LatAm List – In the wake of Softbank’s new $5B fund for Latin America, we report that the VC fund made its first investment in a Colombian startup alongside 500 Startups and Kairos. Softbank joined a $1.25M Seed round to support Colombia’s Ayenda Rooms, Latin America’s first digital hotel chain. This investment was made before Softbank opened its new LatAm fund following two recent investments in Brazil’s Loggi and Gympass.
Since it launched in 2018, Ayenda has already become Colombia’s largest hotel chain, operating 45 properties with members that generate more than $1M. Ayenda operates as a budget hotel franchise by exclusively marketing the hotel, providing its brand, technology and its acquisition channels, and then taking a percentage of all of the hotel’s sales in return.
This business model has found tremendous success in Asia, with India’s OYO Rooms bringing in over $1B in investment, including from Softbank’s Vision Fund. Singapore’s Reddoorz has also received rounds in the millions. This investment fits into a trend of successful Asian business models that have been copied in Latin America, which has also attracted Asian investment, including Softbank, to the region.
Currently, 60% of hotels in Latin America are independent, creating an ample market for Ayenda to expand its franchise. With its 20-person team, Ayenda plans to use the investment to expand to 6 new cities and 120 hotels throughout 2019.
“This round brings together the right partners and amount of funding to expand to at least 120 new properties by the end of the year,” said Andres Sarrazola, CEO of Ayenda Rooms.
It takes fewer than 15 days for a hotel to become a part of Ayenda’s franchise system, allowing the startup to expand quickly across Colombia.
Softbank is one of the world’s largest technology investors, deploying over across the world $100B through its Vision Fund. The fund recently announced a commitment of $2B to the new Softbank Innovation Fund, which will be dedicated to investing in Latin American companies, especially in Argentina, Chile, Brazil, Colombia, and Mexico. This fund will be led by Mauricio Claure, the Bolivian COO of Softbank and ex-CEO of Sprint.
This fund is Softbank’s first major investment into a single region, although they have previously bet on specific countries, like India, in the past. By establishing a parallel group called SoftBank Latin America Local Hub, Softbank will also provide support to its portfolio companies to expand across the region.
“Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead,” said Masayoshi Son, chairman and chief executive officer of SBG, in a statement. “SBG plans to invest in entrepreneurs throughout Latin America and use technology to help address the challenges faced by many emerging economies with the goal of improving the lives of millions of Latin Americans. “
As the US shies away from international investments, Asia has stepped into the Latin American ecosystem and Softbank’s presence will be felt across the region. The new Innovation fund dwarfs any previous capital or funds that have invested in the region. Just over $1B was invested in the region last year, and the largest funds in Brazil are investing $150M. Softbank will put up to $5B into Latin American startups in the coming years.
Softbank is betting on Latin America as the region reaches an inflection point, with millions entering the middle class every year. Latin America currently has more internet users than the US but still faces entrenched problems that tech startups across the region are seeking to solve. Softbank looks to be there to support those companies as they begin to expand internationally.
The Ayenda Rooms investment did not come from the new fund, as it was announced two months before the Innovation Fund was made public. However, this investment bodes well for Softbank expanding its investment interests across Latin America beyond Brazil and speaks to the increasingly close relationship between Asia and Latin America.