dataPlor Featured in Forbes México: COVID-19 Has Caused Layoffs in 1 in 3 Restaurants in Mexico; IMF Approves New $10.8B, Two Year Credit Line for Colombia; After Record Haul, Latin American Startups Adapt to Stay Afloat; and More From Latin America…
Other featured stories include: Latin America Roundup: Big Rounds, Big Mergers, and a $3.8M Pandemic Fund from Nubank; Aprende Institute Raises $1.6M Seed Round for Skills Training in Latin America; Latin America Consumer Tech Market to See Massive Pandemic-Driven Shift; Brazil’s OECD Bid Under Scrutiny After Bolsonaro Allegations; Podcast: Behind Rapyd’s Global Ambitions and Recent Move into Brazil with Eric Rosenthal; and Podcast: Aquí & Ahora; Greg Mitchell & Juan Pablo Cappello.
dataPlor Featured in Forbes México: COVID-19 Has Caused Layoffs in 1 in 3 Restaurants in Mexico
This week, dataPlor’s on the ground analysis of restaurants in Mexico was featured in Forbes México.
According to a dataPlor survey, companies in the industry estimate that they could close if the distancing measures are extended for 3 months. One in three restaurants reduced their workforce, while almost two out of three could permanently close as a result of the social distancing measures derived from the COVID-19 pandemic .
The survey, which interviewed restaurant companies from 28 entities in the country, found that 35.9% of respondents said they had reduced their workforce to survive during the health contingency, which has caused a reported decline in sales between 85 and 90% .
Around 60% of the surveyed restaurants estimated that they are likely to have to be closed permanently if measures to prevent contagion are extended for 3 months or more. However, only 8.4% of the restaurants surveyed chose to request a loan in response to their efforts to maintain liquidity.
The mandate to suspend non-essential activities and close food businesses to only allow take-out service or home delivery began on March 31; however, numerous citizens have taken shelter in their homes to reduce the risk of contagion beginning since March 17.
Photo Courtesy of Unsplash
According to Mexican authorities, these measures are expected to last until May 17 in areas with low incidence of the disease. In other areas of the country, these mandates could last until May 30.
And although most of the surveyed companies have tried to adapt to the new trends, not all have the conditions for it.
“About 78% of respondents reported that they now fill online take-home and home delivery orders. However, according to the dataPlor study, only 51.5% of those surveyed have the adequate internet connection to use online home delivery platforms in a professional way.”
Based on the survey, the main way these companies have been able to migrate to the digital channel has been through food delivery platforms.
To increase their sales, few restaurants (1.9%) resorted to adding new products to their menu, from groceries to souvenirs such as pins, caps, and shirts.
“Some restaurants have chosen to deliver dishes for you to prepare at home. Other places, such as bars or places with identity, chose to transfer it to consumer products, t-shirts, and souvenirs, “ Aldo Bucio, dataPlor’s General Manager & Director of LATAM Operations, explained to Forbes México.
IMF Approves New $10.8B, Two Year Credit Line for Colombia
Last Friday, the International Monetary Fund announced that its executive board approved a new two-year flexible credit line of about $10.8 billion for Colombia, replacing an expiring facility.
The renewal of the precautionary credit line comes as the COVID-19 pandemic is expected to cause Colombia’s economy to contract for the first time in more than two decades, the IMF said.
As reported by Reuters, Colombia received $250 million in emergency financing from the World Bank last month to help its health response to the pandemic.
After Record Haul, Latin American Startups Adapt to Stay Afloat
Gympass built one of Latin America’s fastest-growing tech companies by making it easier for corporate employees to work out.
The eight-year-old Brazilian startup has signed contracts with around 2,000 companies, which gave their workers access to some 53,000 gyms in 14 countries, including the U.S.. Last year, the São Paulo-based company became a tech unicorn valued at $1.2 billion when it raised $300 million in an investment round led by SoftBank Group Corp.
