One country has its time to shine
#064: Meanwhile, valuations data hopes to say the worst is behind us.
Hola technopolists,
If you’re looking for an especially upbeat story from the region this week, check out Burger King Brazil’s launch of pink-sauced Barbie burgers.
But it’s not the only fun news. Valuations data suggests the worst might be behind us, and fintech funding seems like it’s past its nadir.
And there’s one definitive bright spot – Colombian fintech – that we’re diving into this week.
What’s Hot
📊 Valuations bounce. New data from Carta indicates that valuations in LatAm (and around the world) might just be on the rebound. Although capital investment has plummeted in the first half of this year, Carta’s data shows that median valuations for Seed to Series C fundraises have increased, now hovering around Q1-2021 levels. Recent mega-rounds for LatAm startups Daki, Digibee, Cobli, and Sami were all ‘up rounds’, and combined with qualitative data from VCs and M&A advisors, optimism is on the rise. (Bloomberg)
🏦 Fintech funding. Despite a decrease in overall VC investment, LatAm and the Caribbean was the only region in the world to see a quarterly increase in fintech funding in Q2, according to new data from CB Insights. Early-stage dealmaking is on track to hit a five-year high, making up 81% of total activity as investors shift to smaller cheques. One big caveat: offshore Cayman companies are included in the data, so the ‘true’ LatAm boost is smaller than the headlines suggest. (TechCrunch)
⛓️ Stablecoins in Brazil. Brazil processed $17bn in crypto transactions from Jan-May this year, earning its ranking as seventh in the world for crypto adoption. But the surprise here isn’t about size. It’s that stablecoins have surged, completely flipping the script on Brazil’s crypto scene: in 2019, bitcoin transactions made up 94% of market volume, but now, stablecoins (mostly USDT) represent 90% of market volumes. On average, stablecoin transactions were 10x larger than bitcoin transactions. (Valor)
What’s Not
⛔ Reserve pauses services. Speaking of stablecoins, Reserve, the US-based stablecoin platform backed by Sam Altman (OpenAI, YC), halted deposits and withdrawals for users in six countries around LatAm: Argentina, Colombia, Peru, Ecuador, Panama, and most notably, Venezuela, where it has 500k users. Reserve made the pause because of a two-pronged regulatory issue in the US: first as part of a sector-wide probe into crypto, and second for its ties to US-sanctioned Venezuela. (Fortune)
👋🏽 Ripio makes deep cuts. The Argentine-born crypto platform announced 18% cuts to its 300-person team, with the largest reductions in Brazil and Argentina. The cuts arrive despite expansionary announcements from the company in the past quarter, including a big partnership with Mercado Pago in Chile and a new crypto exchange license in Spain. The crypto funding environment is still perilous, with funding dropping ~80% in Q1 to its lowest levels since 2020. (Portal do Bitcoin)
Stat of the Week
You’d be forgiven for overlooking that Colombia is the most resilient startup ecosystem in LatAm, especially with a deluge of headlines still crying ‘contraction’.
But the region’s third-largest startup ecosystem is making serious inroads, despite the ever-cooling winter.
So what? Colombia is most known for birthing famous foodtechs like Rappi and Foodology, but its fintech sector is having a moment.
Lending and payments make up nearly half of all fintechs. This is somewhat predictable since these are typically the largest categories in fintech because of their product portfolio depth, breadth, and complexity.
What’s unique is the growth in proptech, with a surge of new entrants following the trailblazing success of Habi and La Haus. If we changed this chart to show the amount of capital raised in each category, then proptech’s mega-rounds would propel it even further up the ranking.
And don’t be fooled by digital banking in last place: neobanks make up a hypercompetitive space with low differentiation, low margins, and a trend towards consolidation that discourages most from entering the fray.
