#038: Why tech should care about Americanas
Where will shoppers go after the bankruptcy?
Hola technopolists,
We woke up to the seemingly daring news that Brazil and Argentina are planning a common currency. Yes, it would be massive — but it’s probably not a South American euro, nor is it the first time this idea has been pushed.
Our stat this week takes a look at how the surviving retail space could benefit from Americanas’ dissolution. We can only hope that Netflix’s producers are queuing up to bid on the documentary rights of the collapse. Stanley Tucci as Sergio Rial? Sir Ian McKellen as Jorge Lemann?
What’s hot
🏦 Nubank lands a credit line for Colombian expansion. LatAm’s premier neobank raised a $150mn lending facility from the World Bank’s International Finance Corporation (IFC) to deepen its footprint in Colombia. The three-year credit line is the second major lending vehicle Nubank has raised since the pandemic, bringing total credit facilities to $800mn following the $650mn syndicated bank line secured last year. Today, Colombia accounts for less than half a million users – a drop in the bucket for its +70mn user base. Nu’s share price has bounced 10% since the announcement, though it’s still trading well below its IPO price. (Yahoo)
💸 Greensill subsidiary resuscitates from scandal. KLYM, the Colombia-based working capital provider for SMEs (formerly OmniLatam), raised a $27mn round from JPMorgan Chase and the International Finance Corporation (IFC). The investment size and scope are routine, but this story is noteworthy because KLYM is on a rebound after buying itself back from Greensill Capital, the infamous London-based working capital financier that collapsed in 2020 after a high-flying corporate fraud scandal that reached as far as former UK prime minister David Cameron. The re-branded lender plans to distance itself further from the Greensill wreckage, using the funds to expand further into Spanish-speaking LatAm. (Bloomberg Linea)
🇸🇻 El Salvador plans for crypto-backed SME loans. With its first crypto lending legislation only a week old, El Salvador has chosen DeFi lending platform Acumen to provide $10mn in crypto-backed loans that the government will in turn lend to MSMEs. The initiative is intended to reduce loan sharking, which accounts for as much as 98% of MSME lending in the country. The news is ‘hot’ as it’s a first of its kind – not that expectations are particularly stellar. And while the loans are ‘crypto-backed’, the Salvadoran government is only touching US dollars; Acumen is dealing with all things crypto and providing the money in greenbacks. (CoinDesk)
What’s not
🔻 Another bloodbath week of layoffs. The startup winter is far from over as a slew of unicorns made deep retrenchments in anticipation of a possible global recession. Betterfly, the Chile-based benefits platform, announced 30% cuts in its second round of layoffs since receiving its horn in a $125mn Series C last April. In Brazil, identity verification unicorn Unico laid off 10% of staff (150 employees) while publicly listed fintech PagSeguro cut 7% of staff (500 employees). Unfortunately that’s not all: Spain-based edtech unicorn Domestika also announced downsizing across Brazil, Argentina, Peru, and Chile in its second cost-cutting exercise since becoming a unicorn in January 2022. (Forbes)
👥 Mexico’s flagging internet coalition names a new leader. The Mexican Internet Association (AIMX) has chosen Analí Diaz as director following the ignominious exit of predecessor Philippe Boulanger amidst a polyscandal of disarray. Boulanger resigned last September after governance complaints, accounting irregularities, and a million-dollar labour lawsuit against the AIMX triggered the exit of the majority of the group’s advisory board members, including those from Nike, AT&T, DiDi, and Megacable. The suit and governance claims remain unresolved, while the body seems to be mired in confusion with a vague mandate, an eroded membership, and a wounded public image. (Bloomberg Linea)
Stat of the week
Last week, 93-year-old Brazilian retail giant Americanas filed for bankruptcy protection after their newly installed (and now, resigned) CEO exposed $4bn of ‘accounting irregularities’. What does a nonagenarian brick-and-mortar incumbent have to do with tech?
It clears space for survivors. Here’s how the top three competitors could gain:
With its closest competitor vanquished, Mercado Libre is set to have the biggest boon. Why? It has the greatest overlapping internet traffic with Americanas (75% by Citi estimates), meaning that most Americanas shoppers already shopped there. It stands to reason that these customers will simply swap over more of their baskets without Americanas in the picture.
Related: In their Americanas coverage, Brazil Journal pulled some excellent statistics from University of Toronto & University of Berkeley research on the frightening regularity of corporate fraud in the US. The highlights:
4 in 10 companies commit fraud or practice accounting violations
Only one-third of accounting violation cases come to light
Each year, 10% of publicly traded companies engage in some form of fraud related to financial assets
On average, corporate fraud cases result in the destruction of 1.6% of the market value of publicly listed companies in the US
The most common forms of fraud arise from small groups of controlling shareholders — a phenomenon much more common in Brazil and evident in Americanas governance
Smart links
Amplifica Capital ‘wants to be the fund that LatAm’s female tech founders reach out to first’ (TechCrunch)
Brazil antitrust authority opens investigation into Mercado Libre complaints against Apple (El Economista)
Who wins from Americanas demise - MELI or Magalu? (Brazil Journal)
Why we may not see more Latin American IPOs in 2022 (Bloomberg Linea)
What’s blocking digital adoption in Mexico (Whitepaper)
LatAm Climate Startup Radar (Dalus Capital)
Deals (January 17 - 23 , 2023)
M&A
🇧🇷 Pipo Saúde, a digital brokerage for health benefits, acquired the insurance brokerage of 🇧🇷 Convenia, an HR software, for an undisclosed amount.
🇨🇴 Hogarú, a cleaning and domestic services platform, announced it will merge with 🇲🇽 Homely, a corporate cleaning service. Financial details were not disclosed.
🇧🇷 iTalents, an IT recruitment organisation, announced the purchase of 🇧🇷 proDevs, an edtech focusing on software developer training. Financial details were not disclosed.
🇧🇷 Wiser, an edtech focused on medical residency exams, announced the purchase of its competitor, 🇧🇷 MedCof. Financial details were not disclosed.
Funding
🇺🇾 Scanntech, a data analytics platform for supermarket retailers and FMCG suppliers, raised a $40mn round from Warburg Pincus.
🇨🇴 KLYM (formerly OmniLatam), a working capital financier that factors invoices, raised a $27mn round from JPMorgan Chase and the International Finance Corporation (IFC).
🇧🇷 Parfin, a web3 infrastructure fintech, raised a $15mn seed led by Framework Ventures with participation from L4 Venture Builder (of Brazil’s B3 stock exchange), Valor Capital, and Alexia Ventures.
🇨🇴 Cobre, a corporate treasury and payments initiation platform, announced their $14mn Series A led by QED and Atlantico with participation from Canary. The round closed in February 2022.
🇨🇴 Somos Internet, an internet service provider, raised a $5.9mn round from undisclosed investors.
🇧🇷 Portão 3, an expense management platform, raised a $3.6mn seed led by Better Tomorrow Ventures with participation from Endeavor ScaleUp Growth and Pareto Ventures.
🇸🇻 Acumen, a crypto lending platform, raised an undisclosed amount from Blizzard Ventures.
Ad hoc
🇧🇷 B Capital, the fund launched by Facebook co-founder Eduardo Saverin, closed its third fund at $2.1bn. The fund now has $6.3bn in assets under management.
🇧🇷 Nubank, the renowned neobank, raised a $150mn credit line from the International Finance Corporation (IFC) to expand in Colombia.
🇲🇽 Amplifica Capital, a women-focused venture fund, closed its first fund at $11mn.
Did I miss any deals? Let me know!