When the coronavirus pandemic hit, almost all gyms closed, and the company’s business model was upended nearly overnight.
“It was a code red, something so important that everything else is put on hold until it’s solved… We focused everything on building a platform so that the gyms could provide online classes,” said Leandro Caldeira, the company’s Chief Executive Officer for Latin America.
According to LAVCA (the Association for Private Capital Investment in Latin America), investors poured a record $4.6 billion of venture capital into Latin American startups in 2019. With economies shutting down and governments around the world imposing quarantines, these companies, guided by their investors, are trying to stay afloat by cutting expenditures, slashing salaries and jobs and, in some cases, changing their business models.
In response, Gympass was able to launch its online program in two weeks. Through their platform, members can access roughly 50,000 classes, in addition to health apps, such as web-based therapy. Caldeira told Bloomberg that this online platform has helped limit the number of cancellations.
For Gympass, the addition of online content has already helped bring in some new subscribers, and, most importantly, helped it preserve cash, Caldeira said.
“We will definitely survive and after this crisis, we’ll be much stronger than before,” he said.
Julie Ruvolo, Director of Venture Capital at LAVCA, stated that throughout the region, investors are telling their companies to take quick action to preserve funds.
“Right now, cash is king… The question now is really how quickly companies will pivot and respond,” she told Bloomberg.
One of the region’s largest homegrown venture investors, Buenos Aires-based Kaszek Ventures, began sounding the alarm in early March, telling its portfolio of about 40 companies to “switch to war mode.”
The company, which raised $600 million for new investments last year, has seen revenue for the firms in which it has stakes fall by as much as 30%, said Hernan Kazah, Kaszek’s Co-Founder and Managing Partner.
Not all startups will survive the crisis, although many firms are flush with cash thanks to the amounts they raised last year, Kazah added.
To survive, “you have to be more frugal than anything and defend cash… Not everyone will make it, but hopefully most will and we’ll end up producing great companies,” Kazah stated.
Startups in some of the hardest-hit sectors are moving to adjust to the new reality.
For example, Urbvan normally shuttles commuters around Mexico City’s traffic-clogged streets with a fleet of wifi-equipped vans. Now, the company has shifted focus to delivering food and medical equipment, in addition to providing transportation to workers at hospitals and other essential industries, said Joao Albino, the company’s Co-Founder.
“At first, we went from operating 300 vans down to 20… With this change, the recovery has been like a V. We’re up to around 200 vans now,” Albino said.
In Colombia, the startup Ayenda became the country’s largest lodging chain by working with small, budget hotels to spruce up their properties, re-brand them and give them an online presence. Nearly all of its 140 locations have closed temporarily, forcing the company to cut costs and ponder new business models.
In response, Ayenda has decided to launch a food business, using the kitchens of some of those hotels, said Andres Sarrazola, the Chief Executive Officer.
“We’re in the hospitality industry, the eye of the hurricane, so we’ve had to focus on limiting losses,” he said. After taking those steps, the company can survive for 20 months, using the nearly $9 million it raised last year, Sarrazola said.
Latin America Roundup: Big Rounds, Big Mergers, and a $3.8M Pandemic Fund from Nubank
Despite the global panic caused by the COVID-19 pandemic, startups in Latin America have continued to attract international capital.
All three companies target markets that may have grown since the start of the pandemic, namely lending, food delivery and cargo delivery, respectively.
Alphacredit, a Mexican lending startup, raised a $100 million equity round from SoftBank and previous investors to continue to expand its digital banking services across Mexico. This round comes just months after the startup received a $125 million Series B round from SoftBank in January 2020.
Alphacredit’s CEO explained that the round will allow the company to help clients during the current liquidity crisis, increasing financial inclusion in Mexico.
As reported by Tech Crunch, fresh produce delivery platform Frubana raised a $25 million Series A led by GGV and Monashees, with additional support from SoftBank, Tiger Global, and several other private investors. The startup delivers fresh produce to restaurants and small retailers directly from farmers across Colombia.
