AUGUST 2019 Venture Capital in Brazil
1 The Brazilian Private Equity and Venture Capital Association is a non-profit organization that promotes the development of private equity, venture capital and seed capital in Brazil, by improving industry conditions and understandings, while also fomenting good practices that are aligned with international industry standards.
The Brazilian Trade and Investment Promotion Agency (Apex-Brasil) works to promote Brazilian products and services abroad, and to attract foreign investment to strategic sectors in Brazil. The Agency carries out several trade promotion initiatives, such as commercial and prospective missions, business rounds, support to the participation of Brazilian companies in major business fairs, and visits of foreign buyers and opinion formers to assess the country’s productive structure. Apex-Brasil also plays a key role in attracting foreign direct investment to Brazil, working to detect business opportunities, promoting strategic events and providing support to foreign investors interested in allocating resources in the country.
The InBrazil Private Equity & Venture Capital Program is a joint initiative between ABVCAP and Apex-Brasil, set up to keep international investors well informed, linking them up with Brazilian fund managers and portfolio companies. The main goal of the program is to inform and empower the global investor community about the private equity and venture capital ecosystem in Brazil, spotlighting its many opportunities.
Derraik & Menezes Advogados is one of the pioneers in the venture capital area in Brazil. Members of their team were actively involved in the first wave of venture capital investments in Brazil in the late 1990s and remain fully active nowadays. They represent private equity, institutional and corporate venture capitalists, from Brazil and abroad. They have handled numerous major transactions including some of the largest and most sophisticated restructurings companies, M&As, fund formations and foreign investments in Brazil.
2 Industry Overview
This report aims to provide an overview of the Brazilian industry of venture capital. Through data, analyses and interviews with some of the main players operating in Brazil, this publication outlines the trends for the industry and offers prospects for the coming years.
The year 2018 was marked by the record This growth was observed especially number of Brazilian startups raised to among the sectors of fintech & insurtech the status of unicorns - valued over US$ 1 and transport & urban mobility. Consid- billion, drawing the attention of local and ering its relevance among the venture international venture capital firms operat- capital investments in 2018, we devote a ing in Brazil. In 2019 this motion continued section to present its main principles. with Gympass and Loggi hitting unicorn status and Nubank as the first Brazilian In general, the scenario of investments decacorn valued at US$10 billion. in private equity and venture capital in Brazil, in 2018, was positive. Even with The maturation of the Brazilian venture the uncertainty of the political scenario capital ecosystem has attracted more of presidential pre-elections, the coun- and more foreign investors, who lead the try managed to keep the interest in the main rounds of investment in startups local industry with investments of R$13.5 in the country. In 2018, investments in billion and fundraising totalling R$13.6 venture capital showed growth of more billion, representing an increase almost than six times the volume registered in three times the volume in 2017. the previous year, as it will be presented on the following pages.
3 Numbers in Brazil
Below are the 2018 numbers from ABVCAP and KPMG Annual Data Consolidation of the Brazilian Private Equity and Venture Capital, a survey that gathered data from 159 fund managers active in Brazil.
Capital committed to venture capital in Brazil by origin FY15-FY18
CAGR FY15-FY18 5.4 2015 1.7 6.1 +45% +12% 2016 2.0 8.3 2017 2.3 16.6 Total committed capital at the end of the year 2018 Available capital for investments and 2.4 expenses at the end of the year
R$ Billion
In 2018, the total committed capital of the venture capital industry in Brazil was the largest ever recorded in recent years, twice the volume presented in 2017 totaling R$ 16.6 billion. However, part of that increase was a result of “Fly-in” (investment of foreign funds without specific allocation for Brazil). For this reason, the volume of capital availa- ble for investments remained aligned with 2017.
Fundraising in Brazil by investment Fundraising in Brazil by investment type FY17 - R$ Billion type FY18 - R$ Billion
Venture Venture Capital Capital
0.8 0.9
4.4 12.7 Private Private Equity Equity
4 Also on the investment front 2018 surpassed expectations reaching a total volume of R$ 6 billion, a growth of more than six times the amount recorded in 2017. Part of this significant number is the increase of foreign investors participating in VC investment rounds in Brazil.
