Brazil’s startups raised US$772 million in funding in August

RIO DE JANEIRO, BRAZIL – Brazilian startups continue to rack up positive results when it comes to venture capital. In August these companies raised US$772 million in investments, three times more than in the same period last year, when US$191 million was raised. The data are from the latest Inside Venture Capital report from Distrito open innovation hub.

The total amount was distributed over 56 fundraising rounds throughout the month of August.

In the year, the total received by Brazilian startups exceeds US$6.6 billion in 457 rounds in the past 8 months. Despite four months still ahead, the amount invested to date exceeds the total for the whole of 2020 by over 85%. When considering the eight months as a whole, the amount is 346% higher than in 2020.

The funds received in August point to a rebound in the ecosystem as a whole. Last year Brazilian startups received US$484 million in investments, a decline when compared to the volume received in June. The current scenario has not only resulted in a high volume of funding, but also in the return of megarounds.

According to Distrito’s co-founder Gustavo Geriun there is a growing trend in the market for more mature rounds, mostly of series C, D, and E. These rounds, which typically feature “bigger” checks, are called “megarounds,” with sums in excess of US$100 million. “It is a natural trend as our market has gradually matured,” he said at a press conference on Wednesday, September 1.

MAIN INVESTMENTS IN AUGUST

The report highlighted the extension of the Series E round of startup QuintoAndar. The round was led by Greenoaks Capital and Tencent funds, and was worth US$120 million. The series C rounds of Omie (US$110 million), Unico (US$120 million) and Petlove (US$145 million) were also noted.

The US$500 million investment received by Cloudshop and which turned them into Latin America’s latest unicorn was not considered – because it is not a Brazilian company. Movile’s US$1 billion round was also left out of the hub’s analysis.

Of the top 4 deals, SoftBank took part in 3. The entry of Latin funds is a milestone and is symbolic of the ecosystem and the companies’ progress, according to Geriun. “The Brazilian market has been very attractive by foreign investors, which greatly strengthens the system as a whole,” he says.

SECTORS ON THE RISE

For another month, fintechs continue to lead other sectors – in number of rounds and total invested. There were US$178 million in investments in 12 funding rounds. In second place is the retail sector, with retailtechs raising US$145 million, split over 8 rounds.

Next come healthtechs and realtechs, tied in the number of rounds. However, realtechs raised US$140 million in August, while healthtechs received US$6 million.

Ranked 5th among the top sectors are edtechs. Despite having raised only US$8 million last month, these startups are posting the highest continued growth in 2021, according to the report. Evidence of this is that in an analysis of the sectors with the most investment between January and August, edtechs rank 3rd with US$294 million.

MERGERS AND ACQUISITIONS

During the month of August, 26 new mergers and acquisitions (M&A) transactions were completed, 8 more than in July. The volume of transactions completed in the first 8 months of the year is also 85% higher than in the same period last year.

Booming, the M&A market is tracking the pace of venture funds. According to Distrito, the total number of M&As for 2021 should reach 250. Only 96 transactions remain to achieve this.

To reach this projection, the hub considers metrics such as the average of the last investments, companies’ estimated revenues, their growth rates, maturity, among other indicators. “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,” Geriun said.