TLDR

📣 LAVCA Research | Q3 2022 VC investment highlights

📣 M&A | Arco Educação acquires Isaac; Homie acquires Rent

📣 New rounds for Covalto, Franq, Traive, Pulpo, Reworth, Menta, Liv Up, HoyTrabajas

📣 News | Chilean Congress approves Ley Fintech; Foxconn doubles down in Mexico

LAVCA Research

Q3 2022 VC Investment Highlights

Key Highlights

In line with global trends, the adjustment in VC investment has extended beyond late-stage (Series C+) rounds. That said, quarterly VC totals still exceed pre-pandemic levels and 2022 year-to-date has already been a record for seed investment, with USD792m deployed in seed-stage startups between Q1-Q3 2022.

• USD420m in early-stage (Series A-B) investment in Q3 2022, compared to 1.4b in Q2 2022; and USD170m in seed investment in Q3 2022, compared to USD286m in Q2 2022. (For context, quarterly averages for early-stage and seed investment in 2019 were ~USD300m and USD55m, respectively.)

Late-stage startups increasingly opted for credit lines from traditional investment banks as an alternative source of financing. These credit lines account for an additional USD1.3b in financing that are not included in LAVCA’s aggregate statistics.*

* LAVCA’s methodology only includes investments from traditional VCs managing third-party capital through a blind-pool vehicle.

A Case for Cautious Optimism

Deals

▸ DEBT | Mexican fintech Covalto (formerly Credijusto) secured a USD80m credit line extension from Fideicomisos Instituidos en Relación con la Agricultura (FIRA), bringing the debt facility to a total of up to USD180m. DFC also granted a USD10m unsecured loan to the startup.

• Covalto just merged with LIV Capital Acquisition Corp II, a SPAC listed in the NASDAQ by LIV Capital, at a ~USD547m valuation. 

▸ Quona Capital led a USD12m round for Franq, a Brazilian personal finance marketplace, with participation from Globo Ventures and Broadhaven Capital, and follow-on from Valor Capital Group. 

• Valor Capital Group led a ~USD4m Series A in July 2021.

▸ AGTECH | BASF Venture Capital, the CVC arm of German chemical conglomerate BASF, led a USD10m round for Traive, a Brazilian lending platform for agricultural producers. 

• SP Ventures and Astella Investimentos led a USD17m Series A in November 2021; Minerva Foods invested USD3m in September 2021. 

▸ Nazca led a USD8m round for Pulpo, a Mexican fleet management platform, with participation from FEMSA Ventures, Swanlaab, México Ventures and Cracks Funds.

▸ Reworth, a Mexican cashback and customer engagement platform for financial institutions, raised a USD6.6m seed extension with participation from JAM Fund and Actyus, and angels Daniel Vogel (Bitso), Alfonso de los Rios (Nowports) and Ricardo Weder (Jüsto).

• ALLVP led the USD2.8m seed round in October 2021.

▸ Base10 Partners led a USD6m seed round for Menta, an Argentine white label platform for payment collections, with follow-on from PearVC, MatterScale Ventures and Gilgamesh. 

• Menta just raised a USD1.2m seed round in September. 

▸ Brazilian beef exporter Minerva Foods invested ~USD5.2m in the Series D+ for Liv Up, a Brazilian subscription-based meal kit delivery service.

• Globo Ventures led a ~USD10m Series D in October 2021.

▸ HoyTrabajas, a Colombian recruiting platform for blue collar workers without a professional degree, raised a USD5m seed round from Newtype Ventures, Rebel Fund, Starling Ventures, SCM Advisors, AngelHub, New Ventures & Fundacion Botnar, Flucas Ventures, Kube Ventures, Magic Fund, Share Capital, Dragon Capital, Centauri Capital, K20 Fund and Solid Ventures.

• Angels participating included Arash Ferdowsi (Dropbox), Daniel Bilbao (Truora) and Alex Galvez (99 Startups).
• HoyTrabajas raised a USD3.5m round in May 2022.

▸ Mexican short-term rentals platform Kukun raised USD4.5m from FJ Labs, Antelo Capital, Bridge Partners and View Capital. 

▸ QED Investors invested ~USD3.2m in Vixtra, a Brazilian working capital financing platform focused on imports for SMEs.

• Valor Capital Group led a ~USD7m round in 2021.

▸ DOMO Invest led a ~USD1.6m seed round for Faster, a Brazilian content marketing platform for social media advertising. 

• Faster’s clients include Ambev, iFood, L’Oreal, Nubank and VTEX.

▸ DEBT | Teclogi, a Colombian marketplace connecting cargo with independent truck drivers, secured USD1.5m in venture debt from Pomona Impact. 

▸ RESALE | Transa Tu Auto, a Chilean auto resale financing platform, raised a  USD1.2m round from angels including Santiago Lira (Buk), Hector y Diego Gómez (Grupo Sable) and Sebastian Gilbert (Dadneo).

