EXECUTIVE BRIEFING: MAPPING IMPACT DEALS & FUNDS IN LATIN AMERICA

By Cate Ambrose, President, LAVCA
Driven by new member firms and increased deal activity in Latin America, LAVCA has been growing its footprint in Impact Investing, particularly where impact converges with traditional private equity and venture capital.

Not to be confused with broad definitions of ESG or responsible investing, LAVCA defines impact as funds raised or investments realized with specific intentionality for measurable social or environmental returns, in line with the recent guidelines issued by the IFC. Current member firms in this space include Omidyar Network, Elevar Equity, LGT, Adobe Capital, and the TPG Rise Fund.

LAVCA’s second collaboration with the Aspen Network of Development Entrepreneurs (ANDE) on impact data and a dedicated report was published earlier this month, The Impact Investing Landscape in Latin America. And this week we are launching another output from that effort, leveraging additional LAVCA research, that maps the intersection of impact and PE/VC/Tech (read more below).⬇️

READ THE FULL EXECUTIVE BRIEFING.

IMPACT

> NEW REPORT: Increasingly, PE/VC managers active in Latin America are raising dedicated impact funds to manage alongside traditional PE/VC structures. Others are co-investing with impact fund managers in IT startups that address financial inclusion, healthcare, agriculture, and education. 

• Using LAVCA industry data and data collected by LAVCA and the Aspen Network of Development Entrepreneurs (ANDE), LAVCA published a NEW REPORT on Impact+Tech/VC Investing.
• The 6-page breakout report details the intersection of impact and tech with: Highlighted Impact Investors; US$4.7b in Capital Allocated to Impact Investing in Latin America; Highlighted VC+Impact Co-Investments; Highlighted Tech Deals from Impact Investors.

> Social impact investor Oikocredit and the IDB Lab invested US$5.7m in Sempli, a Colombian fintech providing loans to SMEs. In 2017, Sempli raised a US$3.6m seed round from Velum Ventures, FOMIN, XTP1, Grupo Generaciones, and DGGF (Dutch Good Growth Fund).

• Sempli offers working capital loans of US$10k-100k, and has disbursed ~US$10m since 2016.
• Velum Ventures partners Esteban Velasco and Felipe Llano founded Sempli in part as a response to the unmet demand they saw for Colombian entrepreneurs to access capital.

> TriLinc Global Impact Fund approved US$1.5m in term loan transactions with companies operating in Sub-Saharan Africa and Latin America.

> #PE Hamilton Lane launches a global impact strategy.

> Wharton Social Impact published an update on Project Sage, a 2017 analysis of PE, VC and private debt vehicles with a gender lens, and says the number of funds deploying capital with a gender lens is on the rise.

> The IFC released new Operating Principles for managing impact investments.

> PRI launched a new guide to identifying mainstream (high liquidity and maturity) impact investments.

> McKinsey’s new report looks at what it will take for the impact economy to reach maturity.

> WSJ: Will Impact Investing Take Hold in Latin America?

> ALLMX, La Alianza por la Inversión de Impacto Mexico, published a report about impact investment in Mexico.

> FLII Central America and the Caribbean is Nov. 7-8 in Guatemala.

> Katapult Accelerator is accepting applications for its fourth batch. Apply for US$150k in funding by Nov. 9. More info here.

> Impact investing firm Capria is seeking to invest in 3-5 investment managers in emerging markets with capital support and access to its network. Apply by Nov. 23.

EXITS/IPOs

> 🦄 #UNICORNS Brazil's Stone Pagamentos IPO’d on the Nasdaq (STNE) on October 25, raising US$1.5b for an initial market cap of ~US$8.7b in one of the top listings on the Nasdaq in 2018.

