LatAm Venture Bulletin November 1, 2017

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LatAm Venture Bulletin

State of the Industry: 2017 VC Deal Activity & Highlights

2017 VC Deal Activity & Highlights

The entrance of major global investors into a string of recent early and expansion stage rounds in Latin America is contributing to record investment dollars in Latin American startups.

Fund managers invested US$477m in venture capital deals in the first half of 2017, almost as much as was invested in all of 2016 (US$500m), and more than double the amount invested in 1H2016 (US$218m), according to LAVCA data.


> DGF Ventures is launching a second venture fund, with a US$60m target. This is DGF’s fourth fund, including PE vehicles. DGF has made 35 investments to date and has exited 20 investments.

> Adobe Capital announced a partial close of its second impact fund, Adobe Mezzanine Fund II, after raising US$21m. The fund has a target of US$40m.

> BNDES is launching two funds, including a R$200m venture debt fund, to invest in Brazil’s technology and IoT companies.

> Redwood Ventures Mexico is a new fund looking to raise MXN$125-150m and make a dozen investments over the next 18 months. Daniela Calleja, previously with Mountain Nazca, joins RedWood Ventures Mexico as Managing Partner.

> Expanding Capital is a US$40m fund investing in Silicon Valley startups. Brazil's GP Investimentos is the anchor LP, and Leo Janoti (formerly president of Joá Investimentos) manages the fund.

> 01Labs is a new Peruvian VC fund led by Alejandro Ponce that is investing in Israel and Silicon Valley startups.


> SP Ventures made a R$2m investment in Bart Digital, a blockchain-enabled agribusiness barter platform.

> IGNIA, Capital Invent, and Avalancha Ventures made an undisclosed investment in Bind ERP, a cloud-based ERP platform for Mexican SMBs.

> Capital Invent and E Capital led a US$2m investment in Rescata, a Mexican cellphone recycling platform, with the participation of previous investors.



> Mediação Online is a legal dispute mediation service for Brazilian businesses and consumers that was accelerated by Wayra Brasil, and recently received R$500k in investment from 500 Startups. We spoke with founder & CEO Melissa Felipe Gava about Brazil’s “stratospheric” number of litigation proceedings and how Mediação Online is working to lower the cost of mediation services:

"Dai veio a idéia de criar um serviço de mediação com o intuito de popularizar o acesso e o custo do procedimento, e que fosse a melhor experiência possível para o usuário."

> DataGran is an ad optimization startup in New York that raised an undisclosed amount of capital from Wayra Colombia and Quake Capital earlier this year. LAVCA spoke with founder & CEO Carlos Mendez about the adtech opportunity and the global expansion of DataGran’s ad optimizer:

LAVCA: Una cosa interesante que pocas personas entienden sobre adtech en Colombia/América Latina?

DataGran: "El ad tech está migrando hacia la inteligencia artificial y empieza a mirar el blockchain. Adicional que las adtech empezaron siendo poco transparentes y eso empieza a cambiar."



> Mercy Corps Social Venture Fund made an undisclosed investment in LiftIt, a Colombian logistics platform.

> TriLinc Global Impact Fund approved US$13.9m in term loan and trade finance transactions with companies operating in Sub-Saharan Africa, Latin America, and Southeast Asia. TriLinc has made over US$350m in financing commitments for business expansion and socioeconomic development through its holdings in these geographies.

> Dutch headquartered social investor Oikocredit has exited its investment in Financiera Confianza, one of Peru’s largest microfinance institutions (MFIs), through a sale to BBVA.

> B Lab introduced a ranking of impact investing funds based on an assessment of the impact of each company in a fund’s portfolio. LAVCA members recognized on the list include Adobe Capital, Elevar Equity, and CoreCo Holding.

> Financial Times: Macri’s Argentina wants to muscle in on impact investing:

A new capital markets law is expected to be sent to congress soon while other legislation will provide further incentives such as allowing B Corps, for-profit companies that are certified as pursuing social and environmental goals, or social enterprises, in the country.