▸ DOMO Invest led a ~USD900k round for Car Big Data, a Brazilian vehicle monitoring and theft recovery platform. 

▸ GAMING | Airborne Ventures and OTF Capital led a ~USD800k round for Galaxies, a Brazilian recruiting platform for developers in the gaming industry, with participation from GVAngels.

▸ AleFi, a US-based collaborative investing platform for retail investors in the US and Latin America, raised a USD600k seed round from RevTech Labs. 

• AleFi was founded by the Brazilian Daniel Brener and the Salvadorean Mike Roberts.

▸ CVC | LinkedAI, a Colombian data training platform for machine learning models, raised USD500k from Globant Ventures and others.

▸ MOBILITY | Ualabee, an Argentine urban mobility platform,  raised  USD100k from IDB Lab and Fondo Córdoba Ciudad Inteligente, the investment fund from Argentina’s Cordoba municipality. 

▸ DRONES | Kamay Ventures invested in Aerialoop, an Ecuadorian drone delivery startup. 

▸ ANGEL | Anjos do Brasil led an undisclosed round for Prol Educa, a Brazilian scholarship platform for low-income students in the peripheries, with participation from GVAngels and Investe Favela.

Funds 

▸ BIOTECH | IDB Lab made a USD3m commitment to GridX Deep Tech II, Grid Exponential's second flagship fund to invest in biotech startups in Latin America. 

• GridX’s portfolio includes Puna Bio, Stämm Biotech and Tomorrow Foods.

▸ SoftBank announced a new set of executive appointments for the Latin America and Vision 2 funds. 

• SoftBank International CEO Alex Clavel will now head the investment teams for the US and Latin America. 

▸ Amazon launched Catalytic Capital, a USD150m fund to invest in VC funds and accelerators making direct investments into pre-seed and seed stage startups launched by Latino, Black, Indigenous, Women and LGBTQIA+ founders in the Americas.

▸ Explorer Latam VC launched a fund with a USD5m target to invest in early-stage startups in the northern region of Argentina.

▸ Lionel Messi launched his investment firm to invest in tech-enabled sports and media startups.

• The fund will be run out of San Francisco.

▸ LAVCA publishes an annual directory of VC/Tech members, with profiles on 75+ firms active in Latin America.

News 

▸ POLICY | The Chilean Congress approved Ley Fintech & Open Banking. President Gabriel Boric is expected to sign the bill into law in the coming days. 

• Ley Fintech expands the regulatory oversight of the Financial Markets Commission (CMF) which now includes newer business models based on open finance, crowdsourcing and alternative credit financing, as well as guidelines around consumers' legal ownership of their financial information. 

▸ CRYPTO | Nubank announced the launch of its own cryptocurrency in Brazil in 2023 to drive customer engagement and offer preferential discounts to token holders. 

• Nubank isn’t the only company to launch its own crypto: Mercado Libre  just launched MercadoCoin as part of its loyalty program. 

▸ CROSSBORDER | Foxconn, the world’s largest cellphone manufacturer,  acquired a majority stake in PCE Technology de Juarez, a Mexican consumer electronics manufacturer, for USD361m, reportedly to diversify its supply chain operations from mainland China. 

▸ CRYPTO | Binance will open an office in CDMX to oversee its operations in Mexico. 

• Binance just partnered with Miami-based embedded finance platform Inswitch to launch BinancePay for merchants in Latin America. Binance also appointed Adalberto Palma, former president of the Mexican Securities and Banking Commission (CNBV), to its global advisory board.

▸ Jorge Paulo Lemann of 3G Capital and Fundação Lemann and David Velez of VelezReyes+ and Nubank announced a strategic partnership to support seven education and leadership development initiatives in Brazil: Associação Nova Escola, Centro Lemann de Liderança para Equidade na Educação, Ensina Brasil, MegaEdu, Insper, Legisla Brasil and Vetor Brasil.

• David Velez will also join the board at Fundação Lemann.

The Future 

▸ MIT Technology Review: Technology that lets us “speak” to our dead relatives has arrived. Are we ready?

                 “Technology like this, which lets you “talk” to people who’ve died, has been a mainstay of science fiction for decades. It’s an idea that’s been peddled by charlatans and spiritualists for centuries. But now it’s becoming a reality—and an increasingly accessible one, thanks to advances in AI and voice technology [...] At the same time, the technology and the world its enabling are, unsurprisingly, imperfect, and the ethics of creating a virtual version of someone are complex, especially if that person hasn’t been able to provide consent.”

Global Tech

▸ SIGN UP for the Global Tech Brief. Edited by LAVCA Senior Advisor Julie Ruvolo, this bi-weekly newsletter covers tech activity in Asia, Latin America, Africa, CEE and the Middle East.

LAVCA is now part of GPCA, Global Private Capital Association, and will continue to operate as a parallel membership organization with its own dedicated team and board.