• Investors in the IPO included Berkshire Hathaway, Ant Financial (Alibaba’s investment arm), and Madrone Partners (Walton family). Other investors in the company include Tiger Global, Valor Capital Group, Actis, Gávea Investimentos, and the 3G Capital founders Jorge Paulo Lemann, Marcel Telles, and Carlos Alberto Sicupira. This is Alibaba’s first disclosed activity in Latin American tech.
• In addition to Arpex Capital (the founders of Stone’s investment vehicle), Valor Capital Group was the only early-stage VC to invest in the company (Series B). Scott Sobel, a Partner at Valor, shared:

“The Stone IPO was a great outcome for the company, management team, investors, and country. I believe all Brazilian’s should be proud of what this symbolizes as an engine for growth and prosperity. Let's not forget the Stone team was able to build this high growth business over the past four plus years in a highly competitive market and during one of Brazil’s most challenging political and economic times. With Brazil now entering a new chapter, the sky's the limit for Stone and other technology driven, transformative businesses."

> Check out LAVCA’s list of highlighted companies that have raised US$1m+ and have been acquired/listed.

DEALS

> 🛴Mexican e-scooter startup Grin raised a US$45.7m Series A and merged with Ride in Brazil.

• Lukasz Gadowski, Founder of Delivery Hero, led Grin’s Series A, with participation from existing investors Shasta Ventures, DCM, SV Angel, Trinity Ventures, monashees, and Base10 Partners.
• Grin raised an undisclosed seed round from monashees, Sinai Ventures, Liquid2 Ventures, 500 Startups, Base10 Partners, Y Combinator, and others earlier this year, and was part of the YC Spring 2018 cohort.
• Grin Co-founder Sergio Romo says the objective is to become the leading player in Latin America, “Not only in terms of customer base and footprint, but in terms of innovation.”

> #CVC Visa made its first investment in Brazil in Conductor, a payments processing platform backed by Riverwood Capital, through its Visa Ventures arm in Silicon Valley.

• Visa also led a US$12.5m investment in YellowPepper (backed by LIV Capital and others) earlier this year.

> Sequoia Capital and Zetta Venture Partners invested US$2.25m in Rever, a Mexican employee innovation management platform. This is Sequoia’s first known investment in a Mexican startup. Sequoia’s other investments in the region include Nubank and Rappi.

> Innova Capital led a R$22m Series A investment in Bom Pra Crédito, a Brazilian consumer lending platform, with participation from Astella Investimentos. Astella led the seed round in 2017.

> Scale Capital led a US$5m investment in U-Planner, a Chilean edtech platform for higher education.

> NXTP Labs led a US$1.5m investment in RetailApp, a Miami-based retail analytics platform, with participation from Indicator Capital, Alpha4 Ventures, and others.

> #CVC Brazilian secure printing company Valid (BVMF: VLID3) acquired a majority stake in Brazilian agtech Agrotopus for R$6.5m.

> The Gontijo family office led a R$5m investment in Alfred, a Brazilian e-commerce startup building locker facilities for parcel delivery in São Paulo and Rio de Janeiro. Alfred also exchanged shares with Pakpobox, a Chinese locker pioneer partnered with Alibaba, through a strategic partnership. Alfred founder Marcio Artiaga says: “Queremos ser o Banco24Horas dos pacotes.”

> Colombian gym network FitPal raised ~US$330k from investor group Patrimonio Autónomo, Cóndor, and startup incubator Inqlab.

> Anjos do Brasil invested R$525k in Manipulaê, a Brazilian healthtech platform connecting patients to compounding pharmacies.

> Village Capital invested US$75k each in the winners of its 2018 Fintech Latam Program: Vexi, a Mexican credit card app for millennials, and Siembro, an Argentinean fintech platform for agribusiness.

> Aguassanta DI, the real estate holding of Cosan, will invest ~R$4.5m to build an agtech innovation center called AgTech Garage Campus Vale do Piracicaba outside of São Paulo.

> Brazilian proptech venture builder Construtech Ventures made its first investment outside of Brazil in Infraspeak, a Portuguese infrastructure management platform.

> #PE CPPIB (Canada Pension Plan Investment Board) increased its exposure to Brazilian tech with a US$85m investment in Mutant, a contact center technology software platform, with participation from debt investor Adams Street.

