SoftBank sells — but is Spotify leaving Uruguay?
#069: Plus, (Brazilian) fintech feels a massive boost heading into H2.
Hola technopolists, —
Some weeks tempt us into ill-advised prognostications about the market turnaround.
This was definitely one of those weeks.
SoftBank sorta told us ‘we’re so back’, while Brazilian fintech leaders are marching full-steam ahead: PicPay announced big results, Neon hit a big user milestone, and Nomad raised the biggest fintech equity round of the year — not to mention a monster number of fundraises (see Deals, and don’t miss Gympass’ fresh funds that bagged a $2.4bn valuation).
Add in the prospect of a warming IPO market (thanks to Arm and Klaviyo), and you might just be an optimist again.
PS: Don’t miss out on your VERY last chance to get 50% off a paid subscription. Starting with the next edition (September 5th), only paid subscribers will get the full weekly edition plus a monthly deep dive and access to subscriber-only events. Free subscribers will only continue to receive What’s Hot/What’s Not — the rest will be paywalled. Offer ends midnight GMT, August 31st – only 2 days away!
What’s Hot
🤑 SoftBank’s sales. According to SoftBank’s Head of Brazil, Alex Szapiro, the LatAm fund’s 2023 exits alone have yielded a tidy 54% rate of return. It’s some of the first tangible good news out of the fund since 2021’s splintering, which saw an executive exodus coupled with a fund spinout; many hope this inspires confidence among other growth investors, who have largely vanished from the region. SoftBank’s notable divestments include: Pismo, the infrastructure fintech bought by Visa for $1bn; Yaydoo, the Mexican payment platform bought by PayStand; Avenue Holding, an offshore brokerage that serves Brazilians investing in the US; and isaac, the Brazilian fintech platform for schools. (Bloomberg Linea)
💸 PicPay picks up steam. The Brazilian digital wallet posted $12mn in net profits in Q2 for its third consecutive quarter of profitability — a drastic reversal from its -$135mn loss in Q2 last year that’s another stepping stone in a heroic profitability turnaround. PicPay has grown to over 65mn users (for context, that’s two Revoluts); now, the company is edging further into neobank territory as it launches products for lending and crypto. Rumours are starting to swirl that PicPay may consider finally going public after postponing its 2021 NASDAQ filing. (Fintechs Brasil)
📊 Neon’s game-on. The Brazilian neobank (backed by heavyweight VCs like Founders Fund, Khosla Ventures, and General Catalyst) announced that it reached 26mn customers and an $800mn loan portfolio (BRL $4bn) in August. You might be noticing the trend: its new strategy is to focus on lending — specifically, doubling down on crédito consignado (secured payroll loans) — just like PicPay, Nubank, and most leading consumer fintechs. Neon’s also going further ‘down the pyramid’ of customer segments, focusing on lower-income users that have fewer alternatives in credit markets. (Startupi)
What’s Not
🇺🇾 Spotify threatens Uruguay. The Swedish streaming platform has warned it may end Uruguayan operations if the country’s legislation passes a proposed change to its copyright laws. The proposal seeks to force social networks and internet platforms using copyrighted material to make additional payments directly to artists — a law that could make Spotify’s business in Uruguay ‘unviable’, according to a letter the company sent to the government. Uruguay seems to be joining Canada in taking aim at global internet companies like Spotify, Google, and Meta, whose business models are based on access to cheap or free content. (Bloomberg Linea, El Pais)
💳 Mastercard pulls Binance’s debit card. Mastercard announced that it’s ending its crypto debit card programmes with Binance in Argentina, Brazil, Colombia, and Bahrain in an abrupt unilateral announcement. The cards, which enabled Binance users to make payments in traditional currencies using their crypto holdings, will stop working on September 22nd. Tellingly, Mastercard refused to comment on the decision, and Binance has kept mum since the announcement — leaving us to speculate that the termination might be related to Binance’s ongoing regulatory woes around the world. (Reuters)
Stat of the Week
At $61mn, Nomad’s Series B was the largest fintech equity fundraise this year. It’s exciting, what with all of the unicorn-crushing down-rounds – so how does it stack up to other fintech fundraises?
So what? Brazil has accounted for as much as 80% of regional fintech funding in recent years, so Mexico’s near-parity represents a sharp break with the past; in fact, it’s only because of Nomad’s round that Brazil leapfrogged back into the lead. Three factors are at play: first, since Brazil has a more advanced ecosystem with more late-stage businesses, it’s experienced a greater drop in funding as part of venture’s global slowdown. Second, Mexico’s darlings (especially Konfio and Clara) have had time to mature. And third, the rise of debt funding – particularly from foreign lenders – has helped de-risk investor attitudes and level the playing field.
