RIO DE JANEIRO, BRAZIL – After posting the best semester in history in terms of investments, Brazilian startups continue to rack up impressive numbers.
During the month of July these companies together raised over US$484 million in investments, 35% more than in the same period last year. The data are from Distrito open innovation hub’s latest Inside Venture Capital report.
Although lower than the volume raised in June (US$2 billion), the US$484.4 million raised in 44 rounds throughout the month of July are not necessarily a problem for the Brazilian venture capital market.
According to Distrito’s co-founder Gustavo Geriun the drop is a direct consequence of the absence of mega rounds, which boosted the historical performance of investments in startups in June. An example is the US$750 million investment received by Nubank in June.
Fintechs lose the lead
Unlike the previous month, fintechs lost the leadership among companies with the highest volume of investments received. This time, retailtechs took the lead, raising US$191.6 million compared to the US$174.8 million received by financial startups.
Among the month’s most significant rounds was the funding received by Daki in a US$170 million round led by Tiger Global. “We believe this is a move to intensify competition for the fast delivery e-commerce market alongside giants like Rappi and iFood,” Geriun says.
Next up is fintech Blu, which received a US$58.6 million contribution in a Series B investment round led by Warburg Pincus. The report also highlights investments raised by startups Will.Bank, Cobli and proptech EmCasa.
Geriun points out that the increasing amount of investments in fintechs – which go beyond companies in the industry – shows that there is still room for innovation in the industry with endless opportunities for startups wanting to create new solutions. “This is synonymous to constant transformation in Brazil’s financial market,” he says.
However, in number of rounds, fintechs still rank first: there were 14 deals in July totaling US$174.8 million handled by the sector. Retailtechs had 5 deals for a total of US$191.6 million.
Repeating the scenario observed in June, edtechs also had a higher number of rounds when compared to the other sectors. There were 6 deals, totaling US$13.8 million raised.
Year-to-date, real estate startups rank second on the list, just behind fintechs, with US$851.4 million and US$2.6 billion received, respectively.
Mergers and acquisitions
As with investments, the mergers and acquisitions market remains heated. In July there were 18 new M&A deals, and the two main venture capital segments (finance and retail) also stand out the most in the number of mergers and acquisitions completed. “These two sectors are driving innovation and technology in Brazil,” he says.
The highlight of the month is the purchase of auto sales startups Volanty and Minuto Seguros by fintech Creditas. The value of the two transactions has not been disclosed, but the acquisitions represent a major consolidation of the financial sector in search of multi-sector dominance, Geriun says.
“The main reasons for this M&A market maturity is the digital transformation process in large companies and the liquidity of big techs in Brazil,” he says.
Other examples cited in the report are Loft’s acquisition of Credpago and Repassa online second-hand store bought by Renner.