• Mutant spun out of Genesys Prime, the Brazilian operation of Genesys, which was acquired by British PE firm Permira in 2011. Permira and US VC firm Technology Crossover Ventures made their first Brazilian direct investment in Mutant in 2016.
• Mutant has been actively acquiring related companies, including Dextra, quality management TSA, CCM7, and U-Near.

> #PE Axxon Group acquired a majority stake in the Brazilian operations of Westwing, a home furnishings/electronics retailer previously backed by Rocket Internet.

> CORRECTION: Loggi recently raised US$100m from SoftBank as part of a new US$111m round with participation from KaszeK Ventures. Qualcomm Ventures and Iporanga Investimentos also participated in the round. Loggi previously raised capital from Qualcomm Ventures, monashees, Iporanga Investimentos, and Dragoneer Investment Group.

> UPDATE: Rebel, a Brazilian personal credit startup, raised US$4m (previously undisclosed) from monashees, XP Investimentos, Point Break Capital, and family office J. Malucelli. monashees was the company’s first investor in 2017.

FUNDS

> A5 Capital Partners announced plans to raise a US$150m Fund III, targeting startups with over R$100m in annual revenue with target tickets of US$5-20m. 30% of the fund will be reserved for follow-ons.

> Company builder Polymath Ventures is seeking to raise US$100m Horizon Fund for follow-ons and new investments.

> Brazilian investor Bárbara Minuzzi is investing US$46m across two Silicon Valley focused funds: Babel Ventures (biotech) and Ausum Ventures (blockchain).

> #CVC Mexican management consultant GINgroup launched a seed-stage fund called GINCapital, run by Diego Armenta, former research director for AMEXCAP. The fund plans to invest MXN$2-10m pesos in six to nine startups over the next 18 months.

NEW MEMBERS

> LAVCA welcomes TPG Growth as a new member. Partner Angel Uribe oversees investments in Latin America, which includes Resultados Digitais in Brazil.

Last year TPG Growth launched The Rise Fund, a US$1b vehicle managed by Elevar Equity co-founder Maya Chorengel, whose investments include Digital House (Argentina) and Grupo VI-DA (Brazil).

Maya Chorengel of The Rise Fund and Roy Swan of the Ford Foundation at LAVCA’s Venture Investors Annual Meeting this Sept. in NY

NEWS

> Omidyar Network announced a new direction for the organization in response to changing times, which will seek to address structural causes of societal inequity: “While change is inevitable, the direction of change is not guaranteed.”

• As part of the shift, Omidyar spun out its Government and Civic Engagement arm as Luminate, a global philanthropic organisation designed to empower people and institutions to build just and fair societies.

> Clarin covers FOMIN’s investment in scientific accelerator CITES, one of the accelerators chosen for investment from the government of Argentina last year, along with fellow LAVCA members NXTP Labs, Globant Ventures, Wayra Argentina, and others.

> Bloomberg speaks with KaszeK founder Hernan Kazah in A Venture Capitalist's Top Picks in Latin America Unicorn Hunt.

> APF covers the new generation of tech unicorns in Latin America, en español y português.

> Brazilian retail tech company Linx (BVMF: LINX3) is moving into payments with the launch of Linx Pay, a move that Brazil Journal calls obvious:

If half of the R$250b that Linx processes per year was transformed into payments processed by Linx Pay, the company could become the fourth largest in the market… Stone and PagSeguro, the emerging players in the market, process R$48b and R$38b per year, respectively.

> TechCrunch: What the Bolsonaro victory means for Brazil’s startup ecosystem.

> Brazil is a Top 3 market for Google Assistant in terms of number of users.

> Google will make it easier to change privacy settings and delete stored data from their products, starting with Search.

> Lyft hired a head of social impact, Mike Masserman: “We have made our entire fleet and office carbon neutral and we’re covering 100 percent of our electricity consumption with renewable energy.”

> Valor: Decreto destrava investimento externo em 'fintech' de crédito.

> Futuristic transportation project Hyperloop launched a logistics innovation center in Minas Gerais, Brazil, earlier this year.

