Kavak shocks Latin America with unexpected exit
Why Kavak is shuting down his operations in Colombia and Peru. SaaS benchmarks report. US companies leveraging LatAm talent. The decrease of VC funds in crypto and global venture funding.
Welcome to our weekly newsletter covering the latest news and trends in the Latin American startup scene.
Kavak, Mexican Unicorn, to Shut Down Operations in Colombia and Peru to Refocus Commercial Strategy
Mexican unicorn Kavak, a company specializing in the sale and purchase of used cars, has announced that it will pause operations in Colombia and Peru starting January 2024.
The decision was made after evaluating market opportunities and considering the global and local economic environment. Kavak will continue its activities in these countries until all ongoing operations are completed. The company's strategy is now focused on markets with higher profitability and growth potential.
Kavak became Mexico's first unicorn in 2020 and is currently valued at USD $8.7 billion. The move reflects a consolidation and growth strategy in critical markets.
Vía Contxto
How US Companies Can Gain A Competitive Edge Leveraging LatAm Talent
Latin America is emerging as a hub for product development for the United States market, with a 50% increase in hiring from US companies in the region in 2023.
The region's potential for innovation has been overlooked for years, but it is now being recognized for its pioneering projects in digital payments, its development of super apps, and its abundance of user data.
This presents an opportunity for American companies to gain a competitive edge by leveraging Latin America's technological advancements, cross-cultural exchange, and job creation. Collaboration between the region and the US holds the key to fostering innovation in the global tech landscape.
Vía Crunchbase News
Venture capital funds invest USD$308 million in cryptocurrency sector
In October, venture capital funds invested USD $307.68 million in cryptocurrency startups, a decrease from September. Most investments went towards infrastructure solutions in the blockchain industry. Blockaid and Membrane Labs were among the startups that received significant contributions.
The decentralized finance (DeFi) sector also attracted attention, with SynFutures receiving USD $22 million. Web3 startups, particularly those creating solutions and games, also saw increased funding. Blackbird and Shrapnel were among the startups that received substantial investments.
Overall, investments in the crypto industry continue to show growth and interest from venture capital firms.
Vía Contxto
Quick News
Ecuacondor prepares to take off and fly in Latin America
Ecuador is set to have a new airline called Ecuacondor, which plans to operate domestically and internationally.
Value proposition. The startup aims to serve various destinations within Ecuador, similar to the former state airline TAME. It also plans to offer charter services to countries such as Cuba, the Dominican Republic, Mexico, and Colombia.
Highlights. Ecuacondor's first aircraft will be a Bombardier CRJ-200 with a capacity for 50 passengers. However, Ecuador has seen a series of failed aviation startups in recent years, with companies like EQUAIR ceasing operations. (Contxto)
Idea GTO supports entrepreneurs and startups in Guanajuato, Mexico
The Institute of Innovation, Science, and Entrepreneurship for Competitiveness in Guanajuato, known as Idea GTO, has set a goal to support 250 new entrepreneurs and 120 startups seeking funding in Mexico by the end of 2023.
About Idea Guanajuato. Idea Guanajuato has already collaborated with 120 entrepreneurs who have successfully transformed into startups, with 60 of them in advanced stages seeking financing for expansion.
Some numbers. Currently, 250 entrepreneurs are benefiting from a digital incubation program, with the goal of evolving into startups. (Contxto)
Monterrey to host the first AWS Community Day Mexico
The AWS Community Day Mexico is an annual event that brings together professionals to share knowledge about Amazon Web Services (AWS). Monterrey, known as a technological hub, has been chosen as the host city for this event.
About the AWS Community Day Mexico. The goal is to celebrate cloud innovation and provide attendees with the opportunity to learn from experts and discover the latest trends in AWS technologies. The event is free and will feature over 30 conferences, workshops, and hands-on experiences in four thematic areas.
Save the day. The event will take place on November 11, 2023, at the University of Monterrey (UDEM). (Contxto)
Galgo and the IFC forge alliance to expand access to automotive credit in Latin America
The International Finance Corporation (IFC) has partnered with Chilean fintech Galgo to expand credit opportunities for marginalized sectors in Latin America.
