LatAm Tech Weekly: May Wrap Up

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.

And suddenly we are in June! Time is indeed flying by. Even though I do believe the mood is getting better, this was not yet reflected on the numbers. Talking about LatAm, the month of May saw the biggest decrease YoY in venture dollars yet – 82%, to USD 252.5mm. On the QoQ comparison the decrease was of 42%. However, since I always look at the bright side, May also saw 70 deals – the second best month of the year in number of transactions. Brazil received 45% of all investments in LatAm, and the fintech and deep tech sectors were the top attractors of capital.

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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.

As the month comes to an end, Pitchbook’s latest Global Markets Snapshot show the trends in the equity, debt and commodities markets, tracking returns across a range of indexes and sectors. Disappointing GDP prints and stickiness in inflation continues to affect the markets. Nevertheless, the Nasdaq Composite index was up 5.9% in the month. This hike was attributed mainly to stocks related to AI – NVIDIA (+30.9%) and Microsoft (7.5%). Again, as mentioned last week – there seems to be two different worlds: generative AI and the rest. VC deal activity in generative AI has remained resilient despite 2023 headwinds. 

Talking about AI, I read a remarkably interesting piece this week called “Can AI replace VCs? Three experiments” by Andreas Goeldi from b2venture, showcasing how he could use LLMs to write investment memos, conduct market research, and make introductions. The quick conclusion for those who are anxious is that The current generation of LLMs is not nearly capable enough to replace VCs. But, the tools can indeed help a lot one’s day to day, particularly with first drafts of tedious tasks. The experiments done were: 1) writing investment memos 2) conducting market analysis and 3) making intros. If you are into this theme as much as I am – I recommend reading the piece!

Monday

General news:

• New VC Fund led by Lab+ Ventures will be focused on life sciences in Latin America. Ficus advisory and scientific research center Institut Pasteurs from Montevideo expect to close its first funding round for USD10m by mid June with about 15 European and Latin American Investors (mostly family offices and high net worth individuals).

• Mercado Libre aims to move from being a retail platform, to a media platform with all verticals connected (pago, commerce, ads).

• Stone announced a new CFO: Mateus Scherer, with the firm since its foundation. Furthermore, Augusto Lins will no longer be President and has transitioned to an advisory role.

• Broker Rico, owned by XP, will now offer crypto on its platform.

• The Central Bank of Argentina decided to forbid fintechs of offering crypto currencies across the board. The measure was highly criticized by executives and specialists in the sector.

• Housi is gearing up to enter a "billion-dollar game." With a portfolio of 500 buildings and a Gross Development Value (GDV) of BRL15 billion, the startup will leverage this scale to negotiate deals with real estate developers, establish a fintech, and expand its operations to existing buildings.

• Foodtechs focused on the recycle and reuse of food waste continue to attract capital despite the current scenario. The sector should get to a size of USD97bn by 2031.

Deals:

• Vórtx, a Brazilian infratech company that offers back-office solutions for financial markets, announced its latest move to boost capital market education. The company has acquired Capital Aberto, a platform for courses, education, and content on capital markets, investments, and business

Tuesday

General news:

• In a surprising move, Japan’s government recently reaffirmed that it will not enforce copyrights on data used in AI training. The policy allows AI to use any data “regardless of whether it is for non-profit or commercial purposes, whether it is an act other than reproduction, or whether it is content obtained from illegal sites or otherwise.” no-copyright approach to remain competitive. This news is part of Japan’s ambitious plan to become a leader in AI technology. (I know this is not LatAm, but extremely important globally)

• Cubo, innovation hub owned by Itau, announced several new initiatives: it will host important events such as ABVCAP Experience and the Blockchain & AI Real Estate Summit and officially launch its investors vertical (apart from the already existing startups & corporations).

• Brazil-focused SPACs are facing a hard time – and several of them has returned capital to its investors after not finding a target. Three examples are Valor, Itquira and Sotfbank. The three vehicles had raised USD 200mm each. In the coming months, MEKA, the SPAC sponsored by Mercado Libre and Kaszek will need to either find a target or face the same fate.

Deals:

• Goldman Sachs Asset Management led a USD 60 million round at Digibee, Brazilian SaaS. The company raised more than twice as much as last year and reinforced its cap table with Leadwind, K Fund and Vivo Ventures.

• Valid acquired Brazilian IDTech, FlexDoc, for USD 7.9mm.

• Code7, Brazilian SaaS focused on facilitating communication between companies and their consumers, was acquired by Yelcho Partners. Terms of the transaction were not disclosed.

• Liu Constulting, Brazilian information and technology services company, was acquired by AltaPlus. Terms of the transaction were not disclosed.

