles to success, further concentrating the industry...

Finally, the Q2 2024 Global M&A Report by Pitchbook is out!

 

The mild recovery that started to emerge in Q1 2024 is now solidly in place. With the first half of the year behind us, global M&A activity is tracking 10% to 15% ahead of 2023, both in deal count and value. Corporate acquirers and strategic deals have seen double-digit growth throughout the year, but PE-related deal flow had been lagging, holding back the broader recovery due to its higher sensitivity to rising interest rates and sluggish exit activity.

That all changed in Q2 2024. Private equity now seems to be joining the momentum. Reflecting this shift, PE’s share of total M&A deal value bounced back to 41.0% in Q2, up from 33.5% in Q1, ending a nearly two-year decline—at least for now. Over the previous eight years, PE had steadily increased its presence in the M&A market, at one point accounting for 44.3% of all deals. However, given its reliance on debt for transactions, it’s no surprise that PE lagged in this recent upturn until now.

While M&A multiples are still 15% to 20% removed from 2021’s all-time peak of 11.0x of EBITDA and 2.1x of revenue, the extended firming trend indicates that a valuation reset may now be complete. Present multiples have come to rest slightly below the pre-COVID-19 average from 2017 to 2019, which goes to reason given that interest rates are currently much higher.

Turning to M&A activity by sector, the B2B space continued at a steady pace, with an estimated 4,630 deals totaling $161.3 billion. While the sector saw a 17.1% decline in deal value quarter-over-quarter, the number of deals actually increased by 3.1%—a trend that extends beyond just Q2. Across various metrics, B2B deal count appears to have fully rebounded, though deal value still lags. The estimated deal count for Q2 surpasses pre-pandemic averages, and the year-to-date count is on track to exceed 2023’s levels on an annualized basis. However, deal value fell short in both comparisons.

In Financial Services, the picture is brighter. The sector is on course to surpass its 2023 dealmaking totals. Through the first half of 2024, the financial services sector has posted an estimated 1,670 deals worth a total of $199.0 billion, with 887 deals valued at $89.2 billion announced or closed in the second quarter alone. Not only is the sector set to outperform 2023, but H1 2024’s deal value is expected to grow by more than 20% compared to the same period last year. Additionally, the sector has seen the median deal size increase to $54.4 million for the 12 months ending June 30, 2024, up from a median of $40.0 million in 2023.

On the downside, Healthcare, B2C are slow - but starting to see stabilization signs. If you want to deep dive in all sectors, click here.

General news:

• In Brazil's challenging early-stage environment, startups face significant hurdles in fundraising, exacerbated by limited capital availability and prolonged funding timelines. As highlighted in "The Hidden Years of Inception Stage," U.S. startups now take an average of 21 months to raise funds, with Brazilian startups facing even more complexity.
• Databricks, a rapidly growing data tech company valued at $43 billion (R$ 234 billion), is gaining ground in Brazil, challenging giants like Microsoft and IBM. Since opening its local office in 2023, Databricks has expanded its client base, including Petrobras, Volkswagen, and Banco do Brasil. The company’s 80% growth in Latin America highlights its increasing influence.
• Brazil's central bank has mandated major banks and seven fintechs to implement a new phase of Open Finance. This update aims to enhance data sharing and improve customer experience, driving further innovation in the financial sector. The move underscores the country's commitment to advancing its digital financial ecosystem and ensuring broader access to financial services.
• At the Startup Summit 2024, Brazil unveiled its ambitious AI Plan, aiming to revolutionize the tech sector by fostering innovation and addressing national challenges with a focus on inclusion and sustainable growth. The plan, a result of a four-month collaboration among academia, government, and businesses, will invest R$ 23 billion over five years.
• Uruguayan fintech Prex has launched the Prex Argentina card, a prepaid card in Argentine pesos for Chilean residents traveling to Argentina. This card allows users to make purchases and withdrawals in Argentina without commission fees and at favorable exchange rates.
• Bossa Invest and Captable have launched a new investment round focused on U.S. startups, following a successful initial round that attracted 186 Brazilian investors. This expanded portfolio includes 17 companies across AI, robotics, and crypto, such as SpaceX, OpenAI, and Hugging Face, with a combined valuation exceeding $310 billion. Structured as a Special Purpose Entity (SPE), this round offers Brazilian investors access to high-growth global innovations, previously limited to large institutional players.
• Brazilian startup Life Filter has caught the attention of the UN with its innovative use of dialysis filters to purify drinking water. Founded by former medical doctor Fabio Oishi, Life Filter's technology repurposes discarded hemodialysis filters to remove impurities from water, making it safe for consumption. The startup's impact-driven solution has already been implemented in remote communities and aims to address global water scarcity.
• Liga Ventures has rebranded as a "consultech," shifting its focus to using technology and AI to drive innovation and transformation for large companies. Known for pioneering open innovation in Brazil, Liga Ventures has connected over 62,700 startups with 538 major brands since 2015.
• Venture capital investment in Chile plummeted in the first half of 2024, dropping 70% compared to the same period last year. The decline reflects broader global trends affecting tech and startup funding
• Chilean startup Videsk has partnered with Nissan Peru to launch its remote customer service technology in the automotive market. This collaboration marks Videsk's debut in the sector, aiming to enhance customer interactions through innovative digital solutions.
• Costa Rican startup Snap Compliance expands to the Caribbean with its innovative risk detection software, Risk Copilot. Partnering with Banco Popular and BanReservas, the company has entered the Dominican banking market, following its Chilean debut in 2021.