“Some dreamers feel that we can replicate Silicon Valley or Israel, but every region or country has to find its own model,” says Susana Garcia-Robles. “The real impact investment that we’re interested in is in the mainstream — those that believe that you can marry technology and innovation with improving the lives of people.”

> FLII CA&C, The Foro Latinoamericano de Inversión de Impacto for Central America and the Caribbean, will take place on November 8-9, in Antigua, Guatemala. Details here.

> ANDE is hosting an Investment Manager Training course November 27-December 1 in Washington, DC. The course is unique in its focus on impact investing. Details here; LAVCA members receive a 10% discount by emailing

> CISCO is issuing Global Impact Cash Grants to support innovative solutions that solve challenging socioeconomic conditions with a maximum opportunity for impact: critical human needs, access to education, and economic empowerment. Apply here.

> Vodafone is accepting applications for its Wireless Innovation Project to fund wireless technology for a better world. Apply here.



> Engie, Europe’s largest utility company, has been active in Latin America this year, participating in Series B rounds for Enlight, a solar startup backed by ALLVP, and Kingo Energy, a Guatemalan startup backed by a consortium of global investors. Engie’s global investments also include BBOXX in West Africa and Mera Gao Power in India and Bangladesh.

> READ LAVCA’s interview with Kingo founder & CEO Juan Fermín Rodriguez about the urgent need for energy innovation:

Kingo’s long term vision is to become the largest utility in history through the use of distributed renewable energy services. We aim not only to eradicate the lack of access to electricity globally, but also to play a leading role in the transition to 100% renewable energy.

> Two San Francisco-based startups, Angaza and Fenix International, exemplify the growing investor interest in off-grid solar power for emerging markets:

  • Fenix International, which was just acquired by Engie and makes solar power systems for people with no access to electricity grids, is expanding in Africa through a partnership with the continent’s largest wireless carrier. Fenix CEO Lyndsay Handler’s goal is to provide electricity to at least 850,000 Zambians by 2020.
  • Angaza is bringing solar access to rural emerging markets through a pay-as-you-go (PAYG) Android app. Emerson Collective recently led a US$10m Series B in Angaza, with participation from Social Capital, Salesforce Ventures, Rethink Impact, and the Stanford StartX Fund.


20%: SoftBank’s share of capital invested in US startups in Q3 2017. From Series F:

SoftBank was behind four of the five biggest venture capital deals globally in the third quarter of 2017, according to a new report by PwC and CB Insights, as well as responsible for 20% of the total capital invested into the US in Q3. SoftBank says it could invest as much as US$880b(!) in tech.

US$10b: Startups in India have raised nearly US$10b in 2017, more than double the US$4.4b they raised in 2016, according to the Financial Times.

> #4: Brazil remains the fourth largest market for mobile phones, despite a slow economic recovery. At 138 percent, smartphone penetration in Brazil is already above the global average of 115 percent, according to a study by Fundação Getúlio Vargas.

> 5%: The mobile industry represented 5% of Latin America’s GDP in 2017 and contributed US$218b in economic value to the region, according to GSMA.



> At the ACAFI VC event this month in Chile, CORFO EVP Eduardo Bitran announced the introduction of a revised “High Technology” subsidy, which will be provided by a tech-focused investment fund. The new fund will provide companies with a subsidy of up to US$300k and an additional coverage policy of up to US$700k in case the company fails or goes bankrupt, and is currently under revision by the central government.




NEW DIRECTORY: The LAVCA Venture/Tech Member Directory lists the core group of venture/tech investors and players dedicated to early stage rounds in Latin America that are Members of LAVCA and active in the region, as of September 2017.



> READ LAVCA Venture Investors Annual Meeting: The Wrap Up and check out our photo essay of highlights from the program.

> CALL FOR NOMINATIONS: LAVCA is seeking nominations for the 2017 edition of Women Investing in Latin American VC: senior level female investment professionals committing capital to a VC fund, or deploying capital from a VC fund, and female angel investor committing over US$50k to LatAm startups. Investors must be active in the last five years. NOMINATE HERE.