Frubana has seen a spike in demand for its products since the start of the COVID-19 pandemic. As many shy away from visiting large grocery stores, consumer demand has shifted to visiting local mom-and-pop shops that receive the startup’s deliveries. Frubana raised $12 million in mid-2019 to help scale into Mexico and Brazil after it hit a monthly growth rate of 50% in the Colombian market. The startup’s founder, Fabián Gomez, started Frubana after serving as head of Expansion at Rappi, one of Latin America’s fastest-growing startups.
Brazil’s CargoX, the “Uber for Trucks,” raised an $80 million Series E round led by LGT Lightstone Latin America, with contributions from Valor Capital, Goldman Sachs and Farallon Capital. The startup has quietly grown to become one of the largest players in Brazil’s inefficient trucking industry, managing a fleet of nearly 400,000 truck drivers, without owning a single truck.
This investment brings the company’s total capital raised to $176 million, and has enabled CargoX to launch a $5.6 million fund for the delivery of essential goods in Brazil during COVID-19. This fund will help CargoX keep drivers employed and ensure the proper delivery of essential goods like medication, food and cleaning products.
Nubank launches $3.8 million COVID-19 fund to support clients
Brazil’s largest neobank, Nubank, announced a $3.8 million (R$20 million) fund to help its clients survive the current pandemic. The fund also relies on partnerships with iFood, Rappi, Hospital Sírio-Libanês, and Zenklub to help struggling clients access food, supplies, medical care and online psychological treatment throughout the pandemic.
Nubank will utilize the fund to grant credits to people who are unable to leave their home, providing them with discounted groceries and free delivery service. Through their partnership with Hospital Sírio-Libanês, the company will pay for more than 1,000 free online consultations with doctors for its home-bound clients.
Nubank has more than 20 million clients across Brazil and Mexico. The company’s CEO, David Velez said he believes the fund could serve tens of thousands of people in need by the end of April. Customers who wished to receive these benefits were directed to reach out to Nubank via phone, email or chat to be connected with a representative who could grant the appropriate credits.
iFood merges with Domicilios to fight Rappi in its home territory
Brazil’s largest food deliverer, iFood, recently announced a partnership with Delivery Hero to merge with their Colombian subsidiary, Domicilios. The parties did not disclose the price of the deal, but did announce that iFood is now the majority shareholder in Domicilios, holding 51% of the company.
iFood operates in Mexico and Colombia, as well as Brazil, but has struggled to gain traction in other Spanish-speaking Latin American countries. This merger makes iFood the largest food delivery company in the country, with more than 12,000 restaurants in its network. However, local last-mile delivery startup Rappi continues to dominate the market, using SoftBank backing to blitzscale across the region.
In comparison, iFood has focused on developing its technology, using artificial intelligence to improve the user experience across its platforms in Mexico, Colombia and Brazil. Using these systems, iFood processes over 26 million deliveries each month, helping restaurants across the region adapt to the new protocols caused by the virus and social-distancing policies. The company hopes the merger will help provide a more competitive delivery service for Colombians, as well as helping boost growth for local restaurants.
News and Notes: Nuvocargo, Kueski, Magma Partners, SouSmile
Freight-forwarding startup Nuvocargo raised $5.3 million in seed funding to support the growth of its trade routes across the U.S.-Mexico border. Founded by Ecuadorian-born Deepak Chhugani in 2018, Nuvocargo has grown quickly since participating in Y Combinator, although this funding was their first institutional round. The round drew investors from both sides of the border, including Mexico’s ALLVP.
Mexican online credit platform Kueski announced that it would lay off employees due to the economic crunch caused by COVID-19. Kueski provides microloans to more than 500,000 Mexicans, and has been struggling financially as business slows during the pandemic. While Kueski did not disclose an official number, it is estimated that they laid off around 90 employees.
