After investing nearly $2 billion of its Innovation Fund in Latin America in 2019, SoftBank announced this month that it would add an additional $1 billion into the fund to continue supporting tech startups across the region. While the Japanese investor faces the challenge of raising a second global fund after its Vision Fund, SoftBank is still investing heavily in Latin America.
One of its early Latin American investments — and the first in Colombia — Ayenda Rooms, is performing particularly well, raising $8.7 million from Kaszek Ventures this month. Ayenda is the local version of Oyo Rooms, one of SoftBank’s biggest bets in India, which has looked to expand into Mexico despite a financial crunch last month. In fact, the fund recently came under scrutiny by The Wall Street Journal for funding similar delivery competitors Uber, Rappi and Didi, suggesting a conflict of interest.
Most recently, SoftBank invested $125 million in Mexico’s lender, Alphacredit, and they reportedly plan to continue investing in that niche. The firm currently oversees more than 650 companies in Latin America, largely concentrated in Brazil, Argentina, Chile, Colombia and Mexico, and plans to invest $100-150 million in 17 firms and two VCs by the end of the year. To date, over 50% of SoftBank’s investments have been into Brazil, most of which exist in the fintech sector.
Mexican neobank Stori raises $10 million Series A
In a self-fulfilling prophecy, Mexico’s neobank market became all the more competitive this month with the addition of a new player: Stori. Within the past few months, both TechCrunch and Business Insider pointed to Mexico’s neobank market as the one to watch in Latin America as startups like Albo, Klar and Nubank battle for market share. In February, digital bank Stori joined the conversation with a $10 million Series A from Bertelsmann Investments (BI) and Source Code Capital, along with an existing investor, Vision Plus Capital.
This round of funding, led by Chinese investors, is part of a growing trend of foreign funds waking up to the Latin American startup ecosystem, Asian VCs in particular. Tencent has invested in Brazil’s Nubank, which has since expanded to Mexico, and in Argentina’s Uala, which is considering a similar move. SoftBank has investments in the largest lending and credit startups in Brazil and Mexico, as well.
Stori will use the investment to improve its AI technology as it tries to reach over 100,000 Mexicans through its inclusive digital banking services. The neobank has raised over $17 million from investors since it was founded in 2018.
Grow Mobility pulls out of 14 cities
In January, Rappi and Lime pulled back their operations in Latin America in order to focus on technology over rapid growth. Brazil’s top mobility startup, Grow Mobility (which rose out of a merger between e-scooter companies Grin from Mexico and Yellow from Brazil) also pulled back. The startup, which provides e-scooters and bikes shares across Brazil, took bicycles out of operation and removed its scooters from 14 cities.
Grow also restructured its operations through layoffs that affected employees across Brazil, although they did not comment on how many people were affected. Grow Mobility’s scooters will now only operate in Rio de Janeiro, São Paulo and Curitiba.
This pattern of pull-back following explosive growth has become more common among Latin America’s biggest startups, pushing these early-stage companies to focus on technological solutions that boost revenue, rather than blitzscaling measures that only buy market share.
Amazon Web Services doubles down on Brazil
Amazon Web Services (AWS) announced it would invest $236 million (R$1 billion) into São Paulo over the next two years to strengthen its Latin American infrastructure. This effort may be a part of Amazon’s work to consolidate market share in Latin America’s increasingly competitive e-commerce market, where legacy players like MercadoLibre still dominate. This investment will enable Amazon to expand its Brazilian data centers and improve local service offerings to both private and public partners.
Amazon also announced that it would build a new distribution center in Pernambuco in the north of Brazil to support sales across the country. Brazil accounts for almost 40% of Latin America’s e-commerce market, making the country vital to Amazon’s positioning in the region.
News and Notes: Weel, Global 66, Yuca and Memed
Weel, a Brazilian accounts-receivable management platform, announced an $18.4 million investment from Banco Votorantim, Brazil’s seventh-largest bank, in February 2020. This investment was Banco Votorantim’s second in the startup after a $6 million contribution in 2019. Weel will use the investment to explore expansion across Brazil, as well as exploring Chilean and Mexican markets.
Chilean international transfer startup Global 66 received $3.25 million in February from U.K. investor Venrex, to continue its expansion across the region. The startup currently offers rates up to eight times better than existing transfer services, especially for the Latin American region. Global 66 recently opened new offices in Peru and plans to expand to Colombia, Argentina and Mexico within the next two years. Within just two years of operations, Global 66 has processed transactions for over 25,000 users across 60 cities worldwide.
Yuca, a Brazilian proptech, raised $4.7 million from Monashees, ONEVC and Creditas to help fight housing crises in Brazil’s largest cities. As Brazil’s cities sprawl — São Paulo is one of the largest in the world — Yuca creates central co-living spaces for young people that want to shorten their commutes. Inspired by Chinese startup, Ziroom, Yuca currently manages 18 apartments for 80 students and plans to scale to 500 apartments by the end of the year.
Brazil’s digital prescription startup, Memed, recently raised $4.5 million from DNA Capital and Redpoint eVentures to improve the local prescription system for doctors and patients alike. Today, Memed has over 80,000 registered doctors who have created over 10 million prescriptions worth more than $237 million. Memed’s 100% digital prescriptions are said to improve security and efficiency in Brazil’s complex, bureaucratic healthcare system.
While Brazil is still at the forefront of Latin America’s tech ecosystem, Mexican fintechs are edging up, especially with additional support from international investors. 2020 is off to a strong start, hinting at another potential record-breaking year for Latin American tech investment.
Published at Fri, 28 Feb 2020 00:08:12 +0000