Investments in VC as a percentage of GDP FY15-FY18
Total Investment % of GDP
6.0
% R$ Billion
1.2 0.09 0.8 0.9
2015 2016 2017 2018
Amount of companies invested and average value of investments in VC FY15-FY18*
122 Amount Average Value 107 96 84
# 50 R$ Billion
12 9 11
2015 2016 2017 2018
With the increase of investments, both the amount as well as the average value of VC investments increased significantly. The average value went from R$ 11 million in 2017 to R$ 50 million in 2018, an increase of almost five times.
*Additionally, in 2018, there were 89 venture capital investments for which the values of the transactions were not obtained and are not considered in the graphs on this page.
5 Fintech & insurtech sectors and transport and urban mobility stood out among the 211 invested companies recorded in the survey.
NUMBER OF SECTOR COMPANIES %
AdTech & Marketing 19 9%
AgriTech 13 6%
Contrutech & PropTech 11 5%
E-commerce 4 2%
EdTech 12 6%
Energy & CleanTech 7 3%
FinTech & InsurTech 40 19%
HalthTech 12 6%
Marketplace 7 3%
Pharma & BioTech 3 1%
RetailTech 7 3%
Software 21 10%
Transportation & Mobility 29 14%
Others 26 12%
TOTAL 211 100%
6 Since 2017 Brazil has been experiencing a record period of divestments of private equi- ty and venture capital funds, which is illustrated by a growth of 34% in 2018, reaching the record amount of R$13.7 billion. This indicates that managers are finding ways out for their investment options, including via market IPO. The B3, the Brazilian Stock Exchange, recorded that between 2017 and 2018, IPOs of companies totaled R$ 26 billion.
Divestments - private equity and venture capital in Brazil FY11-FY18
14
10
8 6
R$ Billion 6 5 5 4
2011 2012 2013 2014 2015 2016 2017 2018
The higher the volume of divestments and final stage funds, returning capital to its inves- tors, it is natural that the capture process intensifies, what we have seen in the last two years and should remain in 2019.
7 Venture capital deals in Brazil
2018 — 2019
VALUES TARGET YEAR MODALITY INVESTOR(S) TYPE SECTOR (MILLION) COMPANY DST Global; Redpoint 2018 VC Investment R$ 495.0 Nubank Fintech Eventures Naspers; Innova 2018 VC Investment $ 400.0 Ifood Marketplace Capital Softbank; General 2019 VC Atlantic; Atomico; Investment $ 300.0 Gympass Services Valor Capital Group General Atlantic; 2018 VC Kaszek Ventures; Investment R$ 250.0 Quinto Andar Marketplace Qualcomm Ventures
2019 VC Softbank Investment $ 200.0 Creditas Fintech
2018 VC Tencent Investment $ 200.0 Nubank Fintech
Softbank; Microsoft; 2019 VC GGV; Fifth Wall; Velt Investment $ 150.0 Loggi Logistics Partners Monashees Capital; 2019 VC Investment $ 150.0 Grow Mobility 500 Startups Naspers; Innova 2018 VC Investment $ 124.0 Movile IT Capital
2018 VC Softbank Investment $ 100.0 Loggi Mobility
2018 VC FTV Capital Investment R$ 99.0 Ebanx Fintech
2018 VC Temasek Investment R$ 95.0 Bionexo Health Tech
QED Investors; Invus 2019 VC Investment R$ 87.0 Escale Services Opportunities
2019 VC Riverwood Capital Investment R$ 80.0 Omie IT
Point72 Ventures; 2019 VC Investment R$ 75.0 Contabilizei Fintech IFC; Quona Capital IFC; TheVentureCity; 2018 VC Investment R$ 72.6 RecargaPay Fintech Ventech Monashees Capital; 2018 VC Investment R$ 72.0 Banco Neon Fintech Omidyar Network
