Mexico’s Proeza Ventures Raises US$50M to Boost Mobility Startups, Lime Shuts Down Operations in a Dozen Cities Worldwide, Chile's Codelco Uncovers $22 Million of Insurance Fraud Involving Unions, and More

Other featured stories include: Tough Economy Makes Brazilians Buy Smartphones in the Grey Market, Latin America: Finance Disrupted Conference, Guatemala’s New President Alejandro Giammattei Outlines His Administration’s Plans, and Economy Minister Says Argentina is Working ‘Nonstop’ to Resolve Debt Crisis

Mexico’s Proeza Ventures Raises US$50M to Boost Mobility Startups

This Monday, Proeza Ventures—a portfolio management company based in Monterrey, Mexico and Houston, Texas—pre-released the news that they’ve successfully raised US$50 million to boost mobility startups.

As reported by Contxto, the fund will go by the name P.V., and this recent funding makes it the largest regional startup mobility-exclusive investor in the region.

Proeza Ventures has expressed great interest in this line of investment, due to the company’s logistical industrial technology focus. More specifically, it runs two global platforms operating in the mobility and agroindustry sectors. Within this mobility platform, the company is a Tier-1 supplier of structural automotive products for light and commercial vehicles, as well as frames for light trucks in North America (Contxto).

“Our mission is to discover and invest in visionary founders building early-stage startups transforming the way in which we think about mobility and with whom we can partner to make a more sustainable world”, said Rodolfo Dieck, Managing Director at Proeza Ventures.

P.V. intends to utilize this capital for various  subsections within the mobility industry. The capital will go into 12 to 15 startups raising early and growth-stage financing. Their goal is to cover the full mobility value chain from industrial tech (automatization, 3D printing), to smart components, MaaS and digital data services.

“We expect to be writing first-time checks in the range of US$500k and up to US$2 million reserving enough capital to support companies in their development trajectory”, said Dieck.

Lime Shuts Down Operations in a Dozen Cities Worldwide

In a company blog post last Thursday, e-scooter startup Lime stated they are laying off about 100 of its workers- roughly 14% of its labor force- as it shuts down operations in 12 of its 120-plus markets, the company said in a blog post Thursday. Lime said the move is an attempt to achieve profitability in 2020.

The statement explains,

“Part of realizing our vision to transform urban mobility is achieving financial independence; that is why we have shifted our primary focus to profitability.  While the vast majority of our 120+ markets have adopted micromobility transportation solutions quickly and are profitable, there are select communities throughout the world where micromobility has evolved more slowly.”

In the U.S., Lime will shut down operations in Atlanta, Phoenix, San Diego and San Antonio. In Europe, service will end in Linz and Austria. Lastly, in Latin America, Bogotá, Colombia; Buenos Aires, Argentina; Montevideo, Uruguay; Lima, Peru; Puerto Vallarta, Mexico; Rio de Janeiro and São Paulo will be affected.

“Financial independence is our goal for 2020, and we are confident that Lime will be the first next-generation mobility company to reach profitability. We are immensely grateful for our team members, riders, Juicers and cities who supported us, and we hope to reintroduce Lime back into these communities when the time is right,” said Lime co-founder and CEO Brad Bao in an email to CNet.

Chile's Codelco Uncovers $22 Million of Insurance Fraud Involving Unions

On Tuesday, Chile’s state-owned Codelco, the world’s largest copper producer, announced it has filed a lawsuit over an alleged scam in insurance contracts drawn up by unions for workers at its Chuquicamata and Radomiro Tomic mines.

As reported by Reuters, the firm said in a statement that inflated premiums for life and personal accident insurance cost $22 million between 2005 and 2018. Codelco stated that half of this sum had been borne by the company, and half by its workers.

The alleged fraud comes at a time when the relationship is already strained between Codelco and unions at the century old Chuquicamata mine. The mine’s transformation from open cast into an underground mine has led to a reduction in headcount.

The unions said in a statement that all insurance agreements had been signed off by Codelco’s human resources managers.

“We are ready to support prosecutors in every way we can to ensure this investigation reaches the appropriate conclusion,” it said in a statement sent to Reuters.

On Tuesday, Chile’s El Mercurio newspaper reported that an audit administered by Chile’s Copper Commission Cochilco put the premiums at as much as 68% higher than the standard market rate. The newspaper added that at least two unions would have received payments for contracting policies offered by insurance broker Gestion y Servicios (GyS).

“Agreement documents were found that were signed by GyS and union officials in which the payment of benefits to the unions - regardless of the nature of the policies - was offered in exchange for automatic insurance renewals,” Codelco added.

Tough Economy Makes Brazilians Buy Smartphones in the Grey Market

According to new research by marketing intelligence firm IDC, sales of smartphones through the grey market had a massive boost in the third quarter of 2019 in Brazil as consumers sought new devices at a lower cost.

In Q3 2019, the Brazilian mobile phone experienced a modest drop in sales at 1%, according to IDC. About 11.3 million units were sold between July and September: 10.5 million of which were smartphones (down by 3.3%), while 865,000 were feature phones (up by 40.3%).

According to IDC, the main reason for the decline is the unfavorable macroeconomic conditions, which have also driven the increased grey market sales. The research also found that the parallel market- whereby devices reach consumers through distribution channels unintended by the original manufacturer- grew by 537.3% in relation to the same period in 2018 (ZDNet).

