This week in LATAM Startups: SaaS becomes trendy & Why does the region need to involve with Web3?
Fiweex goes to Mexico. Web3 is not dead. Huawei' Spark initiative expands. Canary Island: a LATAM startups opportunity. PicPay expands in Brazil. Gofest 2023 returns to Bogotá. Fintech Summit LATAM.
Welcome to our weekly newsletter covering the latest news and trends in the Latin American startup scene.
Why Does Fiweex See Mexico as the Next Big Market for Their SaaS?
The Paraguayan startup Fiweex, renowned for enhancing communication between businesses and their customers, already has a footprint in countries such as Chile, Colombia, and Paraguay. Founded in 2017 by Esteban Torres and Enrique Santacruz, Fiweex is a B2B SaaS solution focused on tackling operational issues of businesses, particularly in the gastronomy sector. Now, the company has its sights set on Mexico and is searching for a new investment round.
So, why Mexico? Although SaaS’s global growth has been pronounced, in Mexico, specifically, there has been substantial investment in the sector. In 2019, USD$66 million was invested across 28 deals, and in 2020, despite the pandemic, the investment amounted to USD $59 million in 29 deals.
The SaaS industry’s exponential growth and Mexico’s emerging market status present a lucrative opportunity for startups like Fiweex. With significant investments in areas of ERP, finance, CRM, and other business tech platforms, Mexico is quickly becoming a hotspot for SaaS ventures.
Vía Contxto
Why does Latin America need to get more involved with Web3?
The collapse of FTX and Alameda Research has raised concerns about funding for Web3 projects. Over 50 companies in the crypto ecosystem had connections with FTX, leading to a contraction of venture capital.
In Latin America, there are challenges for formal entrepreneurship, such as high administrative costs and lack of access to financing. However, there is hope for Web3 in the region, with over 20% of companies thriving on blockchain technology.
The growth of blockchain projects in Latin America is driven by innovation, new financing schemes, a strong community network, government interest, transparency, and cost reduction. To support the growth of Web3, education and grants are important steps.
Vía Contxto
Quick News
Spark initiative expanded to boost startups in Pacific Alliance countries
Chinese tech giant Huawei is expanding its startup support program Spark to Chile, Colombia, Mexico, and Peru.
Funding oportunity for startups. USD$1.6 million.
Value proposal. The initiative aims to provide startups with access to cloud resources, mentoring, and training, promoting economic and social development. (Forbes México)
Canary Islands: Technological Bridge between Latin America, Europe, and Africa
The Canary Islands Government's internationalization agency, Proexca, has launched a program called Canarias Latam Tech.
Value proposal. The program is aimed at connecting LATAM startups with European and African markets.
Benefits of the program. Mentorship from the most prominent private agents, government officials, business consultants, and venture capital executives in the region. Attractive tax offer for LATAM companies looking to enter the European market.
Closing date of the call. The program is open for applications until August 20th. (Contxto)
PicPay Shop, a super app in Brazil, is diversifying its marketplace platform and experiencing significant growth in sales volume.
PicPay's expansion. With 33 million active users, the super app PicPay diversifies its marketplace platform, emphasizing recurring purchase categories and achieving a GMV of USD$2.5 million in the first half of 2023.
Growth & partnerships. Attracting 2.5 million unique users monthly, the app collaborates with major retailers like Amazon and Carrefour and aims to be a primary financial account for users.
Fintech landscape in LATAM. Led by Brazil and Mexico, the region is shifting towards digital financial solutions. By 2025, it's projected to have a fintech user base of over 300 million, emphasizing the democratization and financial inclusion capabilities of fintech. (Contxto)
Gofest 2023, the “Lollapalooza” of startups, returns to Bogotá for its sixth edition
The Bogotá Chamber of Commerce is organizing the Gofest, a startup event that aims to bring together tech companies, investors, and major corporations from various countries in the region.
Date & host. The Bogotá Chamber of Commerce is hosting the sixth Gofest from August 30th to September 1st.
Significance & attendees. Its role in empowering startups and entrepreneurs. After attracting 11,000 attendees in 2022, this year's event anticipates over 15,000 participants, with delegates from giants like Google, AWS, Rappi, and more.
Highlights. Gofest will feature five distinct stages for networking and capital generation, allowing attendees to meet with potential investors, participate in workshops, form partnerships, and gain insights from esteemed speakers.