> Interested in the role of women in LatAm's early stage universe? Join FOMIN for the Annual WeXchange, a forum that connects high growth women entrepreneurs in LatAm with investors and mentors. WeXchange 2017 is taking place on Dec. 4-5 in Santiago, Chile.

> GSK and Telefónica Open Future_ are looking for startups innovating in digital health for Colombians. Apply by Nov. 5.

> Argentina’s Ministerio de Producción invites Argentine accelerators to apply to the Fondo Aceleración to receive financial support for operating costs and matching funds for entrepreneurs. Apply by Nov. 6.

> Argentina’s Ministerio de Producción invites Argentine VC funds raising a minimum of US$18m to apply to the Fondo Expansión to receive financial support for fundraising costs. Apply by November 6.

> Co-organized by the National Ministry of Production and the Argentine Association of Private Equity, Venture Capital, and Seed Capital (ARCAP), global and Argentine investors will gather in Buenos Aires on November 29 for the Argentina Investment Forum.

> Capria is seeking 3-5 investment managers based in and investing in emerging markets that can deliver superior financial returns with scalable impact. Apply for its fifth investment cycle by Nov. 27. Details here.

> ACE Startups, in partnership with Draper Venture Networks Beta, is hosting ACE Demo Day at Google Launchpad in San Francisco on Nov. 14. Details here (free to attend).

> Join LAVCA at Smart Capital, a conference in Medellin organized by RutaN and Capitalia Colombia, on November 14-15. Details here.

> Red Innova is taking place on Nov. 15 in Buenos Aires. Speakers and tickets here.

> South Summit, a joint initiative between Spain Startup and IE University that connects top innovators from Europe with Latin America in order to promote new business opportunities, is hosting the South Summit Pacific Alliance Nov. 30 - Dec. 1. Details here.

> SAVE THE DATE: Brazilian fund managers are invited to the bi-annual LAVCA VC in São Paulo on December 5th at Wayra Brazil. Details here.



> Reuters: After massive quakes, millions in Mexico turn to early warning app

> The Verge: Alphabet’s Project Loon deploys LTE balloons in Puerto Rico

> TechCrunch: Tesla makes quick work of Puerto Rico hospital solar power relief project

Puerto Rico continues ongoing recovery efforts with PR Governor Ricardo Rossello following an exchange between the Governor and Musk on Twitter. Rossello and Puerto Rican Chief Innovation Officer Glorimar Ripoli proposed turning the territory into a flagship example of what Tesla’s solar technologies can do for the world.



> Brazilian mobile credit card startup Nubank is moving further into banking territory by launching NuConta, a platform to allow customers to transfer money between Nubank accounts. Debit cards and withdrawals might be next. CEO David Vélez says, “our revolution begins today”:

Nossa verdadeira revolução começa hoje. Nós redefinimos o jeito que as pessoas vão guardar e investir seu dinheiro."

> El Informador Chile: Estos son los cursos más cotizados del sitio Coursera donde estudian gratis 400.000 chilenos.

> Apertura: ARCAP Lanza una encuesta para averiguar cuántos inversores ángeles hay en la Argentina.

> #TRASHTECH The Economist interviews Thiago Mundano, a street artist behind Cataki, an app that connects people with some of Brazil’s 400,000 informal trash collectors:

Under the law, municipalities are supposed to collect and sort recyclable garbage. But São Paulo’s government recycles just 300 tonnes of waste a day, while dumping 12,000 tonnes. Catadores collect four-fifths of the city’s recycled waste. Thanks to them, 98% of the country’s empty aluminium cans are recycled (catadores get 2.7 reais, or 85 cents, per kilo). Still, a lot of what could be reused goes into landfill. A report in 2010 by IPEA, a think-tank, estimated that cities bury 8bn reais-worth of recyclable rubbish a year.

