Bloomberg Línea — A report from Movile (the owner of iFood) conducted by Brazilian innovation platform Distrito states that there were 4,200 venture capital deals in Brazil, Mexico, Colombia, and Argentina in the past five years, and 51% of them took place last year.
The majority took place in Brazil (61%), followed by Mexico (21%), Colombia (10%), and Argentina (8%). Seed, Series A, and Series B gathered most of the funding, while fintech, retail tech, and health tech were the top invested sectors in the region for the past five years.
Even at a time when CB Insights figures point to a slowdown in venture funding globally - down 23% from Q1 to Q2 (as of June 23) - Conexa Saúde, a Brazilian health tech, raised nearly $38 million in a Series C round this week, led by Goldman Sachs and with General Atlantic and Igah Ventures.
Funding is therefore still coming into the region. Association for Private Capital Investment in Latin America (LAVCA) partial figures state that Latin America has already surpassed $2 billion investment during the second quarter of 2022. In the first quarter, the region saw $2.8 billion in venture capital investment.
LAVCA says it will be more likely for the region to surpass the investment numbers of the prior quarter than the investment in the last quarter of 2021, which was $3.9 billion.
Will Poole, a managing partner at Capria Ventures, which invests in some Latin American agtechs, told Bloomberg Línea that Capria recently surveyed its global investment partners (fund managers) who collectively manage more than 600 startup investments, of which 45% are in Latin America, and just under half are actively fundraising now.
“Our Latin America managers report that fundraising velocity has slowed from a little to moderately for pre-seed and seed stage, which contrasts sharply with velocity for Series C and D fundraising, where 100% of managers expect that the closing time for growth capital rounds will extend by at least 3-6 months,” he said.
Comparing Capria’s managers from Latin America to those in Southeast Asia, India, and Africa, the firm says it sees no significant difference, as the venture capital slowdown or ‘funding winter’ is global.
“In Latin America, the first quarter of 2022 didn’t see a real slowdown when compared to the first quarter of 2021, and the fintech sector continued to shine,” he added.
Poole states that many managers in the Capria Network have recently raised funds and funds in abundance, so they are still making investments.
“Just taking a longer time, like everyone else. We advised founders at the beginning of March to get rounds closed and move into a cash preservation mode.”
The vast majority of founders across Latin America have done as Capria advised, according to Poole, so he says he is not worried about their ability to weather the correction and raise capital as and when the market warms up again.
“Venture fund managers took unprecedented amounts of capital commitments from LPs in 2021 - they still need to deploy it. The best founders will find plenty of investors, but the dynamics will be of a ‘buyer’s market’ rather than that of the ‘seller’s market’ of the past few years,” he said.
For Poole, the key issue is getting the price right. “Those prices are expected to correct 25-50% downward, to the benefit of early-growth and growth-stage investors.”
Following are the funding movements in startups and the venture capital ecosystem in the region this week:
Lever VC takes control of Brazilian plant-based startup
Founded by Bruno Fonseca in 2019, Brazilian startup of plant-based products The New Butchers is rebranding as The New, as it announces that US investor Lever VC investment of nearly $7.2 million, according to the Brazilian outlet Brazil Journal. The company has not confirmed the amount.
Lever VC took the majority share position in May 2022 and takes control shortly after the inauguration of the startup’s factory in the city of São Paulo. Now, André Carvalho is the new CEO of the brand. His last experience was at Minerva, one of the largest slaughterhouses in the world.
Fonseca remains in the operation as head of innovation R&D, and will be part of the company’s board.
Lever has already invested in Impossible Foods and Beyond Meat, in the US, and in Brazil its plant-based portfolio includes NoMoo and Nude.
Healthtech Seeds: SetYou
Brazilian healthcare startup SetYou, a platform for the customization of vitamins, minerals, herbal medicines, and supplements, raised 3.5 million reais ($666,179) in its first seed investment round led by DOMO Invest, and angels from the University of Chicago, IKJ Capital, The Next Company, Platform Capital, and individuals who are founders of health techs.
The company was founded two years ago and will use the proceeds for technology, sales, and hiring talent.
Mexican agtech with Brazilian funding
Mexican agtech Verqor, which provides credit for farmers, raised a $2.5 million round led by Brazil’s agtech-focused venture capital firm SP Ventures. Century Oak Capital, Amplifica Capital, Mercy Corps, Magma Partners and AngelHub also participated in the fundraising.
Brazilian celebrity investing in an insurtech: Azos
Brazilian singer Thiaguinho invested an undisclosed amount in the insurtech Azos, which operates with life insurance, Brazilian newspaper Valor Econômico reported. Thiaguinho and businessman Marcus Buaiz are joining the Azos board to help with the company’s strategy.
Argentine e-commerce provider
Argentine e-commerce logistics management startup Zippin raised a sixth investment from regional investment fund Kamay Ventures for an undisclosed amount.
Zippin wants to help small and medium-sized businesses in the region to access logistics services and tools that large companies have. In addition to its operations in Argentina, the company has just entered the Chilean market and plans to expand into Mexico by the end of the year. Likewise, its growth objectives include landing in Colombia and Peru between 2023 and 2024.
With the new investment, Zippin plans to hire 25 people in Argentina over the next 12 months, 10 in Chile and another 10 in Mexico.