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Access LAVCA’s Latest VC/Tech Report

Thank you to the 900+ participants who joined the recent LatAm VC/Tech: Update On Data & Trends virtual discussion with SVB on May 5, and to our esteemed panelists: Francisco Alvarez-Demalde, Riverwood Capital‘s Co-Founder and Managing Partner; Julio Vasconcellos, Founding Partner of Canary and Managing Partner of Atlantico; Andy Tsao, SVB‘s Managing Director; Susana Garcia-Robles, LAVCA's Executive Advisor.  Listen to the full recording here.

Facilitated by Julia Figueiredo, SVB's Director of LatAm, the meeting kicked off with data insights from LAVCA's latest annual VC/tech report.

NOW AVAILABLE FOR DOWNLOAD: LAVCA's Annual VC/Tech Report: Inside The 4th Consecutive Peak Year cites 2019 VC investment data, top deals, highlighted transactions, sector and country trends, most active investors, and more.

2019 proved to be a record breaking year for Latin America venture capital on many fronts:
• VC FUNDRAISING (in dollar terms) totaled US$1.08b in partial and final fund closes
• VC INVESTMENT (in dollar terms) for the region rose to US$4.6b
• MEGA-ROUNDS18 disclosed transactions over US$50m; 11 transactions over US$100m
• SEED/INCUBATOR transactions reported a record year in Argentina, Colombia, and Mexico

Venture investment in Latin America has more than doubled every year from 2016 to 2019, tracing a steady growth trajectory that will certainly be interrupted by the 2020 COVID-19 global health pandemic in ways foreseen and unforeseen.

The resilience and resourcefulness of Latin America’s entrepreneurs will be tested in the year ahead as the need for cost-effective solutions to highly complex problems comes into sharper view.

DOWNLOAD LAVCA’s Annual VC/Tech Report.

DEALS

> #DEBT Colombian credit provider platform Zinobe secured a credit line for up to US$30m from Monachil Capital Partners to expand its product offering for underserved consumers and small businesses in Colombia.

> Canary, Atlantico, and Big Bets led a R$7.5m round in Brazilian event planning platform Festalab. Angel investors that participated in the round included Renato Freitas (co-Founder of 99), André Narciso (CEO of Quero Educação), and Bruno Nardon (former President of Rappi in Brazil).

> Fen Ventures, Magma Partners, and Fondo Alerce invested US$1.3m in Chile-based proptech Houm. The startup will use the investment to raise brand awareness and expand its marketplace within Chile.

> Canary led a R$3.2m round in Clarke Energia, a Brazilian startup managing electricity bills for SMEs, with participation from Fundação Estudar Alumni Partners.

• CEO Pedro Rio shares:  "Entrepreneurs open their doors to talk with us because of the potential savings. But the facilitation we provide on the bureaucracy front is definitely a significant factor when hiring us.”

> LAR.app, a Brazilian proptech providing financial management for condominiums, raised a US$1m follow-on from existing investors. Global Founders Capital led a R$4m round in 2019.

• CEO Rafael Lauand (former Head of M&A at iFood) talks about focusing on product development over scalability: “When considering our expansion plans, we are looking at a huge and pulverized market (from a managers to suppliers perspective), so we are strongly inclined to expand product-wise before expanding to other Latin American countries. Besides that, we see a blue ocean in the Brazilian condominium services.”

> MercadoLibre made an undisclosed investment in Intuitivo, an Argentine software provider applying computer sensors to point of sale transactions. MercadoPago will support Intuitivo in incorporating cashless payments in vending machines in Argentina.

> Acumen LatAm Capital Partners led an undisclosed follow-on investment in Crehana, a Peruvian edtech, with participation from Hochschild Group’s #CVC arm, Edventures, and follow-on from DILA Capital and Mountain Nazca.

• Crehana and Colombian edtech Platzi are both recording a 40% increase in demand for their online content in Mexico due to the current pandemic.

