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May 10, 2019

LATAM Business Weekly - Issue #17

SoftBank Invests $20M into Mexican fintech startup Clip

SoftBank invested $20 million USD in Mexican fintech startup, Clip as one of the first Latin America deals of the $5 billion Softbank Innovation Fund.

Clip, founded in 2012, offers a mobile smartphone credit card reader. Businesses across Mexico including cafes, corner stores and street vendors have utilized the company’s service as a straight-forward, low-cost method of accepting card payments.

“Clip’s valuation after the transaction rose to between $350 million and $400 million, the two sources said. Clip’s total funding to date is roughly $160 million.” (Reuters)

Softbank’s investment was part of the Clip’s latest funding round that raised roughly $100 million USD.

“Unlike Asia and the United States, Latin America is a nascent tech market where startups typically have lower valuations and face less competition, meaning even small cash infusions propel growth. In Mexico, startups rarely raise $100 million in a single go.” (NASDAQ)

According to Eric Perez-Grovas, general partner at Mexican investment firm Jaguar Ventures,

“Investors see Mexico as an attractive market for fintech because many people do not have bank accounts but have access to mobile phones… You have the perfect elements to create fintech giants in this country”

Grupo Zap introduces instant home buyer model to Brazil

Grupo Zap is pursuing a billion-dollar opportunity through the introduction of  an instant home buyer (i-buyer) model in Brazil, with plans to nearly double its workforce and enhance data analytics capabilities to support the new business.

Zap owns the two largest real estate marketplaces in Brazil and provides a range of data-driven services to the industry.

Under the instant home (i-buyer) model, online firms assess and purchase properties from owners, which are renovated and later put back into the market.

US-based Zillow is the largest operator in the i-buyer sector, with a three-to five-year revenue target of an impressive $22 billion.

“By introducing the approach in Brazil, Zap aims to shake up the local real estate market. The firm's own data suggests transactions in the country have shrunk 30-40 percent since the last peak in 2014, with property owners currently waiting 468 days on average to sell” (Forbes).

Over the next year, Zap plans to invest 100 million reais (equating to $25 million USD) in 200 property acquisitions in large urban centers in Brazil.

Zap aims to claim a 10% market share of the country's real estate business, currently estimated at about 200 billion reais ($50 billion) a year.

Grupo chief executive Lucas Vargas believes that the i-buyer approach paired with other factors including the emergence of more credit offerings will encourage substantial growth in the Brazilian real estate market, with the current 500,000 yearly transactions rising to over a million in the next decade.

Costa Rican ambassador reflects on the country's economic success

Jairo Hernandez, Ambassador of Costa Rica to the Commonwealth of Australia, spoke in an interview with Biz Latin Hub regarding the nation’s economic success.

According to Hernandez, a key factor to the country’s success is the Costa Rican education system, which has developed into one of the best in Central and South America. The introduction of mandatory English classes has had a substantial impact on students, allowing them to communicate and prosper within the tourism industry: one of the country’s fastest growing industries.

Costa Rica is quickly emerging as one of the most innovative countries of educators in the world, promoting education in language, technology, and environmental sustainability. Additionally, “Costa Rica is considered one of the most progressive nations regarding climate change and aims to become the world’s first carbon-neutral country by 2021” (Biz Latin Hub)

“Costa Rica’s Green Energies industry is growing rapidly and gaining lots of attention on the world stage. The Costa Rican Electricity Institute (ICE) has said that for the last two consecutive years, 98% of the country’s electricity came from green sources.”

FDI investment is one of the country’s priorities and in 2018, the country created 12,691 new jobs through 48 projects. According to CINDE, these projects included new investments and expansions in the service sector, digital technology, life sciences, and advanced manufacturing services.

“A key factor setting Costa Rica apart is the strength of its regulatory bodies and a stable political environment as it provides foreign investors with confidence, thereby making Costa Rica a haven for foreign investors.”

Sonora market: Mexico City’s unconventional street market

Mexico City’s Sonora Market is the ground zero for the commercialization of religious fashions.