Wednesday 

General news:

• According to a recent research by Deel, Latin American employees are increasingly opting for payments in US Dollars and crypto. Despite the so called crypto winter, the report also showed a 27% increase in cryptocurrency withdrawals in Latin America over the past six months.

• Startups from Chile can now submit their proposals to the GoGlobal program by ProChile. The objective is to help startups scale internationally to countries such as Colombia, Peru and Mexico.

• ProInnóvate, program held by the Peruvian government, will sponsor and finance 130 international courses for local entrepreneurs. 

• Runway, startup from Chile that uses AI and deep learning to improve the creative capacity of companies, will soon become the region’s new unicorn, according to Business Insider.

• Qubiotech, Spanish biotech startup, will use proceeds from their recent round to expand to Brazil and Mexico.

• Nubank announced an additional investment of USD 160 million in Colombia through 2025.

• The Brazilian PIX reported yet another record: it has surpassed the debit card and is already responsible for 29% of all transactions in the country.

• FUNSES 1, a Private Equity Fund created with resources from the Sovereign Fund of the Government of Espírito Santo, (Brazil), invested a total of BRL 3 million in 5 startups.

• Adams Street has closed on its seventh secondaries fund, in a green light for the strategy. The firm raised more than $3.2 billion for its secondaries investment program with the close of Global Secondary Fund 7. From March 2022 to 2023, secondaries was the only fund strategy with a positive year-over-year change in total capital raised.

Deals:

• Healthtech: Hilab raised a funding round led by eB Capital and aims to go beyond pharmacies. With the investment, which also included the participation of Rise Ventures and Positivo Ventures, the healthtech plans to bring its portable laboratories to companies, hospitals, and even former rivals in diagnostic medicine. Terms of the transaction were not disclosed.

• Stori, fintech from Mexico, secured a USD 50mm credit line with Community Investment Management.

Thursday 

General news:

• Brazilian IDTech Unico announced a new tool, Unico ID Pay. First of its kind in the local market, it can authenticate online purchases using biometrics. After 3 years of development and an investment of close to BRL 300mm, the tool is expected to double the startup’s revenue in one year.

• Brazilian ticketing company, Sympla, innaugurates a new hub for innovation in Belo Horizonte, in the company’s headquarters.

• Uber closed a partnership with Nubank. Now, clientes can pay for their rides using the Nubank app.

• Podcast Astella Playbook, one of the local pioneers in interviews with founders, will resume with a new season.

• Global Founders Capital shrinks the local team in LatAm- now it will be solely run by Fabricio Pettena. The latest departures where Alex Anton and Guilherme Penna.

• Oracle announced a new strategy, Oracle High Digital, which will cater/serve selected startups the same way as big enterprises.

Deals:

• Brazilian ERP Sankhya anounced its fourth acquisition, Meetime, focused on sales engagement solutions. Terms of the transaction were not disclosed.

Friday 

General news:

• Data sharing in Brazil’s Open Finance is growing rapidly. By the end of March, the number of consents reached 28.3 million, compared to 18.7 million in December 2022.

• A16z is reportedly preparing to launch a fund-of-funds strategy. Details such as size and whether the firm will raise external capital or not are unknown.

• Shopify launched Shop Cash, a new rewards program that earns shoppers 1% back on purchases made using its Shop Pay online checkout service.

• Meliuz announced it has finalized the agreement with Banco Votorantim for the sale of its payment arm, Bankly. In a statement, the company highlighted that it has definitely completed the divestment of 100% of Bankly to BV. 

What did I learn from readers?

A friend sent over a recent blog post by A16z which I found interesting given the current momentum. It outlines the 16 Commandments of Raising Equity in a Challenging Market. Founders: I strongly suggest the read!

1. Be flexible on structures and sources.

2. Don’t begin conversations with price expectations

3. Optimize for size, not dilution.

4. Start early to account for the unexpected

5. Prepare well to run an efficient process. 

6. Engage your insiders.

7. Nurture ecosystem relationships.

8. Ask yourself the difficult questions

9. Pressure-test your burn multiple

10. Don’t pursue growth at the expense of profitability. 

11. Be deliberate and precise on use of proceeds. 

12. Grow into your valuation at normalized multiples.

13. Don’t myopically view a structured up round.

14. Treat deferred valuation as a Band-Aid, not a cure. 

15. Communicate with candor

16. Preserve optionality

What am I reading?

• The Atlantic: People are already tired of machine-generated text, and they're not afraid to say it.

• Itaú BBA on NVIDIA: The Mother of Disruptive Innovation at the Beginning of a Historic Cycle; Initiating at Outperform

What am I listening to? What am I watching?

• Acquired: CEO Daniel Ek - podcast

Quote of the week:

“If a man knows not to which port he sails, no wind is favorable.” Seneca

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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