Bloomberg Línea — Latin American startups raised $436 million in April, the second-best monthly total of 2023. This represents a 78% increase compared to March, but a 48% decrease year-on-year, according to data from the Sling Hub platform.
There were 61 investment rounds in the region in April, one less than in March. Nevertheless, it is the lowest monthly number of transactions since May 2020, after February of this year.
Brazil saw investments plummet 72% in April compared to the same month last year. The volume of investments in fintechs dropped 31% compared to April 2022. However, proptechs and insurtechs, which occupy the second and third places in terms of the highest funding garnered, saw investments, in Habi ($100 million), and Cilia Tecnologia ($21.7 million).
For the first quarter of 2023, the Latin American Private Equity and Venture Capital Association (LAVCA) saw a preliminary $800 million invested in Latin American startups, a 25% decrease compared to the last quarter of 2022.
LAVCA data show that venture debt (a debt fundraising alternative) saw the greatest appetite from dollar investors, representing more than half (51%) of the capital invested in seven transactions in the quarter, totaling $395 million. Debt takers also received the largest checks in the quarter, with funding for fintechs Marco Financial ($200 million) and Clara ($90 million), according to LAVCA.
These are some of the Latin American startups that received investments this week:
R2, a Latin American fintech for lending infrastructure, closed a $100 million loan with global investment manager Community Investment Management (CIM) specific for R2′s loan portfolio. This type of credit financing arrangement is asset-backed by R2′s loan portfolio in Mexico and it will be used to grow R2′s own portfolio.
It is different than a venture debt facility in that money can be for many uses. “We were able to get this funding because we have a differentiator in terms of how we underwrite loans. We work with technology platforms and we are leveraging the data that platforms have for underwriting, so we are empowering our partners to grant credit to merchants,” said R2′s CEO and co-founder Roger Larach in an interview with Bloomberg Línea.
“This underwriting is done with data that the platforms have. This is data that not many players have and that is why CIM was very excited to work with us,” Larach said.
R2 provides services for tech platforms such as Frubana, Rappi, and Clip.
Amid a tough environment for credit given the high interest rates, R2 did not disclose the terms of the credit facility. The startup has already originated over $20 million in revenue and payment-based financing to more than 6,000 small and medium-sized enterprises in Mexico, Colombia, Chile, and Ecuador.
The new $100 million vehicle follows R2′s $15 million Series A led by Gradient Ventures, Google’s AI-focused investment fund, with participation from Adam and Rebekah Neumann’s family office, WeWork.
The fintech recently hired former Capital One VP Nimit Sharma as Chief Risk Officer, and Guillermo Bravo, former Head of B2B Payments Credit Systems at Amazon as VP of Product.
Bump, a startup focused on connecting Brazilian users to a peer-to-peer mobile network, has raised $2 million in pre-seed funding. The round was led by Pillar VC and included participation from The Melon, a firm specialized in web3.
Bump launched an Android app in March 2023 at the Universidade Federal do Rio de Janeiro to expand Internet access on public university campuses. The company allows users to connect to the Internet without the need to log in to public networks by sharing Internet from other users. Users who share their mobile Internet are expected to receive cryptocurrencies as a reward.
After three years of operations, Brazilian digital logistics operator CargOn received investments of more than five million reais ($1.01 million) from TechInvestor, a fund of Grupo Viasoft, and the crowdfunding platform EqSeed.
In a previous investment round, Viasoft Group already held 15.66% of the startup. Now, TechInvestor has acquired another 13.43%, previously held by angel investors, completing the exit movement.
CargOn’s valuation in the operation was 47.5 million reais ($9.61 million).
RX Ventures, Lojas Renner’s corporate venture capital fund, signed its first investment contract in a startup outside Brazil with this round, a minority investment was made in Radar, a New York-based retail startup that develops solutions for inventory control, location, and real-time tracking of product handling and movement in points of sale, using computer vision and radio frequency identification.
Renner’s investment arm was the only fund in Latin America to participate in the round led by US-based Align Ventures. American Eagle Outfitters, Y Combinator and Founders Fund, who were already investors, also invested in this round, which has raised more than $50 million since it began operating in 2013.