Galgo’s market. Galgo, originally founded to support Venezuelan migrants in Chile, now provides credit to over 45,000 individuals in Peru, Colombia, and Mexico.
Value proposition. The collaboration with the IFC aims to prioritize the needs of marginalized groups such as migrants and individuals with limited access to banking services. The IFC will provide advice on risk models and help improve Galgo's financial products. (Contxto)
HireRight arrives in Brazil to strengthen its LATAM presence
HireRight, a global provider of background verification services, has started its operations in Brazil as part of its expansion strategy in Latin America.
Why Brazil? With the new office in São Paulo, HireRight aims to support clients in conducting hiring activities in Brazil more efficiently. The company recognizes the value of local expertise and believes that its presence in São Paulo will differentiate it from other global providers and open up new business opportunities.
About the expansion. HireRight plans to extend its background verification services to cater to the needs of small and medium-sized local businesses. It will provide data, compliance verification services, and customer support in Portuguese. (Contxto)
CBRE launches Latam-Iberia platform to stimulate real estate investment between Europe and LatAm
CBRE, a real estate services company, has launched its new platform Latam – Iberia to revitalize the real estate market and facilitate investment between Europe and Latin America.
Value proposition. The platform aims to boost business relations and visibility of real estate solutions between the regions, serving as a bridge between emerging and more established markets.
Growth plans. The platform is expected to be a turning point in the real estate sector, providing a path for expansion and growth in a globalized market. (Contxto)
Chilean Indigenous Startups Shine at the World Indigenous Business Forum
Four Chilean indigenous startups recently participated in the World Indigenous Business Forum in Papua New Guinea. The startups, sponsored by ProChile, showcased their exportable products and exchanged experiences with indigenous businesses from 13 countries.
About the forum. The startups showcased a range of products, including artisanal footwear, Mapuche food, digital platforms connecting indigenous artists and entrepreneurs, and agro-processed gourmet products.
Highlights. This event demonstrates the value of combining tradition with innovation and modern commerce, serving as an inspiring model for other indigenous communities exploring international trade while respecting their identity and ancestral culture. (Contxto)
N26, German fintech, confirms cessation of operations in Brazil
German fintech startup N26 has announced that it will cease its operations in Brazil after two years of activity.
Why are they living? The company stated that it is focusing on its main European markets and thanked its customers and team for their support. Employees in Brazil have the opportunity to apply for positions at the company's European offices. (Contxto)
HubSpot Academy and Professional Growth Strategies: Transforming Unemployment into Opportunity
HubSpot, a leader in CRM solutions, offers free online courses through its HubSpot Academy to help individuals improve their skills and competencies.
Value proposition. HubSpot suggests seven strategies for maximizing potential in the workplace, including staying updated, expanding skills, and utilizing available resources.
Why it is important. In Mexico, where there is high unemployment and a lack of qualified candidates, training becomes essential for transforming unemployment into an opportunity for growth. (Contxto)
Wollef celebrates 10 years of flying unicorns at LATAM
Mexican private equity fund Wollef is celebrating its tenth anniversary. Over the past decade, Wollef has managed over USD $180 million in investments across 44 companies in 22 countries.
The investors of Kavak. The fund's portfolio includes successful companies like Ben & Frank, Conekta, Konfio, Nubank, and Nexu. Wollef is the only Mexican investment fund with five unicorns: Konfio, Jeeves, Nubank, Kavak, and Loft.
What are they looking for? The fund focuses on sectors such as fintech, e-commerce, proptech, and foodtech. Wollef is known for its honesty, open-mindedness, and courage, and aims to drive the technology industry in Mexico and Latin America. (Contxto)
Finds
tools, websites, and accessories
Looka. Looka is an AI-powered platform that helps users create logos and build their brand identity. With Looka, users can generate custom logo designs and customize them to fit their vision.
Moonbeam. Moonbeam is an AI writing assistant specifically trained to help with long form content, offering features such as Smart Chat for real-time feedback and precision editing.
AI Lawyer. AI-lawyer is a platform that offers legal assistance and expertise through artificial intelligence. It aims to provide quick and affordable legal solutions to consumers, lawyers, and law students.