The Rundown
Mercado Libre says it’s doubling down on remittances products, squeezing margins for competitors in countries like Mexico. (Iupana)
Latin Americans’ social feeds are being flooded with AI-generated ads. (Rest of World)
Why Chile is in pole position to attract venture capital despite its small size, according to ALLVP. (Bloomberg)
Brazil’s central bank has opened consultations with industry stakeholders regarding its proposed crypto regulation. (Portal do Bitcoin)
Electric bicycles can shorten travel times by 26% compared to cars in Brazil’s biggest cities, according to a new study by Tembici. (Startupi)
These are the major obstacles to raising capital in 2023, according to top LatAm entrepreneurs. (Contxto)
Citigroup completed its acquisition of Deutsche Bank’s banking license in Mexico, allowing it to separate its Banamex operations in preparation for an IPO. (Bloomberg)
Deals (July 18-24, 2023)
M&A
🇧🇷 Acura Capital acquired a 10% stake in 🇧🇷 Patex, a blockchain platform, for $10mn. The deal values Patex at $100mn.
🇧🇷 EntrePay, a payments platform, acquired 🇧🇷 Wise Money, a P2P lender, for $2mn.
🇧🇷 Meetz, a B2B sales platform, acquired 🇧🇷 AZ Leads, a commercial intelligence and prospecting software. Financial details were not disclosed.
🇧🇷 Enjoei, a fashion marketplace, acquired 🇧🇷 Elo7, a marketplace for locally sourced artisanal goods. Financial details were not disclosed.
Fundraises
🇺🇸 Preply, an education platform, raised a $70mn Series C led by Horizon Capital with participation from Reach Capital and Hoxton Ventures. The company has a significant footprint in Latin America.
🇲🇽 Conceivable Life Sciences, an in-vitro fertilisation (IVF) provider, raised a $20mn seed from Stride VC, ACME, Cadence Ventures, Future Positive, and Black Opal Ventures.
🇨🇴 Foodology, a dark-kitchen network, raised a $17mn round from a16z, Chimera, and 30N Ventures.
🇧🇷 Earth Renewable Technologies, a compostable bioplastics producer, raised a $6.7mn round from Positivo Tecnologia.
🇦🇷 ZoomAgri, an agricultural supply chain platform, raised a $6mn Series A led by GrainCorp and GrainInnovate with participation from SP Ventures and Artesian.
🇲🇽 Construex, a B2B marketplace for construction, architecture, and design, raised a $4mn round from undisclosed investors.
🇧🇷 Voltbras, an e-vehicle charging station management platform, raised a $2.5mn Series A led by MSW Capital with participation from DOMO, EDP Ventures, and Iberdrola.
🇻🇪 La WaWa, a transportation app for collective rides, raised a $2mn round from undisclosed investors.
🇧🇷 Apprenty, a platform that provides technical education for the digital economy, raised a $1.67mn round led by Canary with participation from Positive Ventures, Potencia Ventures, Latitud, and angels.
Debt
🇲🇽 Konfio, the unicorn SME fintech lender, renewed its $90mn credit facility from JPMorgan.
VC Funds
🇬🇹 Invariantes announced the launched of a $30mn fund to invest in startups and emerging VC funds in the US and Latin America.
🌎 Rockstart announced the launch of a $6mn fund for early-stage investments in Latin America.
🇧🇷 Oosten Moove, a biotechnology-focused accelerator, announced its $4mn expansion to the north of Brazil.
🇵🇪 Alaya Capital received a $3mn investment from Peru’s Fund for Innovation and Entrepreneurship.
🇭🇳 Banco Atlántida and 🌎 IDB Lab announced a partnership to invest $2mn in 100 digital ventures in Honduras.
🇨🇳 Huawei and 🇲🇽 Mexico’s Agency for International Cooperation for Development (AMEXCID) launched the Spark Accelerator, a $1.6mn accelerator-fund to invest in Mexico, Chile, Colombia, and Peru.
🇦🇷 IRSA, one of Argentina’s largest real estate companies, announced the launch of SHEFA, its corporate venture capital vehicle to invest in retailtech and proptech.
Simon Rodrigues is a consultant, writer, and speaker specialising in strategy and storytelling for early-stage startups.