Investment context. The startup investment landscape in Latin America is witnessing a resurgence. The second quarter of 2023 saw a 76% spike in investments to LATAM startups compared to the first quarter, hinting at a possibly sustainable growth trajectory in the coming years. (Contxto)
Celes: Leading player in the retail analytics scene
Colombian startup Celes is revolutionizing the retail industry by using artificial intelligence and data analytics to optimize purchases, prices, and loyalty for medium-sized retailers.
Founding & growth. Established in 2019 by Luis Almanza, Luis Ballestas, and David Florian, Celes, a Colombian startup, has emerged as a dominant SaaS provider in Latin America, expanding even beyond the region.
Specialization & integration. Initially consultants, Celes now offers data analytics for retail, leveraging AI and pre-trained models. Their software integrates with major ERP and CRM systems, and they've developed "Celes Bot," an AI tool for retail data queries via WhatsApp.
Market evolution. From billing USD$2,100 monthly in 2019, Celes now invoices approximately USD$40,000, experiencing a compounded monthly growth of 85% in Colombia and Ireland.
Unique value proposition. Addressing key retail challenges (purchases, prices, and loyalty) Celes offers an integrated solution for these issues, standing out from competitors.
Expansion and future. After securing USD$1 million in seed funding, Celes plans significant growth in Europe. They aim to enhance product offerings, expand geographically, and fortify partnerships, positioning themselves as global leaders in the retail data analytics sector. (Contxto)
Zuru Latam Launches D2D, Its New Digital Platform for Logistics Insurance
Zuru Latam has launched a new platform called D2D, aimed at digitizing insurance for the logistics industry.
Innovation. It’s a digital solution designed to streamline the insurance process for the logistics industry. This SaaS model facilitates instant policy issuance for clients, integrating seamlessly with prominent insurers.
Backing. Supported by insurance titans like HDI Global and Chubb, Zuru Latam aims to expand its services, covering various facets like container, property, and liability insurances. Presently, four major insurers endorse its coverages.
Market potential. Zuru's recent USD$680,000 funding round underscores its promise in a logistics market anticipated to reach USD$784.6 billion in Latin America by 2028. (Contxto)
Ecommerce Fraud Skyrockets in Mexico: 68% Increase
Fraud pressure targeting merchants in Mexico's ecommerce market.
The trouble number. ecommerce fraud has increased by 68% in June 2023 compared to April.
The most affected sector. Fashion category has the most significant rise.
Mexico leads in ecommerce fraud risk in LATAM. It grows at a rate three times faster than the growth of electronic commerce itself. (Contxto)
Wonder Brands secures USD$15.5M to boost LATAM ecommerce
Funding feat. Based in Mexico, the startup successfully raises USD$15.5 million in a Series A funding round, possibly amassing up to USD$20 million, totaling company funds to approximately USD$40 million.
Strategic expansion. The capital is earmarked for expansion from Mexico City into broader South American markets.
Distinguishing factor. Unlike traditional aggregation models, this startup focuses on organic brand development within LATAM's booming ecommerce ecosystem.
E-commerce evolution. With 300 million digital shoppers in the region, the region foresees 20% growth by 2025. Brazil and Mexico dominate, but nations like Argentina and Colombia are rapidly catching up.
Digital shift post-COVID. The pandemic spurred a 230% spike in online sales, redefining consumer behavior. Surveys indicate that the majority of Latin Americans will continue to prefer online shopping even after the health crisis. (Contxto)
100% Mexican Vegetable Meat Arracheras and AI Water Treatment: 2 Startups for the Future of Food
Forma Foods is a Mexican startup that has developed a steak made from peas, which aims to provide a plant-based alternative that tastes like real meat. (Goula)
Cube Ventures and Arkangeles Form Alliance to Support Startups in LATAM
Cube Ventures joins Arkangeles to promote technology startups in LATAM. They seek to diversify investments, minimize risks and strengthen support for emerging companies. (Contxto)
Fintech Summit Latam 2023: Redefining Financial Future in Mexico City
Event overview. The 15th edition will be hosted in Mexico City on August 31st and September 1st, spotlighting the financial industry's future in LATAM.
Global voices. 40 speakers from diverse regions, including Colombia, Argentina, Chile, Brazil, the U.S., and Mexico, will offer a myriad of perspectives on financial megatrends.
Key focus areas. Emerging tech, regulatory updates, and converging financial sectors form the core topics. Highlights include Fintelcos, Open Finance, and FaaS.
