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June 21, 2019

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

SoftBank bets on in Brazilian business with US $200M investment in fintech startup Creditas and US $300M investment in fitness platform Gympass

Softbank formally announced their plans to invest US$200 million in Brazilian fintech startup, Creditas. This new funding upped the company’s valuation to US$700 million.

Since the company was founded in 2012 as a credit lender, Creditas has distributed more than US$500 million in loans. The company’s net revenue increased threefold in 2016, seven times in 2017, and five times in 2018. Creditas’ goal is to grow by 27 before 2022. (Contxto).

According to an estimate by Creditas, there is over R$10 trillion (US$2 trillion) in assets (between vehicles and real estate) in Brazil.

Photo Courtesy of Banking Future

Last week, SoftBank invested Brazilian unicorn Gympass raised $300M USD.

Gympass,the world’s largest corporate fitness platform, has utilized innovative technology to grow an expansive networkd across multiple markets in Latin America, North America, and Europe. The B2B fitness platform currently operates in 14 countries, with roughly 47,000 gym and studio partners worldwide.

Marcelo Claure, CEO of SoftBank Latin America Fund, said in a statement:

“More people are leading healthier lives thanks to Gympass, and we’re thrilled to work with Cesar and the team to accelerate their strategy in Latin America and beyond. There are few companies as successful as Gympass in making the transition to a global champion, and we’re excited for what the future holds” (The PE Hub Network).

This partnership will bring expanded benefits to global corporations, employees, and fitness partners.

Implementation of new Latin American legislation and its benefits for American entrepreneurs

As big-name international investors such as Sequoia, Ant Financial, Berkshire Hathaway, Goldman Sachs, Andreessen Horowitz, Naspers and Softbank make multi-million dollar investments in the region, local Latin American governments and organizations have been working to cultivate the region’s business ecosystem into an ideal launchpad for entrepreneurs.

For many American investors and entrepreneurs, 2018 was the year Latin America became a “legitimate potential investment target”, with international corporations like Didi Chuxing and Walmart providing record-breaking exits for startups in Brazil, Chile, and Mexico (Entrepreneur).

In response to entrepreneurial growth and incoming investment into the region, Latin America’s governments are making strides towards adapting their legal environments to become increasingly amenable to business development. Governments and NGOs across the region are working to eliminate red tape and diminish the power of bureaucracy in efforts of attracting both local and international entrepreneurs.

According to Entrepreneur, this is what U.S. businesses should know about Latin America’s legal restructuring; and how American entrepreneurs can benefit from it:

1. Rapid payment processing

 Earlier this year, Chile passed the first “30-day Payment Law,” or “Ley de Pago en 30 Días”, which requires all companies to complete payment within 30 days of approving an invoice. The law will roll out over the next two years, with a 60-day requirement starting in 2019.

 While Chile is the only country to have passed this law in Latin America, several countries are working to implement similar measures.

 “The law rippled across Latin America as many other countries realized the need they too had to improve financing for SMEs since a lack of liquidity is a significant cause of company failure worldwide.”

Mexico’s entrepreneurship association, with the support of my company Magma’s Eugenio Perea, recently submitted a draft bill to its House of Representatives; and Colombia and Peru have followed in their footsteps. If the laws are passed in these nations, Colombia, Mexico, Peru and Chile would be among the top 20 countries in the world for rapid payment processing.

The legislation demonstrates strong support of startups and small businesses that could otherwise easily be suppressed by liquidity traps; allowing millions more people to start their own businesses.

2. Protecting entrepreneurs from crippling bankruptcy

Several countries have established “re-entrepreneurship lawsm”, or “leyes de re-emprender” to help entrepreneurs recover from bankruptcy, rather than forcing them to fend for themselves with crippling debt.

Since second- or third-time founders often build better businesses, this legislation can have a substantial, positive impact on the Latin American business environment.

 In Chile, Law 20.720 (passed in 2014) helps salvage dying companies, liquify remaining assets and negotiate better debt terms to help startups die without killing the entrepreneur as well.

Colombia passed the “Ley de Quiebras,” or “the Bankruptcy Law” in 2007: legislation that has helped restructure and save almost 450 companies to date. The “Bankruptcy Law” provides companies with remedies to revamp their business models, restructure debt and utilize other alternatives to outright bankruptcy.

Mexico is currently working to pass similar legislation.

3. Having a voice in front of the government and media

While most lobbying efforts in the United States go toward supporting large corporations, many countries in Latin America have their own entrepreneurship advocacy organizations that lobby government support of entrepreneurs and SMEs.

Many Latin American nations have been a part of the Latin American Entrepreneurs Association, ASELA, since 2014. The region’s governments and organizations are working hard to turn the continent into an attractive business environment for international startups.

Other Latin American entrepreneurship associations include:

Chile:

Chile’s Asociación de Emprendedores de Chile (ASECH) works alongside the development agency CORFO to support and incentivize new businesses in Chile. ASECH helped pass the 30-Day Payment Law, the bankruptcy law, and a law that allows founders to incorporate companies in a single day.

