#007: Extreme in both directions, and a look at crypto intensity
New unicorns, new layoffs, and new layoffs at unicorns
Hey technopolists,
The news is going extreme in both directions this week. We meet a new logistics unicorn, while more mature unicorns are making layoffs.
Meanwhile, I crunched the numbers to find out how far crypto adoption and financial inclusion correlate in LATAM.
What’s hot
🦄 Logistics businesses get the bag. With China’s lockdown walloping supply chains (again), logistic plays are still shit-hot amongst investors. Nowports, the Mexican freight forwarder, became LATAM’s latest unicorn with a $150mn fundraise that landed them a $1.1bn valuation. Further south, clicOH, the Argentinian delivery provider, just raised a $25mn Series A led by Tiger, while Pandas, the Bogota-based e-commerce supplier, just raised a $6.3mn pre-seed (for the uninitiated, that’s the largest pre-seed round ever in Latin America). All of these involve a tried-and-true private-equity-esque playbook: aggregate and digitise a highly fragmented supply chain. (TechCrunch, 821 words)
🇧🇷 Foreign capital grows in Brazil. In the first quarter of 2022, foreign investors participated in 39% of fundraises, an increase from 33% in the same period last year. Foreign funds — primarily from the US, Japan (i.e., SoftBank), and Germany — are concentrating their investments in growth and late-stage deals. SoftBank alone accounted for 28% of VC investment here in 2021, and foreign capital accounted for two-thirds of all VC investment in the last 5 years. (LABS, 350 words)
🏦 Nubank prepares Colombian “listing”. Brazil’s Nubank will soon have shares available for sale on Colombia’s public exchange (BVC). It’s not a formal listing, as Colombian investors will be effectively purchasing receipts through the NYSE using pesos via the app. According to CEO David Velez, 50,000 investors are estimated to be queued up. It’s no secret that Nubank is hoping to climb out of a deep valuation hole despite record Q1 earnings and a bullish response to the macroeconomic mood; the Colombian “listing” comes 6 months after Nubank’s IPO, and their market cap currently sits at $17.7bn, one-third of its peak at $52bn. (Bloomberg Linea, 429 words)
What’s not
📉 Layoffs lick LATAM. The corporate culling continues, this time with new unicorns in the crosshairs. Bitso has laid off at least 80 employees (11%); VTex reported 13% layoffs; Olist has let over 150 employees go (13%); and Buenbit (though not a unicorn) has cut 45% of its workforce. At the same time, previous reports of layoffs at Creditas may have been underestimated; recent reports from several employees state that closer to 300-400 (9%) of staff were dismissed, albeit for “performance” reasons. (Bloomberg Linea, 836 words)
🇸🇻 El Salvador’s digital wallet woes. Transaction volume on Chivo, the Salvadoran official digital wallet released last September, has declined 75% since its peak, now logging an average of 5,000 transactions per day. Compared to traditional transactions, Chivo’s usage amounts to roughly 2.4% of card-based transactions in El Salvador; it peaked near 10%. This is a further flunk for the fintech project, following reports earlier this month that two-thirds of Chivo users had already abandoned the app. (Bloomberg Linea, 526 words)
Stat of the week
Improving financial inclusion is a major goal for fintechs across the continent, though there’s still massive variation by country.
In light of Chivo’s slippage and recent data showing Mexican fintechs’ failure to boost inclusion, I’ve decided to analyse crypto adoption per country alongside the percent of people with a bank account or financial product.
Fintech inclusion varies drastically amongst LATAM’s largest economics, with Brazil nearly twice as inclusive as Mexico, LATAM’s second-largest economy. Yet crypto adoption is largely similar across all geographies, with the noted spike in Argentina.
While one of DeFi’s missions is to increase inclusion by democratising market access to financial products, there seems to be little relationship between inclusion and crypto adoption.
Source: Statista; Americas Market Intelligence
Taking this further, I’ve calculated a crypto intensity ratio. I’ve divided crypto adoption (yellow line above) by financial inclusion (red bar) and multiplied by 100, spitting the results out on the chart below. The metric tells you how heavily the banked population relies on cryptocurrencies.
Source: Technopoly analysis
The chart shows us that financial stability and crypto intensity have a roughly inverse correlation; the less stable the local currency, the greater the crypto intensity.
Argentina’s intensity is the highest, and DeFi believers may look to Argentina as a beacon of hope. However, their underlying intensity belies deeper economic tension. Cryptocurrency adoption in Argentina is largely a function of longstanding inflationary concerns coupled with restricted access to foreign currencies, like the dollar. Their crypto intensity is more a fleeing from poor economic stability rather than a flocking towards crypto upsides.
Meanwhile, Brazil — though an economic powerhouse by size — lags behind in last place, a sign of greater currency stability and economic reliability. Brazilians certainly do not lack market access or knowledgeability about crypto, and in 2021 they moved around more crypto than any other country.
For the culture
Time Magazine has released their list of the 100 most influential people of 2022, and Latin leaders claim their shine. The list includes Chilean leftist President Gabriel Boric, Nubank CEO David Velez (whose bio is written by his compatriot, President Ivan Duque), Colombian abortion activists Cristina Villarreal Velasquez and Ana Cristina Gonzalez Velez, as well as Brazilian indigenous rights activist Sonia Guajajara. (Bloomberg Linea, 556 words - Spanish)
Terra’s stablecoin implosion has a human cost, especially in developing markets. Many flocked to crypto assets in countries with volatile fiduciary currencies, like Argentina, and sometimes stored their savings in supposedly safe stablecoins. Now, those who lost it all are telling their stories. (Rest of World, 1,603 words)