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March 22, 2019

LATAM Business Weekly - Issue #10

IBM announces launch of Blockchain World Wire: a new global blockchain-based payments network

This week, IBM announced the launch of Blockchain World Wire: a new global blockchain-based payments network.  

This near real-time blockchain-based network is based on distributed ledger technology (DLT) for regulated financial firms. Blockchain World Wire will introduce a new way for cross-border payments as well as global settlement (with settlements being processed in merely five to ten seconds).

According to James Wester, research director for IDC’s Blockchain strategies, this network allows participants to transact openly, greatly reducing risks and costs with alleviating fraud. (Computerworld)

Blockchain Wire will also allow organizations to execute foreign exchange settlements. The advantage of a peer-to-peer (P2P) World Wire network is the removal of banking intermediaries. Instead, this new system will reduce fees and processing time by removing central banks from the entire process.

According to Stanley Yong, CTO of IBM Blockchain for Finance,

“…instead of having to go through a correspondent bank and a whole set of multi-hops across different nations in order for settlement to take place, what we do is allow a point-to-point transfer of value immediately, along with the exchange of financial information, which tells you to whom they’re going to deliver the money”

Wester claims that the most intriguing aspect of Blockchain Wire lies in its ability to perform transactions without U.S. dollars, instead using a “host of smaller currencies, and thus allow for access to cross-border… money transmitters in developing markets.”

"It means swapping into and out of U.S. dollars or Euros or some other major currency is no longer necessary, which affects [foreign exchange] fees, settlement times and liquidity… There are a lot of potential moving pieces, but using blockchain to do it removes a lot of those pieces by simply giving everyone access to the ledger.”

This video, published this Tuesday by IDG TECHtalk, further discusses IBM’s Blockchain Wire, the future of blockchain technology as a whole, and what that means for users and global organizations.

Facebook and Start-Up Chile Collaborate for New Innovation Lab in Santiago

Facebook has collaborated with Start-Up Chile and inaugurated their new innovation center in Santiago, Chile on February 28, 2019.

While Facebook does not yet have any Chilean offices, the company has chosen Santiago as the site of their new innovation center that will offer training, mentoring and workshops to over 600 Chilean entrepreneurs.

Facebook already has similar innovation hubs in Argentina and Brazil, as well as in South Korea, France, and Nigeria.

According to Susan Ciprot, Program Leader for Facebook Developers in Latin America,

“Facebook started as a startup and we know it’s important that it receives support to make an idea take off.. Chile has created one of the most vibrant innovative ecosystems in the region. We are very happy to be apple to work with Start-Up Chile to support startups and developers.”(Contxto)

Seattle-based pet-sitting company Rover expands into LatAm: leading $7M funding round for Brazilian startup DogHero 🐶

Rover, a Seattle-based pet-sitting marketplace, looks to expand into Latin America: leading a $7 million funding round for Sao Paulo-based DogHero, LatAm’s premier pet care marketplace. 🐕🐩

According to Megan Teepe, Rover’s VP and General Manager of International Business, this deal will help give the company visibility and further its goal of becoming the “global leader in the pet care space”.

“We see this investment as a way to come and learn more about what it takes to operate in the Latin American market and to do that through the eyes of the current market leader in that geography”(GeekWire).

This funding round led by Rover also includes participation from Mexican VC firm IGNIA Partners. This new capital will allow DogHero to introduce their dog-walking service into more cities while growing its core business.

“Latin America is a huge market for companies such as Rover and DogHero with more than 100 million dogs, according to Rover. Brazil alone has more than 52 million dogs, putting it second behind only the U.S. in terms of pup population.”

2019 Latin American Payments Forecast

According to Americas Market Intelligence report LatAm Payments: The Good, the Bad, and Ugly for 2019, intense competition and disruptive challenges are likely to be the key developments in LatAm payments sector this year.

In 2019, we can expect increasing competition between the two main technologies for in-store payments: contactless cards and QR codes.

According to the report,

“Contactless card mandates from Visa, Mastercard and American Express will go into effect this year, which require banks in Latin America to issue contactless cards instead of contact chip or magnetic stripe cards. This should significantly increase penetration of contactless transactions from the current low levels of less than 1%, and there have been very compelling use cases when contactless cards have been trialed in markets, including PriceSmart’s successful efforts in Costa Rica.”

Mobile payments with QR codes are also gaining traction in the region, as made evident through MercadoPago’s success. Meanwhile, the Mexican Central Bank’s plan for a new mobile payments platform looks to transform the country’s payments sector.

However, competing technologies and increased use of mobile payments and marketplaces have potential downsides.

“If mobile payments via QR codes manage to beat out contactless cards, they could end up sucking money out of the banking system in LatAm by offering higher interest rates for deposits of funds into their closed-loop systems, and then charging to withdraw them. In addition, closed-loop systems based on QR codes could potentially make the POS system obsolete.”

Report by Latin American Venture Capital Association reveals LatAm VC funding growth

A report by The Latin American Venture Capital Association(LAVCA) shows that venture capital funding increased more than double in 2017, reaching $1.14 billion versus $500 million in 2016.

“If you combine private equity and venture investing, the numbers are even more impressive. LAVCA estimates that PE and VC fundraising together in Latin America in 2017 totaled $4.3 billion, up from $2.3 billion in 2016” (TechCrunch)

According to LAVCA,

“Brazil led the region across all stages of VC investment, capturing 73 percent of VC investment dollars in 2017 and the first half of 2018 (201 startup investments totaling $1.4 billion). Mexico was the second most active market by number of deals (82 startup investments totaling $154 million), but Colombia saw more money invested ($188 million over 23 deals).”

Netflix focused on increasing production in Mexico

In response to overwhelming success, Netflix boosts production in Mexico with 50 films and series. This recent production increase is substantial, considering that in 2017, only seven Netflix productions were made in Mexico.

“The Netflix projects include four new films, including a musical comedy inspired by the songs of Pedro Infante, a series of documentaries about the border executive produced by Gael García Bernal, and a series about Tejano legend Selena.” (LA Times)

According to Netflix Chief Executive Ted Sarandos,

“The richness of talent in front of and behind the camera in Mexico was key in our decision to begin our local production strategy … four years ago”

The company announced that it will be opening a new office in Mexico City, with its own content executives, and marketing and public relations teams. Netflix has already set up other international offices in Singapore, São Paolo and Tokyo.

The LA Times reports that

“Over half of Netflix’s audience is now international, and international subscriptions are far outpacing domestic. In the last quarter of 2018, the company added 1.5 million U.S. subscribers and 7.3 million international subscribers — a record increase.”
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LATAM Business Weekly - Issue #14

Brazil’s advancement in mobile payment innovation, Growing presence of Venezuelans fleeing into Colombia, Argentina’s wine industry riding out the country’s recession, and more from Latin America...

LATAM Business Weekly - Issue #13

SoftBank tapped industry veterans from Third Point and JPMorgan Chase & Co. to oversee $5 billion SoftBank Innovation Fund focused on LatAm, China's Belt and Road initiative, Central American ecotourism and more from Latin America...

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