> The Entrepreneurial Case for Tech Investing in Emerging Markets:

The emerging markets have a combined population of more than 4 billion—representing 60% of the world’s population—and a large percentage of those people are under 40.

> ZDNet: Google expands tech startup acceleration projects in LatAm.

> FastCo: Can Alphabet’s Jigsaw Solve Google’s Most Vexing Problems?

> OZY interviews the political scientist and lawyer mapping activism in Latin America: “If a new way of doing politics is a baby on the way as traditional models die, we’re doing the ultrasound.” INTERESTING

> Erin Griffith at WIRED has Twitter's Latest Rules for Fighting Hate and Abuse. But is it too little, too late?

> Will Oremus at Slate talks about the problem with big data: "The problem is not that data is bad... It’s the fetishization of data, and its uncritical use, that tends to lead to disaster."

> #CHANGETHERATIO Center for Investigative Reporting published Hidden figures: How Silicon Valley keeps diversity data secret.



> LAVCA advisor Juan Savino of Altment Capital Partners: El capital privado como aliado natural del reformismo permanente:

En este nuevo contexto que presenta Argentina, el capital privado y emprendedor tiene el desafío de cumplir con un rol fundamental en la economía, acompañando el crecimiento de pequeñas y medianas empresas en el país, incorporando mejores prácticas de gestión, de gobierno corporativo, y mejorando los márgenes de productividad para hacerlas más competitivas internacionalmente.

> Nathan Lustig of Magma Partners shares his top 10 Tips from Latin American Entrepreneurs.

> Social Capital, the VC firm that is disrupting the IPO, announced a self-service “capital-as-a-service” platform for startups to pitch the firm for funding: “No hoops, no US$7 artisanal coffee chats, no designer pitch decks, no bias, no politics, no bullshit.” In LatAm, Social Capital has invested in Descomplica, Apli, and Revelo (formerly

> Pioneering European accelerator Seedcamp sold Funds I & II to Draper Esprit, delivering a 4x return to investors. Seedcamp partners Reshma Sohoni and Carlos Espinal spoke at LAVCA’s VC in the Bay program ealier this year.

> Financial Times: Carlyle Group rings the changes in private equity: “Today private equity is no longer at the leading edge of investment. The most lucrative deals being done today in the investment world are tech deals.”



> Foxconn led a US$15m Series B in Abra, a bitcoin-based digital wallet app primary focused on foreign exchange, with participation from IGNIA, Silver8 Capital, and previous investors Arbor Ventures, American Express, Jungle Ventures, Lerer Hippeau Ventures, and RRE Ventures.

> Jeff Jordan at Andreessen Horowitz (and former CEO at OpenTable) talks about crypto-currencies and marketplaces:

Part of the appeal of a lot of these digital currencies, which we're pretty long on, is that networks can emerge. I'm fascinated by it, and it's core network effect. The part that is really exciting to me is that every two-sided marketplace has a "cold start problem." OpenTable, for example, had no diners and had no restaurants. What comes first? Every two-sided marketplace wrestles with this cold-start problem, and how you get the flywheel spinning. A carefully constructed ICO could have financial incentives to create that early momentum.



> NYTimes interviews SoftBank chief Masayoshi Son about his Grand Plan for SoftBank’s US$100b Vision Fund:

The Japanese billionaire said he believed robots would inexorably change the work force and machines would become more intelligent than people, an event referred to as the “Singularity.” As a result… he is on a mission to own pieces of all the companies that may underpin the global shifts brought on by artificial intelligence to transportation, food, work, medicine, and finance.

> #MUSTREAD WIRED: Big Data Meets Big Brother: The Chinese government plans to launch its Social Credit System in 2020. The aim? To judge the trustworthiness – or otherwise – of its 1.3 billion residents.

> TechCrunch: After the end of the startup era:

We live in a new world now, and it favors the big, not the small. The pendulum has already begun to swing back. Big businesses and executives, rather than startups and entrepreneurs, will own the next decade; today's graduates are much more likely to work for Mark Zuckerberg than follow in his footsteps.


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