Latin American venture capital firm Magma Partners acquired Guadalajara-based accelerator Rampa Ventures to intensify its investments in Mexico. Rampa’s headquarters will serve as a Mexican base for Magma Partners as it continues to invest in the country, where it already has 12 startups in its portfolio. Rampa’s founder Mak Gutierrez will take over as CEO of Magma Partners’ internal agency, Magma Infrastructure, which helps startups grow and market themselves in the region.
Brazilian direct to consumer dental tech startup SouSmile raised a $10 million Series A round this month, closing the deal before investors began to show concerns about COVID-19. SouSmile uses 3D scanners to rapidly create invisible alignment devices for customers to provide them with affordable orthodontics for 60% cheaper than current models, a model that has proved highly successful in Latin America, where access to orthodontics is limited and cost-prohibitive.
Aprende Institute Raises $1.6M Seed Round for Skills Training in Latin America
Aprende Institute, an online education platform, raised $1.6M in seed funding from the Angel Ventures AV Pacific Alliance Fund II LP, Artisan Venture Capital, 500 Startups, Claure Group, and private investors.
Aprende Institute offers online training courses in a wide range of professions such as Business and Entrepreneurship, Wellness, Gastronomy, Trade Skills, and Fashion and Beauty.
As reported by LatAm List, the online platform provides flexible learning, monitors student progress, and facilitates connections with teachers, tutors, and students.
“We aim for a high-quality educational offering that effectively trains students in the skills demanded by the job market,” explains Martin Claure, founder and CEO of Aprende.
The recent funding will allow Aprende Institute to further develop its digital platform and improve the technology, as well as expanding further across Latin America. Aprende Institute cites Chile, Peru, Argentina, and Brazil as the next countries for launch.
Latin America Consumer Tech Market to See Massive Pandemic-Driven Shift
ZD Net reports that smartphones, PCs and tablets will see a major drop in sales and prices to consumers will increase, but segments like wearables will continue to grow.
According to a new report from research firm IDC, sales of smartphones and personal computers will be among the hardest hit in the consumer technology space in Latin America in 2020 as the sector braces for a major coronavirus-related slowdown.
The analyst firm had previously predicted timid growth in the smartphone market in March for large Latin markets such as Brazil. However, after analyzing COVID-19’s impact on China and the buying patterns seen in Latin America, IDC revised its predictions, which now bring a bleak outlook with some potential upsides.
According to IDC,
“The smartphone segment, which accounts for 51% of total technology sales for end consumers will suffer the biggest impact. Before the pandemic, IDC projected a 0.2% drop for the segment, which has now been revised: smartphone sales in the region are expected to decline by 10% to 15%.”
When adjusting its projections for 2020 in Latin America, IDC considered that capacity of factories around the globe is currently at about 30% and 50%. These statistics are projected to persist until at least the end of May, affecting the production and distribution of components for consumer devices.
According to IDC, the smartphone markets of Brazil and Mexico should see the greatest impact due to the lack of parts and closure of local factories.
Traffic limitations imposed by quarantine measures introduced in some Latin American countries have impaired the supply chain for consumer electronics, therefore causing delays. According to IDC, this has caused temporary closures or shutdowns in some factories serving the IT industry, therefore resulting in a decrease in sales or price increases, also driven by exchange rate volatility.
“The situation should be worsened by the macroeconomic contraction and aspects such as job losses and reallocation of family budgets to basic consumer goods”, said Paola Soriano, Director of Consumer Insights at IDC in Latin America.
Personal computers sales (for the consumer market) shifted from a previously predicted contraction of 1.9% to a drop of 8% in 2020. Shipments will reach 7 and 8 million units, of which approximately 80% will be laptops. For the segment of PCs for gaming, the sales forecast ranges between 700,000 to 900,000 units, driven by Mexico, Brazil, and Peru.
