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August Roundup: Is Latin America ready for a global investment boom?

Japanese investor Softbank has been investing intensely in Latin America ever since the fund dedicated its $5B Innovation Fund to the region in early 2018. Softbank announced two new Brazilian investments, in fintech Creditas and used-car platform Volanty, which will join their growing portfolio of Latin American startups including Brazil’s Loggi, Gympass, Creditas, and Volanty, as well as Mexican fintech Clip and Colombia’s first unicorn, delivery app Rappi. 

The larger of the two investments went to Creditas, which received $231M at a $750M valuation from Softbank, as well as previous investors Vostok Emerging Finance, Santander InnoVentures, and Amadeus Capital

Founded in 2012 by Spanish entrepreneur Sergio Furio, Creditas provides lower-interest loans to Brazilian customers using alternative assets as collateral to make lending more accessible to the middle class. To date, Creditas has provided more than $500M in loans and grew revenue by 5x in 2018.

In late August 2019, Softbank finalized a $17.6M investment in Volanty, alongside Argentine investor Kaszek Ventures, and Brazil’s Monashees and Canary.

Antonio Avellar and Mauricio Feldman, Volanty is an online used-car platform that provides inspected cars with a warranty to help Brazilian consumers find reliable, affordable vehicles. Volanty first received $4.7M from Monashees and Canary in June 2018. 

Latin American fund Kaszek Ventures raises $600M to drive investment

Recently after announcing the investment in Volanty, Argentina early-stage fund Kaszek Ventures shared that it had closed an additional $600M across two funds to invest in the Latin American market. These funds, representing Kaszek’s fourth and fifth capital raise, will be used to invest in a further 25-30 companies and for follow-on rounds in the fund’s later stage companies. 

Kaszek Ventures was founded in 2011 with a $95M round backed by Sequoia. The fund has invested in several of Latin America’s highest-profile companies, including Nubank, Creditas, Gympass, Loggi, and NotCo, many of which have gone on to receive investment from funds like Softbank and Bezos Expeditions. 

Kaszek expects to invest in the same number of companies as it has with past funds, but plans to dedicate larger tickets to each startup, keeping with current trends in the region.

Payments: Stripe Expands to Mexico, Kushki Expands in Latin America

Digital payments leader, Stripe, recently announced that it would open an office in Mexico City to expand their services into the Latin American market. 

Stripe is one of the most highly-valued fintech startups in the world, currently worth around $22.5B due to support from key investors like Tiger Global, Andreessen Horowitz, Peter Thiel, Elon Musk, Google’s venture arm Capital G, Sequoia Capital and Kleiner Perkins.

Stripe already operates in 34 countries and seeks to expand into Latin America to capitalize on the region’s current boom in mobile payments and e-commerce. Latin America’s e-commerce market is growing at 19% per year, the fastest for any region. 

Stripe follows a trend of growing online payment accessibility in Latin America as consumers increasingly purchase via the Internet. Latin American payment gateway, Kushki Pagos also recently announced their expansion to Chile through the acquisition of Chilean competitor, QVO.

Founded in 2016 by Oscar Quevedo, Waldo Uribe, and Matias Menich, QVO sought to give Chilean SMEs access to online payments. They received early investment from local venture capital in Chile, including Magma Partners and DevLabs

Kushki Pagos was founded in 2015 by Ecuadorian entrepreneurs Aron Schwarzkopf and Sebastian Castro after the partners sold their previous fintech company, Leaf, in the US. 

The battle to become Latin America’s payments processor will likely continue to intensify as more of the region’s population shops online. 

Currently, challenges in logistics and online payments are stalling the growth of Latin American e-commerce, but startups like Kushki are quickly making online shopping more accessible for the 600 million people living across the region.

Pipefy, San Francisco/Brazil SaaS, raises $45M

August also saw big tickets continue to be invested in Latin America. Brazil’s Pipefy, a workflow management SaaS based in San Francisco, raised $45M from Insight Partners, Openview, and Trinity Ventures. 

Pipefy already works with clients in 150 countries, including Santander, Accenture, IBM, TEDx, Capgemini, EmblemHealth, GE, and Telefonica.

RD Station, also from Brazil, raised $50M from Riverwood Capital in its Series D round, bringing the startup’s total funding to $90M. RD Station is an all-in-one automated digital marketing tool focused on the small business segment in Brazil. 

This $50M round was potentially the largest ever raised by a SaaS company in Latin America. The company plans to use the investment to expand out of the Brazilian market and target companies in Colombia and Mexico. 

With over 700 employees, RD Station serves over 13 thousand customers in 20 countries around the world. 

Pipefy’s round, which will fund a go-to-market strategy for its workflow management tools, also exemplifies growing ticket sizes for Latin American startups. 

2018 saw record-breaking rounds for startups across the region, with Brazil’s iFood raising $500M. Rappi quickly broke that record in April 2019 with a $1B round from Softbank. LAVCA noted that the top five rounds of 2018 all topped $100M each and totaled $1.2B, more than the total raised in 2017. The arrival of Softbank’s $5B Innovation Fund in 2019 signals that this trend may continue. 

News and Notes: Weex, Dataplor, Iguanafix 

Other deals in August included Weex Mobile exiting to Yonder Media Mobile for an undisclosed acquisition sum. In 2017, Weex launched the Weex Wallet, which went on to become Mexico’s leading independent digital wallet, with previous investment by ALLVP.

Also in Mexico, a $2M round for dataPlor, a Mexican startup that indexes small businesses in emerging markets to give them a boost through a ‘digital footprint’ that expands their reach. The round was led by  Quest Venture Partners with support from Magma Partners, ffVC, Sidekick Fund, and the Blue Startups accelerator.

US-based industrial appliance manufacturer, Stanley Black & Decker ventured into the Argentine market to invest in IguanaFix, Argentina’s on-demand repair platform. The US company gained distribution rights to IguanaFix’ products in the US market through the round.

Looking ahead to September, it is safe to expect a flurry of investment through the last quarter of the year, as we saw in 2018. With investors like Softbank, Kaszek, and Monashees dedicating ever-larger funds to the region, and Silicon Valley VCs starting to take notice, there is still potential for big ticket rounds through the end of the year. 

What to watch? Latin America send sixteen startups to the Y Combinator Summer Batch this year, so expect to see these early stage companies raising rounds in Silicon Valley and internationally over the next month. 

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