Food for Thought
Global Venture Funding In October Dips Below 2023 Average
Global venture funding in October 2023 totaled USD $21 billion, which is below the average monthly funding for the year. This represents a 24% decrease compared to October 2022. Funding for seed and early-stage companies also decreased by about a third.
Two unicorn companies, Convoy and Olive AI, closed down in October. M&A activity increased, with notable acquisitions including Loom, Arcion, and Parchment. AI and healthcare companies received the most funding, with each sector receiving close to USD $5 billion.
Google made a significant investment in AI company Anthropic. Overall, funding activity slowed down, and companies that raised large amounts in 2021 and 2022 may face challenges securing further funding. (Crunchbase News)Big Tech Ditched Trust and Safety. Now Startups Are Selling It Back As a Service
Massive layoffs in the tech sector have affected trust and safety teams, leaving experts concerned about the industry's ability to handle online safety issues amidst global conflicts and upcoming elections.
Companies like Twitter, Meta, Alphabet, and Amazon have made significant cuts to their trust and safety roles, leading to an increased reliance on outsourcing these services to startups and consultancies. However, experts warn that outsourcing may hinder platforms' ability to improve their products and could introduce new problems with AI systems.
Furthermore, outsourcing raises concerns about accountability and transparency in moderation decisions. New regulations in the UK and Europe are also pushing smaller platforms to prioritize trust and safety. The emergence of generative AI tools has further highlighted the need for early attention to trust and safety issues.
The trust and safety as a service industry is growing rapidly, with startups raising significant funding and estimated revenue projections in the billions. Despite current layoffs, the long-term outlook for trust and safety companies is positive as tech companies increasingly rely on specialized services in this field. (Wired)The 2023 SaaS Benchmarks report highlights the challenges and opportunities in the SaaS industry. While growth rates have compressed, there are pockets of resilience and outliers who are thriving.
One key factor is the monetization of AI, with AI-native companies and those monetizing AI products more likely to be outliers. Another important metric is ARR per FTE, which reflects team productivity. Companies should leverage AI in internal operations to improve productivity.
Product-led growth (PLG) and expansion within the customer base are crucial for success. Efficient operations, international expansion, and easy purchasing options also contribute to growth. (OpenView Venture Partners)
Worthy Recommendations
Factfulness: Ten Reasons We're Wrong About the World--and Why Things Are Better Than You Think, recommended by Microsoft former Cofounder and CEO Bill Gates.
Factfulness. “The bulk of the book is devoted to ten instincts that keep us from seeing the world factfully. These range from the fear instinct (we pay more attention to scary things) to the size instinct (standalone numbers often look more impressive than they really are) to the gap instinct (most people fall between two extremes). With each one, he offers practical advice about how to overcome our innate biases.”, Gates says.
Jobs
Director of Business Development at Arbtrust Venture (Mexico City, Mexico; On-Site)
Director, Kyndryl Vital at Kyndryl (Mexico City, Mexico; Not specified)
Senior Product Manager, Foundations at GitLab (Mexico; Remote)
Head of Latam Global Selling, Amazon Marketplace at Amazon (Mexico City, Mexico; Not specified)
Senior Security Developer, Enterprise Security (English) at Google (São Paulo, São Paulo, Brazil; On-site)
Deals
These startups and companies received capital this week:
CEMEX | Construction Materials | Debt. Cemex, a global construction materials company, has successfully refinanced its USD $3.0 billion syndicated credit agreement, extending the maturity to 2028. This move is part of Cemex's comprehensive financing plan to increase liquidity and flexibility.
Liberty Latin America/Dish | Telecom | M&A. Liberty Latin America has agreed to acquire Dish Networks' spectrum and customer base in Puerto Rico and the US Virgin Islands for USD $256 million. The deal is subject to regulatory approval and is expected to be completed in 2024. The acquisition will add 120,000 prepaid mobile subscribers and various frequency bands to Liberty Latin America's operations.
Finkargo | Fintech | Series A. Colombian fintech startup Finkargo has raised USD $20 million in a Series A funding round led by QED Investors. The company aims to simplify international trade by streamlining the flow of money and data.
