What does LatAm think about AI?
#054: Plus, Nubank’s explosive Q1 results and Walmart’s fintech strategy.
Hola technopolists,
All anyone wants to talk about is AI.
If you’re remotely in touch with Tech Twitter, then by now you’ve been inundated by threads on 101 ways you can make passive income with ChatGPT or The 23 jobs you can completely automate with ChatGPT.
These technological changes confront us with timeless truths. Read behind the headlines of these Twitter threads to find deeply human needs: we desire wealth with less effort, and want to use new tools to get there.
Yet we distrust power that we don’t understand, especially when that power has no face. The desire for gain is tempered by fear of the unknown.
These varying viewpoints vacillate between relentless techno-optimism and apocalyptic terror of human obsolescence - with polls in different countries revealing geographical extremes.
Our stat this week looks at how Latin America feels toward the future of AI, and what it says about the regions position in the world.
What’s Hot
🏦 Nubank’s Q1 results smashed analyst expectations, fuelling a weeks-long hype train. Revenues surged +87% YoY to $1.6bn with modest customer growth and a significant step-up in average revenue per user. What’s most eye-catching is profitability: net income hit $145mn – compare that to analyst expectations of $66mn and Q4-22’s results of $58mn. The neobank has now reached 46% of Brazilian adults, with significant headroom abroad (3% in Mexico and 2% in Colombia). Just after the group celebrated hitting 80mn customers globally, Nu Mexico celebrated reaching 500k customers for its savings account, Cuenta Nu, in its first week since launch. Shares were up 8% in after-hours trading. (Brazil Journal)
💸 Walmart Mexico unveiled more of its fintech strategy with details about its expansion plans for its digital wallet, Cashi. The ecommerce giant recently purchased Trafalgar, a regulated IFPE, and plans to combine it with Cashi to offer transfers, remittances, and withdrawals while keeping options open for future credit products. While execs want to be “the best financial services company in Mexico”, analysts say that its strategy — pursuing the untapped pool of underbanked consumers — is plagued with pitfalls by serving such a riskier demographic. Perhaps they can learn from Nu Mexico’s early experience. (Reuters)
👋🏽 Brazilian early-stage fund Bossanova Investimentos is finding exits everywhere despite a frozen capital market. The fund — Brazil’s most active investors by deal count — achieved 7 exits in 60 days in Q1, making up more than one-third of total Brazilian M&A transactions in the quarter. Its exits include Medei, Becon, SS Telemática, DeuBom and CleanCloud — not exactly household names, but understandable given the strategic nature of the acquisitions at small sizes. While M&A markets have slowed down globally, comparable data from Carta in the US shows that acquisition activity for businesses valued <$10mn has picked up in response to the funding cooling. (Startupi)
What’s Not
📉 SoftBank wrote down $4bn in losses for its Latin American portfolio at the end of its fiscal year in March after readjusting to ‘fair market valuations’. SoftBank did not quantify how much each asset depreciated, but its portfolio is heavily weighted toward late-stage unicorns that were hardest hit in the last year’s correction, with investments in Rappi, Loft, Kavak, QuintoAndar, Mercado Bitcoin, Bitso, MadeiraMadeira, Merama, Olist, Creditas, and Gympass, among others. SoftBank has committed nearly all $8bn from its LatAm funds, though it claims it will still invest in LatAm by tapping its global Vision Fund. The LatAm losses make up 13% of the fund’s record-setting $32bn in global losses. (Neofeed)
⚖️ Brazil’s Supreme Court ordered an investigation into Google and Telegram execs for their “abusive campaign[s]” against an internet disinformation bill. The bill, dubbed the “Fake News Law” and currently awaiting a congressional vote, aims to make internet companies and social media sites responsible for screening user posts for disinformation. In response, both platforms have published critical posts about the law — posts that have since been forcibly taken down by legal order. Telegram has previously stated that, if passed, the legislation would make Brazilian operations impossible. Personalities matter: the Justice spearheading the bill is notorious for his past confrontation with former President Bolsonaro over the latter’s alleged attempts to undermine the electoral process. (Reuters)
Stat of the Week
Back to the earlier thread about AI sentiments: what are different countries feeling about the rise of AI?
Latin America is one of the most AI-positive regions in the world, and the region’s optimism follows a global trend: richer, more Westernised nations trend towards fear while developing countries trend towards optimism.
We don’t have definitive data explaining the trend, but according to the original poll, the wealth-pessimism trend holds across a number of similarly posed questions.
That leaves us with little more than speculation, but we can’t resist venturing a few hypotheses:
Wealthier nations have a higher percentage of workers in ‘tertiary’ services jobs that are at greater risk of disruption.
Wealthier nations generate the greatest R&D advancements in AI, and as a result, public discourse about AI (and its potential hazards) is more widely understood.
As incumbents, wealthier Western nations are more fearful about the future; as they have more power and status with lower growth potential, they have the most to lose due to changing circumstances.
The Rundown
🇧🇷 Lending from Brazilian private institutions and fintechs face growing credit stress after growing significantly in the second half of 2022, mostly in high-risk segments →
💳 Jeeves, the corporate expense platform often called LatAm’s Brex, is making a big Brazilian push while focusing on margins →
🔬 How Uber used a $50mn investment in Brazil as a testing ground for global innovation →
🥑 Cornershop, Uber’s grocery delivery subsidiary, is laying off of 11% of its workforce →
🇪🇨 New data shows that 3 in 10 bank account-holding Ecuadorians have purchased crypto — 7x the European average →
🔗 Over 1.6mn Brazilians transacted in crypto in March, breaking the previous record set in 2019 →
🚨 Brazil is the fourth-largest target of cyber attacks in the world, only behind the US, UK, and Spain →
🚘 Creditas is teaming up with Mercado Libre to offer auto loans in Mexico →
🇨🇴 Colombia’s commerce chamber will begin an investigation into ChatGPT’s data and user privacy protections →
🇨🇱 Opinion: Is Chile the leading fintech economy in LatAm? →
🦫 A famous influencer’s capybara was confiscated by Brazilian authorities; a movement followed →
Deals (May 8-15, 2023)
M&A
🇧🇷 NSTech, a logistics tech platform, closed the purchase of 80% of 🇧🇷 Trizy, a logistics and freight truck driver support application, for an undisclosed sum.
Fundraises
🇧🇷 JL Health, a healthtech for aesthetic equipment, raised a $46mn round from XP Asset.
🇲🇽 Eva, a healthtech for early breast cancer risk assessments, raised a $5.4mn round from undisclosed investors.
🇧🇷 MeuChapa, a gig work marketplace for drivers and logistics professionals, raised a $1.2mn seed led by GVAngels with participation from Venture Hub and Tomkins Square Ventures.
🇧🇷 Covalenty, a B2B supplier marketplace for SME pharmacies, raised a $1.1mn seed led by Iporanga Ventures with participation from DOMO Invest.
Debt
🇧🇷 Ease Labs Pharma, a medical cannabis company, raised a $2.5mn credit line from Itaú BBA.
VC Funds
🇧🇷 LightHouse Investimentos launched LH Tech Ventures, a $20mn seed-stage fund targeting Brazilian startups.
🇧🇷 Afya, an edtech platform focused on health, launched its CVC with an investment in Lean Saúde, a corporate health data platform.
Simon Rodrigues is a consultant, writer, and speaker specialising in strategy and storytelling for early-stage startups. Find more information about his services here.