> NYTimes Op-Ed: Cristina Tardáguila, Director of Agência Lupa, Brazil’s leading fact-checking platform, looks at research into fake news sharing on WhatsApp, and how to mitigate it. Of note:

There have been positive developments in the fight against false news in Brazil. Ours is one of 17 countries where Facebook has third-party fact checkers trying to weed out misinformation from the platform’s News Feed. Facebook and Google have also collaborated on an initiative called Comprova, gathering 24 Brazilian newsrooms to debunk misleading links, videos and images.

STARTUPS

> Levita Magnetics, got clearance from the US FDA to market its Levita® Magnetic Surgical System for use in bariatric (weight loss) surgeries. Based in California, Levita Magnetics received FDA approval in 2015 for gallbladder surgery, a procedure that is performed over 700,000 times a year in the US, inspiring a new classification of surgical technology: “Magnetic surgical instrument system.”

• Levita founder Alberto Rodriguez-Navarro is a former surgeon who spent ten years in a public hospital in a poor area of Santiago de Chile, where he says one of the biggest issues he faced was avoiding and reducing pain. He founded Levita Magnetics in 2012 to develop tech for doctors to perform less invasive surgeries.
• Fast Company selected Levita Magnetics as one of the world’s most innovative companies in healthcare in 2017.
• Investors include Alex Seelenberger from Aurus Capital (co-founder and first investor), FEN Ventures (Cristóbal Silva and José Antonio Jiménez), Juan Andrés Camus, Nicolás Luksic, and Eduardo Ergas.

> Grin and Rappi partnered to offer Grin scooters to users of Rappi’s delivery app. Axios says American scooter unicorns Lime and Bird also have ambitions in the region.

> Fintech YellowPepper announced expansion into Brazil. Visa led a US$12.5m strategic investment in the company earlier this year in its inaugural investment in the region. LIV Capital led YellowPepper’s US$19m Series C in 2015 with participation from Mexico Ventures, Fondo de Fondos, and the IFC.

> SkyDrop is a Mexican shipping logistics platform for online retailers that recently raised US$5m from Variv Capital, Y Combinator and others, after participating in YC’s Spring 2018 cohort.

• Co-founder & CEO Tavo Zambrano tells LAVCA that SkyDrop is working with over 3,000 clients across Mexico, including Walmart, Redpack and others.
• Zambrano says YC was pivotal for their ability to raise capital, and he recommends the program to other founders based in Latin America.

> Homie is a Mexican residential real estate platform that recently raised US$1.3m from Angel Ventures and others.

• Homie’s business model is end to end, like QuintoAndar in Brazil, from listing apartments to handling rental payment. They have rented 1,000+ units in Mexico since 2016.
• Co-founder & CEO Jordi Greenham: “Queremos hacer que rentar un departamento a largo plazo sea tan sencillo como para hacerlo en 24 horas o menos, además de meritocrático."

> Check out LAVCA’s list of 258 Latin American startups with at least US$1m in VC funding, verified by LAVCA. Sort by geo, sector, and stage of investment.

ENTREPRENEUR SPOTLIGHT // CUMPLO

Cumplo is a Chilean crowdlending platform founded by Guillermo Acuña and Nicolas Shea to provide credit for small businesses. LAVCA caught up with Acuña in Mexico City recently to learn about the platform’s traction to date.

Acuña says small businesses have raised over US$400m on the platform since it launched in Chile in 2012, and are currently raising about US$20m per month in collaborative funding.

The financing/lending market for small businesses in Latin America is a US$1t annual market, and US$25b in Chile, according to Acuña. Cumplo, by comparison, captured US$100m of that amount in 2017. In Mexico, the opportunity is in the large informal lending market. Acuña even sees opportunity in the US, noting that the average APR via Cabbage, a referential platform that’s facilitated over US$4b in loans to small businesses, is more than Cumplo charges.

Cumplo is a B Corp, focused on bringing transparency to credit for small businesses. Acuña explains that anyone can invest, or lend money, using Cumplo; the lender profile includes institutional funds, investors diversifying their portfolios, and millennials exploring crowdfunding as an investment platform.

Cumplo is backed by ALLVP, which led an undisclosed round with the participation of Ripple Labs founder and angel investor Chris Larsen.