Creze | Fintech | Debt. Mexican fintech platform Creze has secured a line of credit of up to USD $5.7m from BBVA Spark, the bank’s division for high-impact companies. Creze uses artificial intelligence and a risk assessment model to provide loans to small and medium-sized enterprises (SMEs) in Mexico.
Teclogi | Logtech | Not specified. Colombian startup Teclogi aims to become the digital center for cargo transportation. The company recently secured USD $4.6 million in funding and plans to expand its operations to other cities in Colombia and later to Peru, Ecuador, and Mexico.
Tu Mejor Amigo | Pet services | Venture. Mexican startup Tu Mejor Amigo is close to securing a USD $400,000 investment to enhance its pet walking and care service. The company, founded in 2023, offers a subscription model that includes daily walks and veterinary care.
Accenture/Innotec Security | Cybersecurity | M&A. Accenture has acquired cybersecurity company Innotec Security, expanding its presence in Spain. The financial details of the agreement were not disclosed. Additionally, the company has strengthened its presence in the field of cyber defense in Europe with the acquisitions of Sentor and Openminded, as well as in Latin America with the purchases of MNEMO México, Morphus, and Real Protect.
Extendeal | Marketplace | Seed. Argentine startup Extendeal has secured an additional investment of USD $7.5 million to expand its presence in Mexico and Colombia. The company is disrupting the traditional pharmaceutical industry by offering a digital platform that allows pharmacies to freely choose their products.
Galactic Holdings | Crypto | Series A. Galactic Holdings, the parent company of TruBit, has successfully raised USD $6.25 million in a Series A investment round led by Galaxy Interactive and DragonFly. This funding will help strengthen the company's position in the Latin American cryptocurrency market and support the development of TruBit.
Mercado Pago | Payments | Debt. Mercado Pago, the digital bank of Mercado Libre, has received a capital injection of USD $466 million. The funds were secured through a private financing line from Citi subsidiaries and will be distributed between Brazil and Mexico. The main goal is to expand credit capacity for consumers, entrepreneurs, and small businesses in these countries.
Able-On | Mobility | Seed. Able-On, a mobility startup that combines AI and Analytics with Connectivity and Internet of Things (IoT), has concluded its first round of investments worth R$ 7.25 million. The funding was led by ITA Frotas, a vehicle rental company for fleets, who were attracted to Able-On's customizable and flexible platform for clients' business rules.
Barte | Payments | Debt. Brazilian B2B payments fintech Barte has raised BRL$20 million through debentures, marking its third funding round in the last 12 months. The funds will be used to expand Barte's credit segment. Barte combines payments and access to capital for SMEs, and its revenues have multiplied by 15 in the last seven months.
Legria | Proptech | Debt. Chilean proptech startup Legria has secured USD $3 million in private debt funding, led by Ameris Capital. The funding will be used to acquire strategic properties and expand its presence in the Chilean market. Legria offers a platform that allows buyers to acquire fractions of luxury properties, making second homes more accessible.
Morfy | Apps | Not Specified. Morfy recently secured a USD $100,000 investment from Chilean investment fund Platanus Ventures, which will be used to expand the app to Mexico in 2024. The founders aim to make Morfy the "Google Maps of gastronomy," helping users find restaurants and enabling eateries to attract customers.
Iugu | Fintech | Debt. Brazilian financial services platform, iugu, has secured a USD $14 million investment in a new senior quota series in its FIDC (Investment Fund in Credit Rights) to advance payments of credit card receivables.
Agrotoken | Agtech | Strategic investment. Visa has made a strategic investment in Agrotoken, a Brazilian company that specializes in the tokenization of agricultural products. This investment will support Agrotoken's growth and the development of new products, as well as the expansion of the Agrotoken Visa card internationally.
Loads | Agtech | Seed. Chilean agtech startup Loads has raised USD $2 million in seed funding to connect importers with global producers. The investment comes from Nazca, Canary, Alaya Capital, and angel investors. Loads aims to facilitate exports for local producers and help importers enter the Chilean market.