General news:

• Seedstars Capital and iThink VC have joined forces to support early-stage tech startups across Latin America's Spanish-speaking countries, focusing on sectors like health, fintech, and agriculture. This partnership gives iThink VC access to Seedstars' global network, boosting their ability to identify and support high-potential ventures. The collaboration aims to foster a thriving ecosystem for startups, offering mentorship, resources, and opportunities for international growth.
• Senior Sistemas, a longstanding player in Brazil's tech market, is keeping its IPO dream alive, but without urgency. Despite impressive growth—achieving R$ 1 billion in revenue over the past 12 months—the company is waiting for a more favorable market window. CEO Carlênio Castelo Branco emphasized their readiness for an IPO, backed by a 119% revenue increase and consistent annual growth. With 25 acquisitions in 12 years, Senior continues to expand strategically, especially in fintech and ERP solutions, while exploring new growth avenues through partnerships and joint ventures.
• A group of Brazilian entrepreneurs has launched the MusicTech Brazil Movement to strengthen the country's musictech sector by fostering commercial opportunities, partnerships, and investments. The initiative aims to raise awareness about the potential of musictech startups, which often face challenges in securing investments.
• Only 8% of funds flagged as fraud via Pix are returned to victims, according to data from the Central Bank's Special Return Mechanism (MED). In June, R$452 million of the R$2.1 trillion moved via Pix were linked to fraud, yet systemic limitations hinder successful recovery.
• Lemontech is integrating generative AI into its legal software, launching new tools to streamline contract drafting and improve legal document analysis. This move positions the Chilean legaltech company at the forefront of AI-driven innovation, enhancing efficiency for law firms across Latin America.
• According to LAVCA's latest report, only 1 in 10 Seed-stage startups in Latin America manage to secure Series A funding, and this ratio drops to 1 in 30 for Series B. The trend reflects the challenges of securing new investments as startups mature, a topic discussed during a recent webinar by LAVCA and Silicon Valley Bank. While the market adjusts from the exuberance of 2019-2021, experts see the need for exits and IPOs to rejuvenate the venture capital landscape in the region.
• BNDES has launched the first cycle of its BNDES Garagem program, offering free support to 100 startups, with a focus on green economy, public safety, education, health, and peripheral economy. Selected startups can receive up to R$150K, with the top 10 participating in a Demoday in 2025. The program, which runs until 2028, aims to accelerate 400 startups across four cycles.
• Tempest Security, part of the Embraer Group, has appointed João Paulo Lins as its new CEO, succeeding founder Cristiano Lincoln Mattos, who will now join the advisory board. With over 20 years at Tempest, Lins has been instrumental in major initiatives, including the sale of AllowMe to Serasa Experian.

