#036: The strongest IPO markets

How do Latin American stock exchanges stack up on the global stage?

Hola technopolists,

Welcome to 2023. If you’re one of the hundreds of new readers who’ve joined me recently, or just want to sharpen up after the holiday-induced stupor, catch up with Technopoly’s 5-minute primer on the top 10 stories of 2022.

What’s hot

📊 Merqueo files for IPO. The Colombian grocery delivery company filed its pre-IPO paperwork last week to raise up to $14mn on the NASDAQ. For context, that’s 16% of the exchange’s median IPO size on American exchanges last year ($85mn) and 8% of 2021’s median ($177mn). But Merqueo is relatively small and loss-making: in the 9-month period to last September, it generated $24mn in revenue for a $38mn net loss. The IPO filing is surprising, with consensus sentiment remaining bearish while grocery delivery has suffered particularly badly — just look at Instacart’s 50% valuation cut in the US, or Daki’s geographic retreats in LatAm. (Seeking Alpha)

🇧🇷 Brazil officially authorises crypto. In one of his final acts as the Brazilian premier, ex-President Bolsonaro signed Brazil’s landmark crypto bill into law at the end of December. The bill provides a regulatory framework for digital assets, designating the central bank as its regulator. The securities exchange commission (CVM) got busy in 2023 by authorising investment funds to put up to 10% of their assets into cryptocurrencies while receiving securities protections afforded to stocks and bonds — protections it had previously denied in 2018. Crypto purchases continued to grow in 2022, with a record-setting 42,000 Brazilian businesses buying crypto in December. (Bitcoin.com)

💰 Valor Capital sells part of its portfolio to private equity. The NY-based, LatAm-focused fund sold 25% of its Fund II to private equity firm StepStone for $95mn. The transaction, known as a ‘strip sale, returned $80mn in cash to Valor’s investors while the remaining $15mn is earmarked for reinvestment. Valor did not disclose which companies’ equity were included in the transaction, though it confirmed that it kept its positions in darlings Olist, Cloudwalk, and Gupy. Strip-selling looks increasingly attractive for VCs under current market conditions, since traditional exit routes such as IPOs or M&A have dried up. (Bloomberg Linea)

What’s not

😡 Twitter amplifies the ‘right’ in Brazil. A prescient analysis by Rest of World – published days before the Jan 8th storming – shows that Twitter under Elon Musk has become an amplifying soap box for right-wing Brazilian politicians and pundits. The spike is partially a localised result of a global trend, since Musk made massive cuts to content moderation that effectively empowered the extreme right (see also: Twitter’s surge in hate speech). Twitter has previously admitted to amplifying right-wing bias in 2021 that was later corroborated by a mass-scale academic study. (Rest of World)

🚘 Carlos Garcia steps in to save Kavak Mexico. Kavak’s global CEO has taken the reins of the car platform’s Mexican operations in addition to his role as global CEO after a leadership reshuffle. The reshuffling last year resulted in the termination of all of Kavak’s top brass in Mexico as a result of cooling sales and rising customer complaints in the unicorn’s home geography. Garcia has stated that Kavak’s Mexico operations should return to profitability by January under his stewardship before he finds a long-term replacement. (Bloomberg Linea)

Stat of the week

Merqueo is showing rare mettle in testing public markets. What does 2022’s IPO data say about the state of IPOs?

So what? The -45% worldwide drop is what we’d expect, jiving with the similar slide seen in late-stage valuations and VC funding activity. But the Americas are taking the biggest shock, while Latin America is getting asymmetrically thumped. There was only 1 IPO in Brazil and Mexico in 2022 compared to 46 combined in the prior year. It’s not that emerging markets are getting uniformly punished, either — just look at India and China. 

EY’s report included one interesting data point not in the chart: the proportion of IPOs on American exchanges made by foreign companies increased from 26% in 2021 to 40% in 2022. That means startups from places like LatAm are still going public  – just not in their native exchanges. Just as investors flee into greenbacks during times of uncertainty, founders flock to NYC.

Smart links

The Next Big Thing LatAm 2023 (Julia de Luca & Lucas Abreu)

VC in 2023: what LatAm startups can expect, according to investors (Bloomberg Linea)

Unifin declared bankrupt, begins conciliation phase (Bloomberg Linea)

Aviva wants to use your face to determine your creditworthiness (TechCrunch)

Deals (Dec 20, 2022 - Jan 9, 2023)

Author’s note: I will no longer be covering deals under $1mn, with rare exceptions for extraordinary deals. The long tail of small investments is too noisy and goes against my mission of giving you pithy, high-quality insights.

M&A

🇺🇸 Ansys, a global engineering software conglomerate, bought 🇧🇷 Rocky DEM, a discrete element modelling (DEM) tool, for an undisclosed amount

🇺🇸 Fiserv, a financial services conglomerate, announced the acquisition of 🇦🇷 Yacaré, a QR code payments wallet, for an undisclosed amount

🇧🇷 Itaú Unibanco, the major Brazilian bank, announced the purchase of a 30% stake in fintechs 🇺🇾 Prex and 🇺🇾 Paigo, for an undisclosed amount

🇧🇷 Alper, an insurance company, announced the acquisition of 🇧🇷 Me Sinto Seguro, an agroinsurance startup, for an undisclosed amount

🇨🇴 Amplo, an impact investment fund, bought 🇨🇴 Velum Ventures, a VC fund, for an undisclosed amount

Fundraises

🇧🇷 LinKapital, a tech-enabled SME lender, raised a $13.3mn round from SRM Ventures

🇨🇱 HealthAtom, a cloud-based operations software for healthcare providers, raised a $10mn Series A led by Kayyak Ventures with participation from FJ Labs, Soma, Amador, Taram, and angels

🇧🇷 The Coffee, a tech-enabled retail coffee chain, raised a $7.5mn round co-led by Monashees and CapSur

🇦🇷 Bricksave, a real estate crowdfunding platform, raised a $6mn round led by Graphene Ventures

🇨🇱 Kredito, a business lender, raised a $6mn seed from angel investors and family offices

🇧🇷 Pods, a cryptocurrency investment company, raised a $5.6mn seed from IOSG, Tomahawk, Republic, Framework Ventures, 4RC, Alexia Ventures

🇧🇷 Cromai, an AI-based agriculture management software, raised a $2.8mn round led by Baraúna VC

🇲🇽 Hero Guest, a hospitality worker training service, raised a $2.3mn “pre-Series A” round led by MVS Group, Variv Capital, and Anderson Group

🇲🇽 Aviva, a microlender to ‘nano-businesses’, raised a $2.2mn pre-seed led by Wollef with participation from Newtopia VC, Seedstars International Ventures, and 500 Startups

Did I miss any deals? Let me know!