#016: What happened with LatAm VC funding in July?
Fintech is blazing, SPACs are back, and Mercado Libre looks lucro
Olá technopolists,
Public markets are smiling on LatAm darlings, with Brazil’s first SPAC coming to fruition and MercadoLibre’s quarterly results beating analyst expectations. Fintech — and especially Buy now, Pay later — continues storming ahead with funding and M&A.
Plus, July’s VC funding numbers are in — and they’re… well, they’re just fine.
What’s hot
🤑 Fintech FTW. Fintech fundraises completely dominated July’s venture funding oin the region, and August’s fintech activity is off to a roaring start. Fintechs accounted for two-thirds of July’s VC money – more than doubling in size over the previous month – while the month’s new unicorn on the block was Mexican lender Stori. This past week, Argentinian fintech infrastructure startup Geopagos raised $35mn, while Kontempo, a Mexican B2B Buy now, Pay later (BNPL) startup, bagged $31.5mn in fresh funding. Meanwhile, BNPL players Paystand and Yaydoo merged to become a new unicorn, too. (Sling Hub)
🦄 SPACs are back. Brazilian data platform Semantix went public via a special purpose acquisition company (SPAC) last Thursday, making history as Brazil’s first completed SPAC. The SPAC, originally created by Brazil’s Alpha Capital, minted Semantix as LatAm’s latest unicorn. The acquisition was a long birth, requiring 6 months of selection and 9 months of negotiations before completion, and arrives as a relative rarity since most late-stage scaleups are choosing to delay IPOs until the correction evens out. (Bloomberg Linea)
🇦🇷 Mercado lucro. MercadoLibre beat analyst expectations with their Q2 earnings release, growing revenue +56% year-on-year to $2.6bn while improving gross margins to 49% against analyst expectations of 45%. Mercado Pago, the group’s fintech arm, posted especially strong results, doubling in size to $1.2bn and accounting for nearly half of ML’s total net revenue. The e-commerce giant’s lending portfolio grew from $2.4bn to $2.7bn with no signs of increased distress despite the macroeconomic downturn, which will come as welcome news to Goldman Sachs, who recently lent ML $233mn to expand their credit portfolio in Brazil and Mexico. (Bloomberg Linea)
What’s not
🇨🇴 Colombian collections. Colombia’s Finance Minister, José Antonio Ocampo, is looking to levy taxes on large multinationals like Netflix and Spotify as part of the new administration’s tax reforms. Today, foreign entities like streaming platforms pay no taxes in Colombia, but the new plans would consider companies with high revenues as Colombian-domiciled businesses subject to localised tax policies. The new tax plans are one portion of a multilateral tax reform platform, which could include far-reaching changes like wealth taxes on the rich, expanded “green” taxes on high-polluting corporations, and tightened regulations for free-trade zones - perhaps hot for Colombian society, but not for big business. (Bloomberg Linea)
🇪🇸 Conquistad-or… maybe not. Madrid-based fintech Bnext has announced the end of its Mexican operations after two years in operation in Mexico. The Spanish digital money provider entered Mexico in 2020 with ambitions of “revolutionising” Mexican banking, but quickly hit regulatory hurdles as their logistical partners were denied financial authorisations and ran afoul of local laws. Bnext’s retreat forces the closure of 230,000 customer accounts. (Latin America News)
Stat of the week
LatAm’s VC funding in July bounced back slightly from June’s nadir, but it’s still a far cry from 2021’s froth. Total funding in July hit $845mn, up +16% from June’s near-historic low, but still down -46% year-on-year.
That also means that VCs are deploying $1bn per month on average this year. While that’s a significant downgrade from last year ($1.5bn per month), it’s nearly 4x what we saw in 2020 ($270mn). If this is the new normal, then many will be celebrating.
Smart links
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Copa America Femenina: Brazil beat Colombia to win tournament for the eighth time
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