August is roaring
#065: Earnings seasons kicks off, while mega-rounds abound.
Hola technopolists,
Last week, we were slightly surprised to find out that July turned out to be the strongest month for venture investment this year.
August is a completely different story. Mega-rounds from Loft and Tractian headlining a litany of fundraises and M&A. Even NATO is getting involved with a $1bn growth fund.
Plus, it’s earning call season for public markets, and both Mercado Libre and Amazon have big news to share.
What’s Hot
🤑 Mercado Libre’s Q2 results. Yep, MELI’s still winning big. Revenue growth was strong (+57% YoY), but profit expansion was even stronger (+123.7%). It’s a time of change, too. Geographically, Brazil and Mexico stood out with the fastest profit growth — unsurprising, perhaps, given their market sizes and Argentina’s inflation. Plus, fintech unit Mercado Pago, while still a strong contributor with 48.4% of revenue growth, is no longer outpacing the retail unit’s growth. Separately, MELI hit 5mn clients in its insurance business and plans to launch its own OTT video streaming platform, Mercado Play. (Reuters)
💳 Amazon’s credit cards reach Latam. The global ecommerce juggernaut is set to launch credit cards in Brazil this week. Bradesco, the Big 4 bank, will underwrite and manage the credit portfolio, while Mastercard is the chosen card partner. Further details, like loyalty programmes and card limits, are yet to be revealed. The announcement comes at a time when Brazilian credit balances and interest rates have hit record highs, while the central bank recently voted to begin cutting rates. (Reuters)
💰 Loft’s brand new bag. The Brazil-based proptech unicorn raised a $100mn round led by ADQ, Abu Dhabi’s third sovereign wealth fund. The round, which came in convertible debt, completes a series of contributions that began in late 2022 and includes participation from a who’s-who of growth investors: a16z, BTG Pactual, D1, DST, Monashees, QED, Silverlake. There’s one caveat: the round implies a $1.7bn valuation. That means Loft is still a unicorn, but it’s a -40% markdown from its last valuation in early 2021 — flying in the face of previous public statements that it was not raising a down round. (Pipeline)
What’s Not
📵 5G rollout. LatAm’s adoption of 5G, while continuing, is at high risk of following behind other developing economies, according to recent data. While a select few progressive countries are charging ahead, such as Brazil and Chile, sluggish political processes and distorted market dynamics threaten rollout around the rest of the region. In particular, essential tech geographies Mexico and Colombia are at the greatest risk of falling behind, with markets characterised by high data prices, low revenue per user, and a chaotic network of public and private operators. (Bloomberg Linea)
🚔 Wenance’s fraud charges. Wenance, an Argentine fintech lender to the underbanked, faces an escalating federal case with 3,000 investors from Argentina, Uruguay, and Spain alleging the fintech has swindled them out of their repayments. Authorities raided 7 Wenance locations, including the home of Founder and CEO Alejandro Muszak, who has denied any wrongdoing and placed the blame on increasing customer delinquencies. Muszak claims that investors will be repaid, though he’s gone mum since laying off most of the company. But Wenance’s troubles are hardly a one-off investor default: the federal investigation began based on claims of loansharking and longstanding patterns of abusive lending practices. (La Nacion)
Stat of the Week
With all of the uncertainty roiling credit markets, how has Mercado Libre fared in scaling its portfolio?
So what? Mercado Libre’s fintech unit is surging despite this year’s market chop. Not only are the indicators moving in the right direction, but the fintech has been increasing the automation of its underwriting function. It’s still a long way off from competing with the consumer lending of Nubank in places like Mexico, but sometimes, slow is smooth and smooth is fast.
The Rundown
Women, Black, and Hispanic workers are more likely to be hurt by the AI wave in the US, according to a new McKinsey report. (Bloomberg Linea)
As Mexico’s Casai goes under, its founder reflects on its mistakes. (Bloomberg Linea)
Brazil’s Central Bank announced that its new blockchain-based digital currency will be called ‘Drex’, and should be available to the general public by the end of 2024. (Finsiders Brasil)
Where did the Latin American fintech boom go? The story of devaluations, retreats, and layoffs. (Iupana)
Klar, the Mexican fintech darling, will soon launch savings and investment products. (Latam Fintech Hub)
Colombia’s Central Bank released a proposal outlining potential regulations for a new PIX-like instant payments system. (Yahoo)
Latin American startups embrace OpenAI, but at what cost? (Rest of World)
Ex-SoftBank LatAm investor Paolo Passoni has joined Valor Capital as a partner. (Brazil Journal)
Deals (August 1-7, 2023)
M&A
🇬🇧 Rapyd, a fintech-as-a-service provider, announced the all-cash acquisition of 🌎 PayU’s Global Payments Organisation, an electronic payments platform. The deal values PayU’s GPO at $610mn. PayU operates extensively across LatAm.