> #ANGEL BR Angels made a R$1.5m investment in MindMiners, a Brazilian market intelligence platform.

> VC investment in Latin American startups has quadrupled since 2016 to a record US$4.6b in 2019, according to LAVCA data.

FUNDS

> DOMO Invest held a first close for Domo Enterprise, a dedicated fund to invest in B2B startups in Brazil. The fund reached 30% of its R$150m-R$200m target. DOMO Invest General Partner Cesar Pinela shares:

"Despite the terrible pandemic we are facing, dealflow remains strong and entrepreneurs are still willing to take risks to follow their dreams. The team is now more important than ever, and startups with a resilient group of founders will have higher probability of success, be it in consumer or enterprise focused solutions."

> Mindset Ventures held a US$33m first close for its third fund, which has a target of US$50m. Daniel Ibri shares that the fund was raised exclusively from Brazilian investors and will be focused on B2B early-stage startups in the US and Israeli markets.

STARTUP SPOTLIGHT: WILDLIFE STUDIOS

Wildlife Studios is a Brazilian mobile game developer with over two billion downloads and a global reach. Founded in 2011, Wildlife (formerly TFG) raised a US$60m round in 2019 led by Benchmark at a reported valuation of 🦄 over US$1b, with participation from Bessemer Venture Partners and notable angels.

LAVCA interviewed Wildlife Studios co-founders Arthur Lazarte (Co-CEO) and Mike Mac-Vicar (CTO) about the cutting edge of gaming, why they’ve raised so little capital, and life since C19. Read it here.

What has changed since the C19 crisis began?
Our top priority is the health and security of all the collaborators. As we are a company with 600 collaborators, and not used to working from home, it was a challenge at the beginning. But we were able to overcome it and maintain the same workflow.

The mobile gaming market has been growing since the quarantine. A recent study indicated that gaming is showing the biggest growth within the entertainment area, and Wildlife is on the same path. We are still hiring people. Our goal is to hire 300 more people through the end of the year; it’s just that now we’re doing the selection and onboarding process entirely remote.

In terms of direct response to the crisis, we partnered with Loft on a campaign called Tech for Good in Brazil, where we invited all the startups in the tech segment to collaborate with the biggest hospital in Latin America (Hospital das Clínicas). We have raised funds for more than three million masks to support the hospital. Read full interview. 

STARTUP M&A

> Following a US$140m round from SoftBank, Gávea Investimentos, and Constellation Asset Management in late 2019, Brazilian retail e-commerce development platform VTEX acquired dLieve, a Brazilian logistics and monitoring platform, for an undisclosed amount. VTEX previously received funding from Riverwood and Naspers.

> Peruvian urban delivery platform Chazki acquired Chilean logistics startup TodoVa to expand in the country. TodoVa’s CEO Carla Rodriguez will become Chazki’s Country Manager for Chile.

> Brazilian influencer marketing platform Squid acquired US-based online community manager Duopana for an undisclosed amount.

STARTUPS

> Cornershop launched in the US with operations in Dallas and Miami. The grocery delivery service can now be found in Chile, Mexico, Peru, Colombia, Brazil, Canada, and the US.

> QuintoAndar launched the Neighborhood Classifieds Program, a free platform for Brazilian self-employed professionals and small businesses to share their offerings during the current crisis.

> Colombian logistics platform Liftit launched Flota Logistica, a free logistics marketplace to connect businesses with independent freight contractors impacted by the crisis. 

> Brazilian edtech Sanar launched a free application to assist health professionals with patient and PPE management in Brazil. Sanar just announced a US$11m Series B led by Valor Capital and DNA Capital.

> Petlove is lending its infrastructure to Brazilian veterinarian education platform Vet Smart to enable digital commerce for veterinarians and small pet shops affected by the crisis.

