#034: What happened to VC funding in November?
Why VCs think that 2023 is going to be one of their best vintages in a decade
Hola technopolists,
It wasn’t a great week to be an incumbent.
Latin America’s largest startup (Kavak) is facing a reputational crisis as employees accuse top brass of nepotism amidst declining performance. Mass layoffs are still cropping up at unicorns (Loft) and ‘soonicorns’ (Alice, Buser). And Uruguay's dLocal is scrambling for reputation as it tries to fend off Muddy Waters’ short position.
Need I mention Brazil’s loss to Croatia?
What’s hot
👊🏽 MercadoLibre goes on the fintech offensive. The ecommerce platform-cum-fintech giant is reportedly in talks with WhatsApp to support its business payments. That’s a colossal prospect: WhatsApp is used by +90% of the adult population in most of the region. In the same week, the company also filed an antitrust complaint against Apple in its two largest markets, Brazil and Mexico. The complaint alleges that two of Apple’s practices — prohibiting third-party distribution on its app store and forcing developers to use its payment processor — lead to unnecessarily high costs for users. The suit is a LatAm pile-on for a pre-existing controversy: Apple faces scrutiny in similar antitrust cases around the world, most notably in the USA, where it was sued by Epic Games over a distribution monopoly. (Bloomberg)
🏦 Nubank’s preparing a big Mexican push. LatAm’s largest fintech announced that it will invest a further $330mn into Mexico from its own coffers — a healthy addition to the $1bn that the Brazil-based neobank has already ploughed into its second-largest market. The announcement coincided with regulatory approval for its two anticipated products, digital savings accounts and debit cards, which expand beyond its existing offering of credit cards in the country. (Reuters)
🍔 NotCo keeps its horn. The Chilean plant-based food provider raised a decent $70mn Series D extension from big-ticket investors that reaffirmed its last valuation of $1.5bn. Remember: NotCo raised a $235mn Series D in July 2021 at the top of the market; since late-stage valuations are down at least 30% this year, maintaining a flat valuation is no mean feat. Princeville Capital led the round, and big funds that have been quiet in LatAm this year, like Tiger Global, also participated, while MercadoLibre’s CEO also put personal funds in. Strategically, the company is changing up its distribution plan. After initial success in its joint venture with Kraft Heinz, NotCo is pursuing B2B sales by offering their AI-based food engineering platform as a kind of outsourced R&D for other food companies. (Bloomberg)
What’s not
🚗 Kavak employees decry nepotism. LatAm’s most valuable startup is under new scrutiny after employees inside the company claim that nepotism at the very top is derailing company performance. Kavak has felt the heat this year, with reports of sales slumping over 50% since last year and customer complaints spiking to over 30% of purchasers. Now, anonymous employees have spoken out against changes to leadership that have seen relatives of CEO Carlos Garcia put into senior leadership roles, such as his cousin’s husband into Head of HR, while lacking qualifications. In the past two months, the car reseller made widespread layoffs and completely replaced its Mexican leadership team. (Bloomberg Linea)
🦄 Mighty soonicorns trim the fat. Three large late-stage Brazilian companies announced widespread layoffs last week. Loft, the proptech unicorn, shed 12% of staff in its third wave of layoffs this year, and overall shrinking to 30% of the company’s 2021 size. Healthtech Alice made a second round of cuts, this time affecting 16% of headcount (113 employees), bringing total cuts to ~20% of its initial size. And Buser, the mobility company backed by SoftBank and Valor, announced 30% cuts, too. (Startups Brasil)
Stat of the week
November’s fundraising data has landed. NotCo’s fundraise may give hope to the healthiest ventures, proving that very healthy ventures might be spared the down-round knife, but widespread layoffs still signal a bleak market outlook.
Which indicator should we trust?