🇲🇽 Albo, a digital wallet, announced the acquisition of 🇲🇽 Delt.ai, a fintech and SME lender. The deal values Delt.ai at $20mn.
🇧🇷 Serasa Experian, the credit rating platform, completed the majority acquisition of 🇧🇷 Mova, a peer-to-peer lending platform. The deal values Mova at $16mn.
🇨🇴 SaludTools, a medical office SaaS platform, announced the acquisition of 🇨🇴 Netmedik, a medical clinic management software. Financial details were not disclosed.
🇨🇱 Grupo Central, a dark kitchens and dark store company, announced the acquisition of 🇨🇱 Dituci, a logistics and last-mile fulfillment company. Financial details were not disclosed.
Fundraises
🇧🇷 Tractian, a producer of AI-powered industrial monitoring systems, raised a $47mn Series B led by General Catalyst with participation from Next47, DGF, and Norte Ventures. The deal values Tractian at ~$200mn. Previous investor Citrino also sold a $10mn stake to Monashees in a secondary transaction.
🇻🇪 Spline, a 3D design software, raised a $15mn round led by Gradient Ventures with participation from First Round Capital, NXTP, Chapter One, Combinator, Backend Capital, and angels.
🇲🇽 Momento Seguros, a car insurance provider, raised a $10.5mn round led by Foundation Capital and HSCM Ventures with participation from Gilgamesh Ventures, Picus Capital, Wollef, Clocktower, BoxGroup, GFC, Y Combinator, and angels.
🇧🇷 Cashbanx, a whitelabel cashback loyalty platform, raised a $4.2mn round from SRM Ventures.
🇧🇷 Fiibo, a wellbeing platform for health benefits and insurance, raised a $3.6mn round from XP Assets and Headline Global.
🇧🇷 Speedbird Aero, a drone delivery company, raised a $2mn round from MSW Capital.
🇲🇽 ConfiAbogado, an AI-based platform that connects clients with lawyers, raised a $1.7mn seed led by Tuesday Capital with participation from 500 Global, Goodwater Capital, Seedstars, DTB Capital, Invariantes, GAIN Capital, and Side Door Ventures.
🇧🇷 EqSeed, a crowdfunding platform, raised a $1.6mn round via its own platform, setting a new record for the largest crowdfunding round in Brazil.
🇧🇷 Fintalk, an AI-powered automation platform for speech, raised a $1.2mn seed from Revolution (Jorge Paulo Lemann and Marcelo Lacerda).
🇧🇷 Inklo, a fintech lender for medical procedures, raised a $719k pre-seed from angels.
🇧🇷 goFlux, a B2B marketplace for logistics services, raised an undisclosed amount from Arrebol Capital.
🇧🇷 HZ4Liver, a biotechnology platform for liver-related issues, raised an undisclosed amount from Securitas Biosciences.
🇦🇷 N5, a platform that supports digital transformations, raised an undisclosed amount from Illuminate Financial Management.
🇲🇽 Paradero (Todos Santos), an experiential hospitality brand, raised an undisclosed amount from Derive Ventures.
🇲🇽 Rintin, a wholesale digital marketplace, raised an undisclosed amount from LatinLeap.
Debt
🇧🇷 Loft, the property marketplace unicorn, raised a $100mn round of convertible debt from ADQ, an Abu Dhabi sovereign wealth fund. The deal is estimated to value Loft at $1.5bn — nearly a 50% markdown from its previous valuation of $2.9bn.
🌎 Torrecom Partners, a regional telecommunications provider, received a $30mn loan from the IDB to build cell towers around 9 countries in Latin America.
🇧🇷 Educbank, a fintech lender for school systems, raised a $14mn debenture coordinated by Itaú BBA.
🇨🇴 Avista, a fintech serving low-income earners and third-age pensioners, raised a $12mn credit facility from Bancolombia.
Funds
🌎 NATO announced a $1bn NATO Innovation Fund (NIF) to invest in growth-stage companies developing strategic technologies that defend basic human rights. The fund will invest up to $15mn in pre-seed to Series B rounds, beginning later this year.
🇺🇸 Ribbit Capital, an investor in LatAm companies such as Nubank and QuintoAndar, raised $800mn for its 10th fund.
Simon Rodrigues is a consultant, writer, and speaker specialising in strategy and storytelling for early-stage startups.