Event's purpose. Ana María Yumiseva underscores the summit's mission to facilitate transformative discussions in the financial ecosystem, supported by esteemed international speakers.
Networking & innovations. Aimed at fintech leaders, the event offers AI-driven networking through the Swapcard app and showcases cutting-edge fintech solutions in both virtual and physical exhibition spaces. (Contxto)
Finds
tools, websites, and accessories
B12 AI Website Builder. B12 offers an AI website builder with professional tools to enhance your online presence and streamline business operations.
ClickUp. ClickUp is a feature-rich and highly versatile project management tool that combines collaboration tools, project-tracking tools, reporting dashboards, workflow creations, and document organization.
Focus Booster. Focus booster helps users stay on task and overcome distractions by implementing the pomodoro technique digitally.
Food for Thought
What Does ‘Dry Powder’ Actually Mean For Startups?
The article discusses the concept of "dry powder" in venture capital fundraising, which refers to the amount of money that limited partners have committed to VC funds.
The author points out that while this capital is not always guaranteed, it is still a positive signal for the industry.
The impact of this capital will vary between early-stage and growth-stage funding, with growth-stage funds facing challenges due to poor fund performance and zombie companies.
The author suggests that VCs should focus on identifying outlier opportunities in large markets and prioritize transparency, discipline, and standardization to attract LPs. (Crunchbase News)
‘Winners Take None’ Is A Mantra For Many In The Unicorn Era
In various sectors, heavily funded startups have failed to produce a clear winner, despite raising significant amounts of capital.
Examples include co-working (WeWork), scooters (Bird), fast grocery delivery (Gorillas, Jokr), autonomous vehicles, e-commerce aggregators (Thrasio, Perch), and used car sales (Cazoo, Vroom).
This trend challenges the notion that competition always leads to a victor in the startup world.
Other sectors experiencing similar challenges include meal kits, ghost kitchens, virtual events, moving and storage, and vertical farming.(Crunchbase News)
Latin American Startups Turn to Venture Debt With Equity Deals Drying Up
Latin American startups are increasingly turning to high-interest loans as venture capitalists reduce equity investments in the region.
Debt now represents about one-third of all venture capital raised in the first half of the year, the highest proportion on record.
Startups are seeking loans as they struggle to secure cash and are hesitant to accept equity deals that would lower their valuations.
This shift in funding reflects the challenges faced by the region's startup scene, which had previously attracted global investors and produced numerous billion-dollar companies.
In the past year, startups in Latin America borrowed about USD$1 billion, while equity investments in the region amounted to around USD$3 billion.
Companies are being forced to accept unfavorable terms and conditions, including high interest rates and collateral requirements, due to limited funding options.
This environment highlights the divide between struggling startups and those with established business models. (Yahoo Finance)
Worthy Recommendations
Conscious Capitalism, according to Gavin Armstrong, Lucky Iron Fish Enterprise’s CEO:
Conscious Capitalism by John Mackey and Rajendra Sisodia. That book lets you explore the concept within different frameworks and how it would work for you. It uses relevant, current issues and examples. “Even if you don't agree with the opinions, you are given enough information to make your own decision”, Armstrong says.
Jobs
Especialista de Mejora Continua at Kavak (Buenos Aires, on-site)
Planning & Operations Analyst at Konfío (Mexico City, hybrid)
Analytics Engineer at Nubank (Mexico City, hybrid)
Senior Business Systems Analyst at Zendesk (Mexico City, remote)
Country Manager, Latin America at Riot Games (Mexico City, not specified)
Deals
These startups and companies received capital this week:
Klar | Fintech | Debt Financing. Klar, the Mexican fintech, has secured a credit line of USD$100 million to expand its operations in its Mexico, a nation with one of the lowest banking rates in the region. This financing comes from Victory Park Capital (VPC), a U.S.-based investment firm.
Educbank | EdTech | Debt Financing. Brazilian financial platform Educbank has raised USD$14.2 million in their first debenture offering, managed by Itaú BBA. The funds will support Educbank's growth and development of new products to enhance the educational experience in Brazil.
Wonder Brands | Ecommerce | SeriesA. Mexican e-commerce brand acquirer, Wonder Brands, has closed a USD$15.5 million Series A funding round led by Nazca and IDB Invest. The funding will enable Wonder Brands to expand into South America. The company uses data from online marketplaces to create its own brands and has launched over 15 brands in the past year.