Deals:

• Ainwater, a Chilean startup specializing in AI-driven water management, has closed its first investment round to expand into Colombia and Mexico. The company aims to revolutionize water resource management in Latin America with its innovative technology.

General news:

• OpenAI has launched the GPT-4o model for corporate customization, allowing businesses to fine-tune the AI to their specific needs. This process, called fine-tuning, enhances the model's ability to address tasks like customer service or regulatory compliance. Priced at $25 per million tokens for fine-tuning, the model offers strong results with just a few examples.
• Syonet, a CRM leader for automotive dealerships, is targeting R$60M in revenue and 35% growth by the end of 2024 through its strategic expansion. The company has acquired martech firm Lead Force, rebranded, and is launching international operations, starting with a new hub in Mexico.
• Around 100 financial institutions are in line to join Brazil's Pix payment system, reflecting its rapid adoption and growing importance in the digital payment landscape. As the demand for instant payments continues to rise, Pix remains a key focus for expanding financial inclusion and innovation in the country.

Deals:

• EasyJur, a legaltech startup, has raised R$1.4M in a new funding round led by Investidores.vc. The funds will be used to enhance its SaaS platform for law firms, expand its client base, and strengthen its team with new hires, including a CPO and CFO.

General news:

• Mercado Pago launches Meli Dólar, a new dollar-pegged stablecoin in Brazil, available to its 60 million users with no transaction fees. This addition to its crypto portfolio, including Bitcoin and Ethereum, reflects Mercado Pago's commitment to expanding its digital asset offerings in a growing market. The stablecoin aims to provide stability against the Brazilian real's volatility and attract users interested in secure crypto investments. Ripio will act as the market maker and exchange for the Meli Dólar transactions.
• QuintoAndar Group has announced key leadership changes to drive its operations in Brazil and Latin America. Bernardo Dorigo has been appointed as General Director of Classifieds for LATAM, overseeing operations in six countries, while Eduardo Miranda takes on the role of Sales Director for Imovelweb and WImóveis in Brazil. These appointments aim to integrate QuintoAndar’s brands and enhance business opportunities across the real estate ecosystem. The group, with over 45 million monthly visits and 8 million listings, continues to innovate across its diverse portfolio of services.
• Brazil ranks among the top 10 countries globally in entrepreneurship, with 90 million entrepreneurs or aspiring entrepreneurs, according to the 2023 Global Entrepreneurship Monitor (GEM).
• Clara, a corporate expense management fintech, has expanded its offerings in Brazil by launching Pix transactions and investing in AI. After receiving authorization from the Central Bank as a payment institution, Clara now provides digital accounts and integrated payment solutions, including batch payments via APIs.
• Igah Ventures is launching its fourth fund, aiming to match or exceed the $111M of its previous fund. The new fund will invest in Seed to Series B stages, focusing on SaaS, fintech, healthtech, and edtech, with a preference for experienced founders.
• Aceleraí, a Brazilian startup founded by Allan Barros, has revolutionized celebrity endorsements by making them accessible to small businesses. By breaking down high-profile contracts, Aceleraí allows regional companies to feature celebrities like Cauã Reymond in their ads. The startup, which earned R$ 70 million last year, aims to double its revenue this year.

Deals:

• Fintech Magie raises R$ 28M to expand its WhatsApp-based digital bank. The seed round, led by Lux Capital with R$ 22M and R$ 6M from Canary, will drive growth in Brazil. Launched in early 2024, Magie enables transactions like Pix and bill payments via WhatsApp. It has already processed over R$ 100M. The funds will enhance security, explore Open Finance, and support new tech innovations, aiming to evolve beyond traditional banking.
• OneVC led a new funding round for Brazilian startup Everlog, which provides logistics automation solutions to major companies like Klabin and Eurofarma. Everlog's platform streamlines freight management, reducing costs and enhancing operational efficiency. OneVC's investment highlights Everlog's potential to disrupt traditional logistics with innovative tech solutions, reinforcing the firm's commitment to backing transformative startups in Brazil.
• Pátria Log (HGLG11), Brazil's largest logistics real estate fund, has acquired a 623,000 m² site in Simões Filho, Bahia, to build a custom logistics warehouse for Mercado Livre. The project, spanning 132,330 m² of leasable space, will be executed in two phases, with completion expected by Q3 2025. The fund projects a 10.2% annual yield for the first phase, highlighting its strategic expansion in the logistics sector. A second warehouse is also under negotiation, pending demand.
• Brazilian proptech PipeImob has secured an additional R$ 2 million from Latitud Ventures, bringing its total pre-seed funding to R$ 4.5 million. Founded in 2022, PipeImob introduced the first transactional real estate management (TRM) platform in Brazil, simplifying property sales by managing legal, financial, and transactional processes.
• Chilean proptech Buydepa has secured financing from Grupo Nevasa's AGF to fuel its expansion. The company aims to scale its operations and enhance its digital platform for property transactions. This funding marks a significant step in Buydepa's mission to streamline and innovate the real estate market in Chile and beyond.

General news:

• Bessemer Venture Partners, known for backing LinkedIn and Shopify, is renewing its focus on Brazilian startups. The firm has invested in fintech Monkey Exchange, marking its return to the Brazilian market. Bessemer plans to leverage its global expertise to support the next wave of innovative startups in Brazil, seeing significant opportunities in sectors like fintech, SaaS, and e-commerce.
• Despite its transformative potential, AI adoption in Brazil faces hurdles like limited understanding, data privacy concerns, talent shortages, and ROI doubts. A Bain & Company survey reveals 58% of Brazilian firms are still exploring AI, with only 9% considering themselves leaders.
• Brazilian financial institutions have refunded R$683 million to clients due to inappropriate practices. The reimbursements stem from regulatory actions addressing issues such as improper fees and misleading charges. This significant sum highlights the ongoing efforts to enhance transparency and consumer protection within the financial sector.
• Sami Saúde has appointed Paula Rabello as its new Chief Product Officer (CPO). Since joining in 2022, Paula has led AI-driven initiatives, including a Google Cloud generative AI project that saves over 900 hours per month by summarizing chat interactions.
• Volters, a Brazilian energy marketplace, is empowering SMEs by allowing them to choose their energy source, much like selecting a telecom provider. Founded in 2022 by Eduardo Berriel, Volters connects over 500 clients, primarily small businesses, with 150 energy producers. Clients can save up to 20% on energy costs while earning sustainability certifications.

Deals:

• Pátria Investimentos has entered the digital asset market with an R$11 million investment in Liqi, a leading Brazilian tokenization firm. This move, part of Pátria's fourth venture capital fund, marks its official entry into the cryptocurrency and blockchain space.

First of all I would like to thank you all for sending me several interesting tech events that will happen in the upcoming months!! The list is very extensive, and I’ll create soon a notion with all of them (to avoid this section being too long). Here, I’ll share the ones I found more interesting - which is not necessarily true given that it is based on my own opinion! If you like tech events (while the Notion is not ready), I encourage you to access my LinkedIn post that has the entire list!!!!
 

Colombia Tech Week:

Dates: August 26 - September 3

Location: Bogotá and Cali

Overview: Colombia Tech Week 2024 is set to be a major event in the Latin American tech scene, bringing together startups, venture capitalists (VCs), accelerators, corporates, and international tech communities. The event aims to position Colombia as a hub for investment and innovation, with a focus on fostering connections and creating business opportunities across the region.

More info
 

Climate Week

Dates: August 26 August 30

Location: Cubo Itaú (SP)

Overview: The São Paulo Climate Week aims to foster meaningful discussions and concrete actions regarding climate change.

More info
 

WSO2 Experience Brazil 2024

Date: September 5

Location: Rosewood (Sao Paulo)

Overview: Discussions on the latest technological innovations, with a focus on Artificial Intelligence and the Platformless approach. Additionally, we will address the challenges and opportunities that Brazilian companies currently face, such as optimizing customer experience and building a resilient digital infrastructure.