> FT interviewed Pierpaolo Barbieri of Ualá in Coronavirus boosts digital banking as Argentines lose fondness for cash. Ualá has issued almost 2m debit cards to date.

• Barbieri: “Our main competitor remains cash. 75% of transactions in Argentina are still made in cash.”

> Endeavor Colombia interviewed Merqueo and Domicilios’ Founder Miguel McAllister on his view around the current crisis and the future of e-commerce.

> Gympass CEO Leandro Caldeira shares the digital overhaul undertaken by the company to adapt to the current C19 lockdown.

> IDB Lab reviewed initiatives by Cabify and others to adapt to the C19 pandemic in Argentina.

> STARTUPS: How are you responding to the coronavirus pandemic? Share your updates by filling out this form.

> Check out LAVCA’s directory of 331 Latin American startups with at least US$1m in VC funding, verified by LAVCA (as of end-2018), our Unicorn Leaderboard, and our Inaugural Survey of Latin American Startups.

🆕 GLOBAL TECH NEWSLETTER

> SIGN UP for a new bi-weekly newsletter covering cross-border tech transactions and innovations with cross-border applications in a rapidly changing world. Geographies will include Latin America, Africa, India, Southeast Asia, the Middle East, and other emerging VC markets. Sign up here.

NEWS

> Bloomberg, Valor, and Crunchbase News covered LAVCA’s new report on 2019 VC/tech investment:

Bloomberg: After Record Haul, Latin American Startups Adapt to Stay Afloat: “Across the region, investors are telling their companies to take quick action to preserve funds. Right now cash is king. The question now is really how quickly companies will pivot and respond.”

Valor: Digital demand helps maintain interest in startups: "Altogether, 440 startups were financed in 2019, 23 less than in 2018. As a result, the average amount contributed more than doubled, from US$4.3m to US$10.5m."

Crunchbase News: Report: VC Funding In Latin America More Than Doubled To A Record $4.6B In 2019:
"Co-investments between global and Latin American investors are on the rise. Of the total US$4.6b VC dollars, 70% was deployed via a co-investment in which there was more than one investor involved—regardless of where they were based. 37% of the total US$4.6b VC dollars were deployed via a co-investment involving at least one Latin American investor and one global investor."

> MercadoLibre is moving forward with its R$4b commitment to invest in Brazil in 2020 to accelerate recruitment efforts, open a fourth distribution center and expand MercadoPago.

• MercadoLibre also expanded its operations into the food segment in Brazil.

> Banco Inter launched an interest-free R$250m credit line for Brazilian small businesses to prepay receivables for credit card sales, and another R$300m in partnership with brMalls to offer credit to small retailers.

> Itaú Unibanco launched Todos pela Saúde, a R$1b initiative to finance C19 relief efforts in Brazil, including testing, promotion of face masks, and training of healthcare professionals.

> #POLICY Brazil’s Conselho Monetário Nacional is expected to approve the country’s first set of open banking regulations. The approval would make Brazil the second country in the region with this type of regulations after Mexico, which approved Ley del Fintech in 2018.

> #CHANGETHERATIO Jose Ortiz Masllorens from Mercado Libre shares his view on the importance of promoting diversity in the workplace:

“Cada persona es un mundo; todos fuimos marcados por lo vivido a lo largo de nuestras vidas, y esas vivencias influyen hoy en nuestra manera de pensar y de actuar. Un equipo diverso trae distintos puntos de vista a la mesa y enriquece el producto final. La gran mayoría de la empresas (salvo algunas protegidas por regulaciones) necesitan evolucionar rápidamente para subsistir en el tiempo. Si tenemos un equipo uniforme, probablemente nos perdamos gran parte de lo que pasa alrededor nuestro y seamos historia rápidamente.”

> Bloomberg reviews Maria Antonieta Alva’s rising popularity among Peruvians in Peru’s 35-Year-Old Finance Minister is Suddenly a Rock Star.

