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April 5, 2019

LATAM Business Weekly - Issue #12

Amazon Web Services’ Colombian infrastructure location will help train 2,000 students in cloud technology.

Last Thursday, Amazon Web Services (AWS), a unit of Amazon.com Inc, announced that it will open a Latin America infrastructure location in Colombia.

AWS’ general public sector manager for Latin America, the Caribbean and Canada, Jeffrey Kratz, said in a government statement that the company will work with Colombia’s public technical education institute to train roughly  2,000 students in cloud computing.

Colombia is Amazon’s the sixth Latin American edge location and will help deliver data, videos, and applications to end-users at higher speeds.

“Kratz, in Bogota for a technology conference, said Amazon wants to support the development of digital infrastructure and help entrepreneurs create large-scale projects. He said the company would continue to invest in Colombia, though he did not provide further details” (Reuters).

In addition, last August Amazon announced that it would open its first customer service center in Colombia this year that will employ 600 people.

Second-hand fashion startups GoTrendier and Chicfy merge to take Latin America by storm

Second-hand fashion startups GoTrendier and Chicfy have merged to create an accumulative clientele of 8 million and a catalog of 12 million products.

Go Trendier and Chicfy want to create alternatives to “fast fashion” based on their transactional C2C (consumer to consumer) business model and intend to create the largest marketplace for second-hand clothing in Latin America.

Mexican startup GoTrendier launched in 2016 and currently has operations in Mexico, Colombia and Spain.

Second-hand fashion startups GoTrendier and Chicfy have merged to create an accumulative clientele of 8 million and a catalog of 12 million products.

Go Trendier and Chicfy want to create alternatives to “fast fashion” based on their transactional C2C (consumer to consumer) business model and intend to create the largest marketplace for second-hand clothing in Latin America.

Mexican startup GoTrendier launched in 2016 and currently has operations in Mexico, Colombia and Spain.

According to GoTrendier founder and CEO Belén Cabido,

“Following the collaboration, the company plans to expand services to more Latin American countries with users benefiting the most” (Contxto).

Chicfy is the leading second-hand fashion marketplace for men, women and children in Spain.

São Paulo: Brazil’s innovation powerhouse

As home to a population of nearly 15 million people including half of Brazil’s billionaires and accounting for 18 percent of the country’s GDP, São Paulo is the heart of the Brazilian innovation ecosystem.

In addition, the city accounts for 60 percent of startup investments in Brazil and well over 2,000 ventures working on tech-based products and services.

“São Paulo is a decision-making hub, the Latam base of 65 percent of Fortune 500 companies and tech giants like Spotify, Airbnb, Google, Netflix and Amazon. It is also home to many local unicorns, including ridesharing firm 99, fintech Nubank and real estate startup Quinto Andar.” (Forbes)

The urban problems facing the city create vast opportunities for businesses that are working to solve these problems such as mobility and healthcare.

A prime example is the resounding success of mobility startups Yellow and Grin, who achieved exponential growth in the city within a few months.

According to Michel Porcino, manager at investment agency SP Negócios,

“In São Paulo, there is an openness that is unique… It is not easy to start a business like Uber in Cuiabá, for example. But if you start it in São Paulo, prove your business works and make it known, it has a much higher chance of succeeding elsewhere.”

Chilean startup Descatame raises $3M series A funding round to further develop financial management platform

Chilean-based startup Destacame recently closed a $3M series A round of funding, with prominent investors including Fen Ventures, Accion Venture Lab, and Mountain Nazca.

Destacame is a personal financial management platform with over 1.3 million users across Chile and Mexico.

According to LAVCA,

“The company collaborates with more than 25 financial institutions to deliver these financial products through its platform. Destacame focuses on reducing the cost of the financial system while empowering underserved individuals to build their financial capabilities and ultimately access better quality financial products through an intuitive and simple platform”

This new investment round will allow Descatame to scale operations in Mexico, reinforce its position in Chile, and developing its financial products.

President Trump backs down from his threat to shut down the U.S. border

President Trump has previously issued a threat of closing the border in efforts to halt border crossings by asylum-seekers from Central America.