Brazil’s OECD Bid Under Scrutiny After Bolsonaro Allegations
Brazil’s bid to join the OECD has come under harsh scrutiny since allegations emerged that President Jair Bolsonaro sought to interfere with the federal police, according to the Organization for Economic Co-operation and Development.
According to Bloomberg, Drago Kos, chairman of the working group on bribery at the Organization for Economic Co-operation and Development, urged Brazilian officials to investigate the accusations made by former Justice Minister Sergio Moro, who resigned in April in protest against Bolsonaro’s firing of the federal police chief.
“Our member states are very, very rigorous when discussing accession to the OECD, so I’m hopeful that Brazil will use this as an opportunity. But if this goes otherwise, our member states will know how to deal with it,” Kos said in an interview.
Kos added that his team is known to be the toughest branch of the OECD in assessing bids to join the group.
“We have to be absolutely sure that Brazil is not going backward”.
President Bolsonaro has been eager to see Brazil join the OECD, as it constitutes a symbolic badge of honor to the country and his government. While lobbying U.S. President Donald Trump to back Brazil’s bid, Brazilian authorities have been working hard to ensure the Latin American nation meets the group’s political and economic standards.
Kos said he was shocked by the departure of Moro, who rose to fame as the judge in charge of the so-called “Carwash Probe” that sent dozens of politicians and business leaders behind bars.
Last year, the two men met in the federal capital of Brasilia to discuss Brazil’s efforts to meet OECD anti-corruption standards.
Moro’s abrupt resignation tainted President Bolsonaro’s anti-corruption credentials, one of the pillars of his government.
Bloomberg reports that,
“The case prompted a political storm in Brazil as the federal police carry out a number of investigations with potential to implicate Bolsonaro’s family, including a probe on the spread of fake news and another on money laundering and diversion of funds. The family has repeatedly denied wrongdoing.”
The OECD is asking Brazilian officials “what is going on,” according to Kos. He noted that both sides will hold a videoconference in June to discuss this and other matters related to Brazil’s candidacy, which was submitted in 2017.
Kos suggested that Brazil investigate Moro’s allegations to prove it remains as committed to fight corruption as it was during the Carwash Probe. Prosecutors, police and investigators should be allowed to do their job, he said.
“When you see a person like Moro leaving the ministry of justice, then you know something might be terribly wrong… In Brazil I met very qualified police officers, prosecutors and great experts to deal with corruption cases. The question now is how free they will be to do their work?” he said.
Podcast: Behind Rapyd’s Global Ambitions and Recent Move into Brazil with Eric Rosenthal
In the following podcast, Rapyd’s Eric Rosenthal discusses the jump into fintech after working for incumbent financial institutions. He’s worked all over the world and is helping the payments infrastructure company expand throughout the Americas.
Podcast: Aquí & Ahora; Greg Mitchell & Juan Pablo Cappello
Greg Mitchell sees opportunities where most people don’t. While many saw funding of Latin American startups, double for each of the past two years and double each of the past two years, Greg saw an opportunity. Gregg Mitchell realized that market leaders (Brazil, Mexico and Colombia) would soon be crowded with capital. So he chose to focus on a less crowded and emerging tech-hub.
Greg is Regional Director of Angel Ventures, (a startup investor advisory company) and is the creator of the blog Ruta Start-up. He also runs the AVP Seed Fund based in Lima. Greg supports the startup ecosystem in the country through his roles as Director of the Peruvian Association of Seed and Venture Capital and mentor at Endeavor. He earned an MBA at the prestigious Wharton School of Business and Master of Arts degree at the University of Pennsylvania.
In the tech world, Juan Pablo is known as one of the partners of Patagon.com, one of the first on-line banks that was bought by Banco Santander for more than US$700 million. Juan Pablo has co-founded Idea.me, Lab Miami, Lab Ventures & Wonder (purchased in 2020 by Atari). He also publishes a widely read column on the TecnoLatino and continues advising entrepreneurs in the region from PAGLaw.