So what? VCs continue to deploy capital very conservatively despite some recent inklings of positivity around regional inflation and 2023 growth forecasts. Cheque sizes are the smallest they have been in recent memory, averaging $4.8mn last month — less than half the 2022 average. Early-stage deal activity is stronger than ever as VCs align behind the idea that recessions churn out winners, ergo 2023 will be an amazing startup vintage. Mexico overtook Brazil as the country receiving the most funding, as Brazil earned a surprisingly low total: only 16% when it usually comprises +40%.
Smart links
Under fire for weak regulation, dLocal CEO says seeking UK license (Reuters)
Creditas posts BRL$246mn loss in Q3 (Fintechs Brasil)
The Brazilian who runs Slack (Brazil Journal)
Argentina creates a National Blockchain Committee (CoinDesk)
Social security issues delay Mexico’s planned labour reform for delivery apps (Bloomberg Linea)
Cash payments in e-commerce will stubbornly stick around (Bloomberg Linea)
Analysis: Mexican VC fund activity (Whitepaper)
Mexican startups lead 500 Global’s Investment Batch 17 (Contxto)
Uruguay’s Infinia gets selected for Y Combinator’s next batch (Latam List)
Airbnb is not a home rental platform anymore and Latin American startups are cashing in (Rest of World)
Uruguay is plotting to poach Argentina’s tech sector (Rest of World)
Deals (December 6-13 , 2022)
M&A
🇧🇷 Quiq, a restaurant delivery management platform, bought 🇧🇷 Cadis, a restaurant delivery software
🇦🇷 GDM, a soybean-focused agricultural conglomerate, bought 🇦🇷 Dymaxion Labs, an AI-powered geospatial analysis software
Fundraising
🇨🇱 NotCo, a plant-based food provider, raised a $70mn Series D extension led by Princeville Capital with participation from Bezos Expeditions, Tiger Global, L Catterton, Kaszek Ventures, and Marcos Galperin (MercadoLibre’s CEO)
🇧🇷 Docket, a legal document analysis platform, raised a $22mn Series B led by Gerdau Next and Inovabra (Bradesco) with participation from ONEVC, Valor Capital, and Wayra
🇧🇷 PiniOn, a survey platform for market research, raised a $20mn Series A from Dubai International Finance
🇧🇷 Senhasegura, a network security management software, raised a $13mn Series A from Graphene Ventures
🇺🇸 Syncfy, a Texas-based open finance & DeFi platform serving LatAm, raised a $10mn seed led by Point72 Ventures with participation from JAM Fund, Ausum Ventures, Avalancha Ventures, FJ Labs, MANTIS Venture Capital and XBTO Humla Ventures
🇧🇸 Partanna, a manufacturer of carbon-absorbing materials, raised a $9.3mn investment from undisclosed investors
🇲🇽 Plenna, a health services platform for women, raised a $4.4mn seed led by Urban Innovation Fund with participation from Canary VC, Collaborative, 1984 VC, 500 Global, Bridge Latam, Amador Holdings, Nido Ventures, Integra Groupe, Phoenix Club and others
🇧🇷 Lastro, a real estate portfolio management software, raised a $4mn seed from undisclosed investors
🇲🇽 AltScore, a B2B ‘lending-as-a-service’ credit infrastructure platform, raised a $3.5mn seed led by Far Out Capital with participation from Techstars, Kamay Ventures (Arcor & Coca-Cola), Buentrip Ventures, and others
🇧🇷 Seedz, an agribusiness platform that connects farmers with dealers, raised a $3.1mn Series A led by Alexia Ventures with participation from ScaleUp Endeavor, Vox Capital, and others
🇧🇷 DrCash, a fintech for medical bills financing, raised an undisclosed Series A from Banco BV
🇦🇷 Kilimo, an irrigation management agtech platform, raised an undisclosed investment from Kamay Ventures (Arcord & Coca-Cola)
🇨🇱 WiseConn, an irrigation geo-referencing company, raised an undisclosed investment led by Morningside Group
Ad hoc
🇨🇴 Dale!, a digital wallet, raised a $30mn round from its parent, Grupo Aval
Did I miss any deals? Let me know!