The Rundown
The bullish case for Latin America, according to ex-SoftBankers Marcelo Claure and Shu Nyatta. (Bloomberg Linea)
LatAm SMBs struggle to access capital. Is that a market opportunity? (Signals)
LatAm startups are playing ‘on hard mode’: fintech and AI with VC Mercedes Bent. (TechCrunch)
How did Brazil become the world’s second-largest market for WhatsApp? (Startups Brasil)
With MISTO, Latitud hopes to create the new SAFE for LatAm. (Startups Brasil)
Uber’s new bets in Latin America, explained by regional boss Eduardo Donnelly. (Neofeed)
Six months after launching in Brazil, North American HRtech Atlas is withdrawing. (Startups Brasil)
Deals (August 22-28, 2023)
M&A
🇦🇷🇧🇷 Itau Unibanco’s Argentine banking division was acquired by 🇦🇷 Banco Macro for $52mn.
🇧🇷 Magnetis, a digital asset manager and robo-advisor, was acquired by 🇧🇷 BTG Pactual, the investment bank. Financial details were not disclosed.
🇧🇷 GeekHunter, an outsourcing platform connecting US companies to LatAm developers, was acquired by 🇺🇸 Howdy.com, a similar outsourcing platform. Financial details were not disclosed.
🌎 ConstruMarket, a Central American construction platform, was acquired by 🇧🇷 SoftPlan, a multi-vertical SaaS platform. Financial details were not disclosed.
🇦🇷 Aivo, a conversational AI platform for customer service, was acquired by 🇺🇸 Engageware, a customer engagement platform. Financial details were not disclosed.
Fundraises
🇧🇷 Nomad, a fintech that enables Brazilians to have US dollar accounts, raised a $61mn Series B led by Tiger Global with participation from Stripes, Monashees, Spark, Propel, Globo Ventures, and Abstract. The deal values Nomad at $365mn, an 80% increase over its Series A valuation in 2021.
🇺🇸🌎 Gympass, the corporate wellbeing platform, raised an $85mn round led by EQT Growth with participation from Neuberger Berman. The deal values the company at $2.4bn.
🇧🇷 Principia, a fintech platform for the education sector, raised a $41mn Series A led by Valor Capital with participation from FJ Labs, Supera, Spectra, ARC, Moka Gestora, and others.
🇨🇱 Botanical Solutions, a sustainable botanicals supplier for the pharmaceutical industry, raised an additional $7mn in Series A funding led by Otter Capital with participation from Boldo SpA and Quebec LP. The investment brings total Series A funding to $13mn.
🇧🇷 A de Agro, a lender for agribusinesses, raised a $5.7mn round led by DXA Invest with participation from Alfa Collab, BTG Pactual, Suno, and angels. The deal values the company at $20mn post-money.
🇺🇸🇨🇴 Longevo, a B2B health and wellbeing platform, raised a $5.5mn round led by Grupo Valora with participation from angels.
🇵🇪 Prestamype, a fintech lender for MSMEs, raised a $5mn round co-led by Alive Ventures and Oikocredit Ecumenical Development Co. with participation from Inca Ventures, Salkantay, AVP, and others.
🇧🇷 Cumbuca, an expense-sharing platform, raised a $3mn seed led by Lightspeed with participation from Supera and other undisclosed investors.
🇧🇷 Coala Saúde, a digital health platform for schools, raised a $2.6mn round led by Owl Ventures with participation from angels.
🇧🇷 Vendah, an ecommerce marketplace for re-sellers, raised a $2.5mn seed led by Y Combinator with participation from Village Global, Goodwater, Pioneer, DOMO Invest, Maya Capital, Sergio Furio (Creditas), and other angels.
🇵🇹 MyCareforce, a labour marketplace for healthcare workers, raised a $2.1mn round from Shilling, Portugal Ventures, Demium, and angels. The company will use the funds to expand in Brazil. The deal was originally announced on August 14th.
🇧🇴 Facia, a security tracking platform for local communities, raised a $1mn round from Acelera Ventures.
🇨🇱 Tet4D, an AI-powered logistics management platform, raised a $350k investment from Google Cloud Ventures.
🇧🇷 Anfitriões de Aluguel, a short-term property management platform, raised a $300k round from Nexpon (NSC).
🇧🇷 Bebook, a revenue management platform for hotels, raised a $300k round from LH Tech Ventures (LightHouse).
🇨🇴 Swiset, a financial risk management platform, raised $50k of funding via Tenity’s accelerator.
🇵🇪 Rextie, a currency foreign exchange company, received an undisclosed investment from Citigroup.
🇧🇷 OOH My Media, an adtech platform for out-of-home media placements, raised an undisclosed investment from Cedro Capital.
Funds
🇲🇽 Nido Ventures, an early-stage fund, announced the close of Fund I, a cross-border fund, at $7mn. The fund will invest in 25 pre-seed and seed companies in B2B fintech, B2B marketplaces, and vertical SaaS.
🇧🇷 Darwin Startups, a Florianopolis-based accelerator, is launching a new $4mn fund. It currently has capital committed from XMS Investimentos.
Simon Rodrigues is a consultant, writer, and speaker specialising in strategy and storytelling for early-stage startups.