However, the President is giving Mexico a one-year warning

“to address his concerns about its handling of immigrants traveling through the country on the way to the United States. He also demanded that Mexico tamp down on the flow of drugs.” (NPR)

If Mexico does not respond appropriately, however, Trump has threatened to impose auto tariffs, saying it would be a “very powerful incentive”.

According to President Trump,  

“Mexico understands that we’re going to close the border or I’m going to tariff the cars — one or the other”

Brazilian bureaucracy’s impact on tax payments and economic growth

It takes nearly 2,000 hours per year for a medium-size company in Brazil to make their tax payments: undoubtedly the longest tax payments process in the world.

While bureaucracy afflicts Latin America, in Brazil it is one of the main hindrances to the nation’s economic growth. The case of Brazil is especially problematic in that each Brazilian city and state have distinct sets of rules that shift regularly.

“It takes 21 days to open a business in Brazil, three times more than in investor-friendly Chile, according to the World Bank. It was even worse before the recent adoption of electronic systems, with 80 days before a new business could start” (Bloomberg)

Over the past few years, Brazil has made progress in reducing red tape, however the business environment still remains somewhat hostile to companies.

According to Gleisson Rubin, adjunct secretary of debureaucratization, roughly 1,200 processes have been digitized in the past few years and the Brazilian government hopes for another 1,000 by end-2020.

Protests at Chinese copper mine in Peru

On Friday, Peruvian police released Gregorio Rojas, president of the Quechua-speaking community Fuerabamba who had been blocking roads to a major Chinese copper mine.

Fuerabamba villagers cut off access to Chinese miner MMG Ltd’s copper mine Las Bambas in efforts to stop its exports.

The Fuerabamba community was relocated earlier this decade to a new town in order to make room for Las Bambas. MMG claims it has spent hundreds of millions of dollars on the relocation plan after close collaboration with Fuerabamba villagers.

“But the community has complained for years that MMG has not fulfilled its commitments, and in early February started blocking MMG from transporting copper on a road that passes through its property.” (Reuters)

Police accused Rojas of belonging to a criminal organization that was trying to extort Chinese miner MMG. Rojas was freed in the capital Lima without charge a week later.

However, news of Rojas’ release failed to suppress a protest by Fuerabamba villagers in Challhuahuacho. The Peruvian government declared an emergency on Friday, giving military authorization to restore order.

Podcast: Guatemala’s backlash against accountability

While a few years ago, Guatemala was making historic strides in the fight against corruption and human rights abuses, a “pact of the corrupt” in the country’s ruling elite continues to push legislation that would terminate trials and investigations for war crimes and corruption.

According to WOLA,

“Members of Congress have made multiple attempts to pass a bill that would grant amnesty to perpetrators of grave war crimes and human rights abuses during the country’s armed conflict… a law being discussed by Congress would maliciously limit pre-trial detention to just one year, regardless of the nature of the crime and despite the fact that high impact cases often require more time to go through the entire judicial process”

Surprisngly enough, Guatemala has surpassed Mexico as the number-one country of origin of undocumented migrants being arrested at the U.S.-Mexico border.

In this podcast, Adam Isacson discusses the situation with WOLA Senior Fellow Jo-Marie Burt, who recently returned from one of her frequent visits to Guatemala.

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SoftBank's Brazilian investments, Latin American legislation's benefits for American entrepreneurs, and more...

This week, SoftBank bet big on Brazilian business, Platzi raised $6M USD in a Series A funding round, and President Andres Manuel Lopez Obrador invited Mark Zuckerberg to join him in promoting universal internet access in Mexico.

Softbank Vision Fund invests $100M in Brazil’s Loggi, Chinese ride-sharing giant Didi’s future Latin American expansion, PayPal’s Involvement in Mexican SMB lending, and more from Latin America…

This week, logistics startup Loggi became the newest Brazilian unicorn, Didi announced expansion plans for Colombia and Chile, and PayPal kicked off their new partnership with Konfio. 

Rappi announces plans to launch Visa debit card, Brazilan payments startup Celcoin raises $1.5M, Netflix collaborates with Latin American Youtubers to promote engagement, and more from the region…

This week, Rappi entered the neobanking market, Netflix tapped into their Latin American consumer base, and Finnovasta released their Mexican Fintech Report.

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