> NYTimes: How Housebound Brazil Popstars and CEOs Caught Streaming Mania and Dominated YouTube: "With much of the world stuck at home, YouTube's top 10 most-watched concerts in real time all took place in April - and seven of those were by Brazilian artists."

> Americas Quarterly looks at LatAm’s US$100b remittances industry in Latin America's Changing Remittance Landscape:

"Remittances are a US$100b industry in Latin America, with money traditionally coming to the region from the United States and Europe. But the unprecedented level of intraregional migration is fostering completely new corridors, with flows now originating from countries like Costa Rica and Chile."

INVESTORS

> READ C19 guidance from investors including ALLVP, Astella, e.Bricks, KaszeK, Microsoft, and SoftBank at https://lavca.org/covid-19/.

> SoftBank discusses the “Alibaba effect” in LatAm and shares its updated investment outlook.

> ALLVP shares the fund’s updated sector focus, adapting to new realities.

• ALLVP also launched DeckCheckr, a platform for founders to submit their pitch deck to receive informal feedback from investors within 48 hours.

> AC Ventures shares its view on challenges facing founders and investors.

> DILA Capital shares initiatives implemented by its portfolio companies to address the crisis.

> Forbes interviews Jaime Zunzunegui of Mountain Nazca in The Mexican firm that injects almost US$100m to startups. El Economista also interviews Zunzunegui and Managing Partner Hector Sepulveda on the fund’s current strategy in Mexico.

> Greg Mitchell of Angel Ventures shares a framework for assessing the C19 impact on their portfolio:

“Startups that are growing fast under the new context shouldn’t cut costs. Startups with a solid cash position and recurring clients should find a way to get through the next six months. SaaS platforms for industries that have been impacted significantly should find a way to help their clients transform.”

> FT: Microsoft’s Satya Nadella: crisis requires coordinated digital response:

“Too often we celebrate the ideal of a maverick working alone in a garage solving all our hard problems. We do need those mavericks, but we also need more coordinated combinations of government and industry that respond and innovate. That’s true for this pandemic and it is true for global warming, homelessness and other pressing concerns.”

> Om Malik: The inevitable has happened: "The startup ecosystem might contract. But overall, this is a big moment for technology, and it’s only going to get bigger."

> #CRYPTO Andreessen Horowitz raised US$515m for Crypto Fund II. The fund will focus on investments in next generation payments, decentralized finance, and blockchain-based platforms.

> INVESTORS: How are you responding to the coronavirus epidemic? How are you advising your portfolio companies? Fill out this quick form.

> Renato Valente, former head of Wayra Brasil, joins Iporanga Investimentos as a General Partner.

“I have known Iporanga’s partners for quite some time. We are friends and always had a similar work philosophy. The end of an amazing cycle at Telefonica and Wayra ended up aligning with the start of a new Iporanga fund, where we’ll be helping extraordinary founders build great companies.”

> New Ventures’ Foro Latinoamericano de Inversión de Impacto will be hosted virtually from May 25 to May 29. Additional details and tickets can be found on FLLI’s website.

> BNDESPar, the investment arm of BNDES, will invest up to R$4b in funds providing credit to small businesses in Brazil. Applications close June 3.

> Petrobras and Sabrae launched the second edition of Petrobras Program for Innovation, a R$10m initiative for projects focused on digital technology, robotics, and water treatment technologies. Apply by June 28.

> Omie, a Brazilian cloud management platform for SMEs, is hiring a CRO. Details here. Omie is backed by Riverwood, Astella, and others.

> Investors from MAYA Capital, Canary, Astella, Innova Capital, Positive Ventures, Wayra, Google, 500 Startups, and others are offering free mentoring for female entrepreneurs through Female Force LATAM.

The LatAm Venture Bulletin is the VC/tech newsletter and content platform of
The Association for Private Capital Investment in Latin America.

Have news we should include? Please email news@lavca.org.