More than 1.2 million phones have been sold through those channels in Brazil. The grey market has grown steadily in the country since Q1 2019, with the arrival of Chinese manufacturers. Although new product launches sparked consumer interest, official price tags deterred Brazilian consumers, who often bought the devices through alternative means.

“It is not just Chinese manufacturers that sell counterfeit products in Brazil and that such devices are not always fake. They may be original, but arrive in Brazil illegally and so enter the gray market,” says IDC Brazil analyst, Renato Meireles.

Latin America: Finance Disrupted Conference

As a result of digital innovation, the finance industry is undergoing an unprecedented period of disruption. From mobile money and online lending platforms to bitcoin and the blockchain, a variety of new products and emerging players will pave new opportunities to better serve customers.

In Latin America- where according to the World Bank, only 51% of adults have a bank account- the impact of this disruption can be revolutionary.

As reported by The Economist, the opportunity to give millions of people and SMEs (small to medium-sized businesses better access to short and long-term financing would close a large economic gap while also giving business leaders the resources to build smarter companies.

In Latin America, a region that favors traditional financial services firms and is afflicted with frequent financial fraud, scaling fintech will pose challenges. Capitalizing upon the fintech opportunity will require smarter regulation and a culture that embraces collaboration among both incumbents and startups.

Finance Disrupted LATAM, an event put on by The Economist, will bring together financial industry leaders, investors, entrepreneurs and policymakers who are immersed in the future of fintech and how it can help drive inclusive growth in Latin America.

The conference, held in Mexico City on February 25, will examine the future of the finance sector five years from now and look at how incumbents and startups can disrupt existing business models to ignite economic growth in the region.

Guatemala’s New President, Alejandro Giammattei, Outlines His Administration’s Plans

Alejandro Giammattei, Guatemala’s new President, faces challenges as he takes office on January 14th. Crime in the country is high, corruption remains unchecked, and hundreds of thousands of Guatemalans a year seek better lives in the United States. Mr Giammattei’s answer, engraved in English on a Guatemala-blue bracelet that he wears, is “hope”.

As reported by The Economist, Mr. Giammattei says that one of his first tasks as president will be to “rebuild the pieces of government that they are leaving behind”.

Giammattei shares his predecessor President Morales’ scepticism of the International Commission against Impunity (CICIG): the organization which launched the investigation that led to Giammattei’s own imprisonment. He spent ten months in jail during the investigation of the killing of seven inmates. The charges were ultimately dropped.

Giammattei contends that CICIG’s watch corruption has worsened, and plans to replace it with a “national” anti-corruption commission, whose powers are still uncertain. Activists doubt that the government can be trusted to police itself.

Photo Courtesy of Reuters

                                                         Photo Courtesy of Reuters

The new President is highly concerned with violent crime, and his rhetoric and record promise a militaristic approach. Giammattei is keenest to promote growth, and optimists compare him to such pro-business presidents as Álvaro Arzú in the 1990s and Óscar Berger in the 2000s.

Unless economic growth rises from 3% to 5-6%, “we won’t get people out of poverty,” says Tony Malouf, the new administration’s economy minister, who was the boss of Guatemala’s main business chamber.

Malouf aims to achieve these results (in part) by doubling exports. Since Giammattei’s election victory in August, he has visited nearly a dozen countries to invigorate investment. By teaming up with the “entrepreneurial right”, this administration might achieve a level of competence not seen in recent governments, says Juan Luis Font, a journalist.

Giammattei rejects the widespread view that his conservative, pro-business politics are associated with indifference towards poor indigenous Guatemalans. When asked what his government will do for the rural poor, Giammattei showed a photo on his phone of a malnourished child.

“This is the reality of a million children in Guatemala,” he says, promising a “crusade for nutrition”.

Giammattei’s initiative to build roads in the western highlands- the source of many migrants- in addition to attracting investment to the region reflects his hope to construct a “wall of prosperity” to curb the exodus of migrants. This will require investment by Guatemala’s government, which currently is terribly low.

As reported by The Economist, tax revenue is 10% of GDP: the lowest share in Latin America. Giammattei’s Vamos Party, which has a tenth of congressional seats, cannot raise taxes on its own.

Economy Minister Says Argentina is Working 'Nonstop' to Resolve Debt Crisis

Argentina’s new government is “working nonstop” to resolve its sovereign debt crisis, the Economy Minister Martin Guzman said on Friday, a month after center-left Peronist President Alberto Fernandez took office.

“We are working nonstop to resolve the external public debt crisis, the result of a failed irresponsible model that does not work in any country of the world and which left us hostage to the international financial markets,” Guzman tweeted.

As reported by The Financial Post, Fernandez’s government, inaugurated on December 10, is set for tough talks with creditors to restructure ~$100 billion in debt to avoid a damaging default after former president Mauricio Macri’s administration was plagued by economic crisis.

Guzman has been tasked with leading restructuring talks with private bondholders and other creditors, including the International Monetary Fund (IMF), which agreed to a $57 billion financing package with Argentina in 2018.

Last Friday, Fernandez told journalists that “everything is fine and on track” with the IMF.

Argentina’s debt talks are set to face their first big test this month with a $277-million payment due on a Buenos Aires provincial bond, seen as a gauge of how the indebted country will handle its creditors.

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