More info
 

Inteligência Artificial no Agronegócio

Date: September, 12

Location: STATE Innovation Center, São Paulo.

Description: Grão Direto, the largest digital grain commerce platform in Latin America, has partnered with Microsoft, ADM, BASF, and PwC to host a super event featuring renowned market speakers, exclusively for selected participants. Pre-register here and seize the opportunity to participate in an immersive technology experience in agriculture. The event is free! 
 

Sao Paulo Tech Week

Dates: Sept 16-22

Location: São Paulo

Description: Several events focused in LatAm Tech taking place in the city. Notably, Cubo Conecta will happen on September 18.

More info
 

Gartner CIO & IT EXECUTIVE

Dates: Sept 23-25

Location: São Paulo

Overview: Future of IT

More info
 

Microsoft AI Tour - São Paulo

Date: September 26

Location: São Paulo

Overview: AI (including opening with Satya)

More info
 

Bossa Summit 2024

Dates: Sept 25-26

Location: São Paulo

Description: his event is a major gathering for the Venture Capital market, featuring over 400 speakers, extensive networking opportunities, and a range of workshops and mentoring sessions. It's designed to bring together more than 10,000 attendees, offering around 200 hours of content on business and innovation.

More info
 

LAVCA Week 2024

Date: October 8-11

Location: Conrad NY Downtown

Description: LAVCA Week convenes leading private capital investors from Latin America and around the globe each year for a series of meaningful discussions and private meetings covering the latest trends in private equity, venture capital and other private capital strategies. Participation at LAVCA Week is carefully curated and capped. LAVCA Members, non-member private capital investors and qualified institutional investors are invited to attend. LAVCA Members have access to special early bird rates through 29 August 2024.

More info
 

AsaaS Connect

Date: October 10

Location: São Paulo

Description: This event is designed to bring together leaders and professionals interested in the latest trends in technology, business, and finance. The one-day event offers a comprehensive experience, including presentations from top industry experts, networking opportunities, and insights into innovative solutions that can drive business success. Asaas Connect 2024 follows the success of its previous edition, which attracted around 1,500 participants and featured notable speakers such as Randi Zuckerberg, who discussed the future of the metaverse. I will be a speaker… see you there?!

More info
 

REC ‘n’ Play

Date: November 6-9

Location: Recife

Description: Annual innovation and technology festival aimed at fostering creativity, technology, and entrepreneurship. It brings together professionals, students, and enthusiasts through workshops, lectures, and cultural activities, providing a platform for learning, networking, and collaboration. The event highlights Recife's role as a growing hub for innovation in Brazil, connecting participants with industry experts and new trends.

More info
 

Stats Conf

Date: November 8-9

Location: São Paulo

Description: Bitcoin only technology event - crypto, finance, blockchain

More info
 

#fswk24 - O Momento Atual dos VCs na Saúde

Date: November 6

Location: Rio de Janeiro

Description: This event focuses on the current landscape and opportunities for venture capital investments in the healthcare sector. Attendees will gain insights into the latest trends, challenges, and strategies for investing in health tech startups and innovative healthcare solutions.

More info
 

WHAT AM I READING?

• Carta VC Fund Performance: Q1 2024
  • Slow capital deployment: Funds in the 2022 vintage have deployed about 43% of their committed capital at the 24 month mark, the lowest share of any analyzed vintage. Prior vintages ranged from 47%-60% after 24 months.
  • Graduation rates declining: 30.6% of companies that raised a seed round in Q1 2018 made it to Series A within two years. Only 15.4% of Q1 2022 seed startups did so in the same timeframe.
  • Distributions back to LPs remain elusive: Less than 10% of 2021 funds have had any DPI after 3 years.
     

WHAT AM I LISTENING TO? WHAT AM I WATCHING?

• Goldman Sachs Podcast: Women in the Workforce - Analyzing the data and gaps
• BG2 Pod (Brad Gerstner & Bill Gurley) - recent episode on public market volatility

QUOTE OF THE WEEK:

"Sometimes the best way to convince someone they are wrong is to let them follow their own path." - Unknown