STARTUP SURVEY

📋 LAVCA, with the support of Facebook, is conducting the first-ever survey of Latin American startups.We want to tell the world how many jobs startups in the region are creating, what the gender diversity is among startup founders, challenges for startup growth, and the impact startups are making in their market, sector, and community. Results will be shared globally to help put Latin American tech innovation on the map 🗺️.

✔️PARTICIPATE IN THE SURVEY. This survey is multiple choice and should take a startup CEO or founder no more than 12-15 minutes to complete. 

PEOPLE & PROGRAMS

> Join us for WeXchange, a forum to connect high-growth entrepreneurs with mentors and investors, Nov. 6-7 in Lima, Peru. #womenSTEMpreneurs Meet the finalists for the pitch competition:

• Laura Mendoza, CPO of Mexican biotech blood testing startup Unima
• Amparo Nalvarte, CEO and Co-founder of Peruvian payments platform Culqi
• María Laura Palacios, CTO of Argentine agtech platform AgroPuma
• Angela Pinzón, Co-founder of Colombian transport system DashFleet
• Marina Solanas, Co-CEO of Argentine fintech WABA.network
• Juliana Villalba, CEO and Co-founder of Colombian event management solution Rebus

> Scotiabank hosts its first LatAm E-commerce and Technology Forum on Nov. 6 in Mexico City to connect its investment clients with leading FOs, VCs, and startups in Mexico and across the region. Email Marcela Villarreal (marcela.villarreal@scotiabank.com) to request an invitation.

> TechCrunch hosts Startup Battlefield on Nov. 8 in São Paulo. Agenda and details here.

> Resultados Digitais hosts is annual RD Summit in Florianopolis Nov. 7-9 and expects a crowd of 10,000 attendees from Brazil, Mexico and Colombia. Details here.

> Seedstars will be in Guatemala on Nov. 7. Seedstars also hosts its LatAm Summit Dec. 5-6 in Lima. Details here.

> Facebook’s innovation center Estação Hack, in partnership with impact accelerator Artemisia, comes to Salvador on Nov. 9 and Florianópolis on Nov. 30. Details here.

> Join the NVCA for their first conference on Emerging Technology Meets National Security, Nov. 14 in Washington D.C.

> Foro de Capital para la Innovación - Región Litoral Centro is on Nov. 29 in Santa Fe, Argentina. Details here.

> TheVentureCity upped its investment in startups accepted in its Growth Accelerator from US$20k to US$100k, in exchange for a 6% equity stake.

> Google updated the brand for its startup programs and campuses as Google for Startups.

> Google is accepting applications for its Residency program at Google for Startups in São Paulo. Focus: startups working on conversational tech for virtual assistance. Apply here.

> Endeavor Brasil is accelerating 19 startups in healthtech, edtech and environment/transport through its Transforma Scale-Up program, with support from Omidyar Network, and others.

INVESTOR POV

> Sustainable impact investor Michele Giddens shares her perspective on how governments can support impact investing, from the annual Global Social Impact Investment Steering Group meeting in New Delhi.

> Former Vox Capital Partner Julia Johansson and her partner Nadine Bruder are launching SHE FOR SOCIAL IMPACT, an exclusive network of change-leading women across the globe working to increase women’s influence in society as impact investors and as impact professionals. Women who want to be Impact angel investors, as well as impact entrepreneurs, scientists and technologists can join here.

> FT says family offices are in a talent grab for young impact investors.

CRYPTO

> Valor covers Footcoin, a Brazilian blockchain platform for football teams to launch their own crypto-currencies, starting with creating the “Leãocoin” for Fortaleza. Footcoin has raised R$15m from VC fund San Francisco.

THE FUTURE

> WIRED: Jeff Bezos Wants Us All to Leave Earth—for Good.

> #MUSTREAD WIRED: The AI Cold War That Could Doom Us All: “Is the arc of the digital revolution bending toward tyranny, and is there any way to stop it?”.

The LatAm Venture Bulletin is the VC/tech newsletter and content platform of
The Association for Private Capital Investment in Latin America.

Have news we should include? Please email news@lavca.org.