According to Salvatore Zavala, who has worked at the market since he was 8, Mexican movie stars of the 1950s and ‘60s would come to the market for ritual cleansings “implicitly linked to the concept of death as a deity. This became explicit about 60 years ago when the first images of the Santa Muerte, depicted as a female grim reaper, started being sold in the market.” (City Lab)
Photo courtesy of City Lab
“People throughout Mexico always believed in a holy death figure, as part of our pre-Hispanic heritage. The difference was that it had remained hidden, because you could get into trouble having such an image… Buyers from all over the world come here. The Santa Muerte is growing rapidly, whenever there is a new kind of problem there is a new statue of Santa Muerte dedicated to it.”

An afro-Cuban religion cult to voodoo called Santeria is also heavily represented at the market.

Glovo acquires Peruvian rival company Domicilios.com

Spanish delivery company Glovo recently acquired Peruvian rival company, Domicilios.com. Shortly after, it was announced that the company has raised roughly US$169 million in their most recent Series D funding round.

In efforts of overcoming hurdles in Chile, Glovo purchased Domicilios.com’s operations in Peru and Ecuador.

For Glovo’s co-founder Sacha Michaud, prospects are especially high in Peru in terms of potential revenue and growth opportunities.

According to Michaud,

“Peru should be one of the top three worldwide markets at the end of the year, along with Spain and Italy” (Contxto)

According to a report published by marketing research group CCR, Glovo is the most known delivery service in Peru, followed by Uber Eats and Domicilios.com. The report also found that both Glovo and Domicilios.com were the top preferred brands among consumers.

Brazilian SaaS startup Omie raises $20M in series B funding

São Paulo-based startup Omie recently raised $20M from Riverwood Capital in their Series B round, amounting to a total of $27M raised since it was founded.

Omie’s business management platform for SMEs helps companies manage their daily operations through invoicing, inventory management, accounts receivable, and accounts payable. In addition, the platform provides a customer relationship management, POS services, stock management, working capital management and financial services.

In 2018 Omie’s revenue grew to $7.3M from $4.3M in 2017. The company currently has 215 employees, up from 38 in 2017. In terms of potential clients, the Brazilian market is home to roughly 2.7 million SMEs.

According to Omie CEO Marcelo Lombardo,

“With our offering, we help solve the biggest operational pain points Brazilian companies face as they grow, in almost any segment… “We have shown accountants that together we can drive the digital transformation of Brazilian SMBs, making them more competitive and integrated,” he added. This brings efficiency to the entire ecosystem” (Crunchbase).

Buenos Aires bill regulates e-scooter traffic

Last week, a bill was passed to regulate e-scooter traffic and rentals in Buenos Aires. The bill will regulate maximum velocity, age limit, and minimum requirements that the “personal-use vehicle” should have to be safe.  

Mexican scooter company Grin works with Rappi and is already operating in some of Buenos Aires’ neighborhoods.

Another key player in the e-scooter market is Voltion, an Argentine startup that distributes AirWheel scooters in both Argentina and Europe.

In addition, Glovo and Cabify’s parent company, Maxi Mobility, plans launch e-scooter platform Movo in Buenos Aires in the upcoming months. According to Lat Am List, Grin’s presence and the local government’s interest in regulation has accelerated Movo’s expansion in Argentina.

Photo courtesy of LAVCA
“Movo will benefit from the brand that Glovo and Cabify have already established in Argentina, which will “help open doors” to move forward with their project. The company’s long term plans are to unify Movo, Glovo, and Cabify under a single multiservice platform.”

It is estimated that Movo will launch preliminary services with 300 scooters, which is the same amount they started with in other Latin American cities like Santiago de Chile and Montevideo.

Brazilian President Bolsonaro signs provisional measure to reduce bureaucracy from startups

Last Tuesday, Brazilian President Jair Bolsonaro signed a provisional measure to encourage entrepreneurship via reduced levels of bureaucracy.

The initiative was led by Paulo Uebel, Brazil’s Debureaucratization Secretary, aiming to increase entrepreneurship and startup creation by eliminating limitations, roadblocks, paperwork and costs involved in starting a business.

According to Onyx Lorenzoni, Minister of the Civil House, “startups won’t need licenses” or permits to test products. (Contxto)

The only condition is that startups don’t endanger public safety or violate sanitary and health regulations.

“The more fluid dispensation of permits will make opening offices easier and less restrictive if the endeavor is considered “low risk.” On top of that, we’ll see improved measures to allow small and medium-sized companies to trade in the national exchange, making financing and funding alternatives easier for these businesses.”

Video: Softbank bets on Latin American tech


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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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