Big Firms Approach Latin American Startups for Acquisitions and Corporate VC

Two international software companies bought Peruvian and Brazilian startups Mandu and Everflow this week

For Leonardo Monte, leader of Sinqia's Corporate Venture Capital investment arm, there has been no retraction in the purchase of stakes in startups by the company. (Courtesy/Sinqia)
May 24, 2022 | 08:49 AM

Bloomberg Línea — With high-interest rates around the world, venture investment has retreated. But for large companies, the strategy of buying stakes in smaller startups does not seem to have slowed down at the same pace. M&A and Corporate Venture Capital have appeared as solutions for startups to capitalize during the crisis. Only this week, Pegasystems (PEGA) and Visma, software companies from the United States and Norway, went on a shopping spree for Latin American startups.

Data from the innovation platform Sling Hub show that Latin America had 26 M&As transactions in April. Pegasystems - a competitor of Salesforce and ServiceNow - announced on Monday that it had bought Everflow, a Brazilian software startup specializing in process mining, which will help the New York-listed company optimize processes. Everflow’s CEO, Kleber Stroeh, is now the vice president of product mining at Pegasystems.

In an interview with Bloomberg Línea, Mauricio Prado Silva, managing director of Pegasystems in Latin America, explained that companies use Pegasystems’ software to integrate processes with less dependence on third parties for programming (low-code).

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“We have a global acquisition process, we are always looking to see what is best and modern in the market to complement it intelligently and that fits well with our portfolio of solutions,” he said.

Visma, a Norwegian software company that had already been operating with Human Resources in Latin America since 2018, wants to consolidate in the region with the acquisition of the Peruvian startup Mandü. The Peruvian startup has developed software for talent management.

Visma has operations in Argentina, Peru, Chile, Colombia, and Mexico. With the purchase of Mandü, the company said it has reached more than 5,000 clients in Latin America.

Corporate Venture Capital

“The capital injections are not going to stop happening, but I believe they will be made with more finesse than what we have seen in recent years,” Leonardo Monte, head of Torq, Sinqia’s innovation hub, told Bloomberg Línea in an interview. Torq has had a corporate venture capital program since last year, through which it has invested in companies such as Celcoin, Data Rudder, and CashWay.

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According to Monte, the crises do not affect Sinqia’s core business, software licensing for the financial market. Therefore, he tells that on the corporate venture capital side there has been no downturn. “On the contrary, we have a demand within the company’s strategy to continue accelerating investments. Of course, it carries a certain risk, but it is different from venture capital, our goal is not the profitability of that asset, but we look at the strategy tied to our thesis.”

Monte says that Sinqia has available cash of about R$ 200 million for M&As and new investments. But the idea is not to be limited to this amount. “We understand that this cash can grow and we can have access to the totality. Today we have mapped more than 500 startups within our thesis,” he said.

Within the portfolio of investees, there are already 70 startups. “We collect synergies, and support for them to continue growing. We are partners with some of these companies to understand the market trends. And, on our side, we have much more than money. We give access to over 700 financial market customers of all sizes, the main players within this universe, the incumbent banks, pension entities, consortium administrators and the neobanks”.

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