Argentina:

Argentina’s Asociación de Emprendedores de Argentina (ASEA) is responsible for legislative action such as Law 4064; which helps newly registered SMEs minimize their taxes, as well as the Argentinean Entrepreneurship Law, which allows entrepreneurs to incorporate companies in a single day. ASEA created an online community for startups, which provides support alongside Buenos Aires’ government accelerator, IncuBAte, and the entrepreneurship organization Startup Buenos Aires.

Mexico:

Mexico’s Asociación de Emprendedores de México (ASEM) is strongly backing the new Pago en 30 Dias law and Mexico’s Ley de Re-Emprender. While still behind other neighboring countries, ASEM is following Chile’s example in supporting entrepreneur-friendly legislation.

Peru:

Peru’s Asociacion de Emprendedores de Peru (ASEP) works with programs like Startup Peru to represent founders before the government. The organization recently helped pass a law to incorporate a business in a single day.

Meet Platzi: the platform bringing online education to Latin American workforce that just raised US $6M in Series A funding round

Platzi- an online platform that offers Spanish- and Portugese-language live-streamed classes for courses that include programming, marketing, design and business- has raised $6 million in a Series A round led by venture capital firm Foundation Capital. To date, the platform has raised $8.3 million.

Platzi has already served one million students, and looks to bring more online education to Latin America with this new round of capital. According to Co-Founder Freddy Vega, the new funding round will go toward adding more classes to the platform and including more Portuguese to promote growth and expansion of the platform in the Brazilian market.

A report published by Accenture revealed that an estimated 75 to 81 percent of workers in Colombia, Mexico, Brazil, Argentina and Chile hold low- or medium-skilled jobs and are thus vulnerable to automation and displacement by technology. In comparison, roughly 60 percent of the workforce in the U.S. and European Union are susceptible to these threats. (Accenture).

According to a McKinsey report, 40 to 50 percent of Latin American employers agree that most entry-level job vacancies are due to candidates’ lack of skills.

Vega explained,

“A lot of companies talk about changing the world. We’re not going to be able to change the world, but we may be able to change the economy of a region” (EdSurge).

He believes Platzi is helping these workers develop the necessary skills to get them hired; as Latin America adds more high-skilled labor and appeal to U.S. companies in search of employees in the region.

“Right now Latin America is super hot and the need for talent is amazing. We’re training the next generation,” said Vega.

Business Insider: 5 surprising facts about the Mexican economy

1. More Mexicans are leaving the US for Mexico than the other way around

According to the Pew Research Center, from 2009 to 2014, about 1 million Mexican immigrants and their American-born children left the US to return to Mexico, while about 870,000 Mexicans entered the US in the same time span.

2. Mexico has more than four times Canada's population, but its GDP is smaller

Mexico still trails Canada in terms of gross domestic product. In 2017, Mexico's GDP was 1.15 trillion, versus Canada's 1.68 trillion.

Mexico's population of ~126 million is over four times the size of Canada.

3. Mexico is the No. 1 source of imported cars in the US

Mexico has become an integral part of the US auto industry.

While American carmakers have build a significant portion of their cars in Mexico, 89 of the world's top 100 auto-part makers also have production facilities in Mexico.

In 2018, the US imported $93 billion worth of cars and car parts from Mexico. Many auto brands- including Ford, Audi, Mercedes Benz, BMW, and Nissan- continue to make significant investments in Mexican factories.

4. Mexico gets more money from remittances than from oil exports

Migrant workers and other immigrants often send money home through international money transfers, known as remittances.

According to CNN, Mexico's remittances added up to more than $26 billion in 2017: a number that exceeds most of the nation's other sources of foreign income - even petroleum exports, which add up to only about $18.5 billion.

Mexico ranks as the second largest receiver of remittances in the world behind India. Mexico is the largest recipient of remittances from the US.


5. Mexico City has the largest taxi fleet in the world

Mexico City’s population of about 9 million people, puts it on parity with other large cities like New York City. But while NYC has about 14,000 taxi cabs, Mexico City is home to over 100,000 registered taxi cabs - the largest fleet in the world, and the most taxis per citizen.

Video: President Andres Manuel Lopez Obrador invites Facebook’s Mark Zuckerberg to join him in promoting universal internet access in Mexico

This Tuesday, Mexican President Andres Manuel Lopez Obrador reportedly spoke with Facebook’s Mark Zuckerberg: inviting the social media mogul to partner with him in a bid to promote universal internet access in Mexico.

Lopez Obrador posted a short clip on Facebook and Twitter of his video conference with Zuckerberg in which the Mexican President explains that a fifth of the Mexican population does not have internet access, adding that he would like to work to implement better connectivity to help improve social conditions, especially in the nation’s remote and rural areas.

“This is a program to communicate, inform, improve education, health at a very low cost,” said President Lopez Obrador.

A Facebook representative said in a statement to Reuters,

“We had the opportunity to discuss the life-changing potential of connectivity with President Lopez Obrador”

Video: How Mexico is Winning the Car Manufacturing War


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Featured stories include: the top four big trends in Latin American startup funding, Grow Mobility’s growing success, EU-Mercosur Treaty: deal details and its international implications for Latin America.

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