8 Andreessen Horowitz; Thrive Capital; Monashees 2019 VC Investment $ 70.0 Loft Marketplace Capital; Canary; Valor Capital Group; Fifth Wall; QED Investors GGV Capital; Mo- nashees Capital; 2018 VC Investment $ 63.0 Yellow Mobility Base10 Capital; Glass 5 Global Redpoint Eventures; Minuto 2019 VC Investment $ 60.0 Insurtech Intact Ventures Seguros Vostok Emerging Fi- nance; Santander In- 2018 VC Investment $ 55.0 Creditas Fintech noVentures; Amadeus Capital Partners
2018 VC Invus Opportunities Investment R$ 54.0 Descomplica Ed Tech
Valor Capital Group; 2018 VC Redpoint Eventures; Investment R$ 52.8 Pipefy IT OpenView Partners Desinvest- 2019 VC CRP Participações R$ 50.0 Hiper Retail Tech ment Vostok Emerging Fi- 2019 VC nance; Atlant Fonder; Investment R$ 42.0 Finanzero Fintech Dunross & Co
2018 VC Monashees Capital Investment R$ 30.6 Yellow Mobility
Cota Capital; China Bossa Nova 2018 VC Walden Ventures; Investment $ 29.0 IT Robotics Intel Capital
2018 VC Foundation Capital Investment R$ 26.4 Grabr Retail
Ribbit Capital; 2019 VC Kaszek Ventures; Investment R$ 25.0 Warren Fintech Chromo Invest IFC; FJ Labs; Mer- cado Libre Fund; 2018 VC Investment R$ 25.0 Mandaê Logistics Tekton Ventures; Performa Investments
2018 VC Astella Investments Investment R$ 25.0 Omie IT
2018 VC Invest Tech Investment R$ 22.5 Sky.One IT
Bom pra 2018 VC Innova Capital Investment R$ 22.0 Fintech Crédito
2019 VC DNA Capital Investment R$ 20.0 Feegow Health Tech
Valor Capital Group; 2019 VC Investment $ 20.0 In Loco IT Unbox Capital
9 Confrapar Partici- pações; Qualcomm 2018 VC Investment R$ 20.0 Ingresse Services Ventures; Mercado Libre Fund; FJ Labs Quona Capital; Mo- 2018 VC Investment R$ 20.0 Biz Capital Fintech nashees Capital Monashees Capital; 2018 VC Investment R$ 19.0 Volanty Marketplace Canary Discovery Capital; 2018 VC Investment R$ 19.0 Vitta Health Btov
2018 VC Movile Investment $ 18.3 Zoop Fintech
Andreessen Horowitz; Thrive 2018 VC Investment $ 18.0 Loft Marketplace Capital; Monashees Capital; Canary Vostok Emerging 2018 VC Finance; Monashees Investment R$ 17.0 Magnetis Fintech Capital FJ Labs; Lumia Capi- 2018 VC Investment R$ 17.0 InstaCarro Marketplace tal; Rise Capital QED Investors; 2019 VC Kaszek Ventures; Investment R$ 16.0 Xerpa HR Tech Redpoint Eventures Elephant Ventures; 2019 VC Investment $ 16.0 Mosyle Ed Tech Peak Ventures Confrapar Partici- pações; Crescera 2018 VC Investment R$ 16.0 Altave Aeroespacial Investments (Ex-Bo- zano)
2018 VC IFC Investment R$ 15.0 Koin Fintech
2018 VC Chromo Invest Investment R$ 15.0 Biz Capital Fintech
2018 VC Valiant Capital Investment R$ 15.0 Gaveteiro Varejo
Prosegur Tech 2018 VC Investment R$ 15.0 Concil Fintech Ventures Monashees Capital; Hi Technolo- 2018 VC Investment R$ 14.7 Health Tech Qualcomm Ventures gies Confrapar Partici- 2018 VC Investment R$ 12.8 Hands Mobility pações Vostok Emerging 2018 VC Investment R$ 12.0 Finanzero Fintech Finance Valor Capital Group; 2019 VC Investment R$ 11.5 Gupy IT Maya Capital Monashees Capital; 2019 VC Maya Capital; Y Com- Investment $ 10.5 Kovi Mobility binator
10 2018 VC E.bricks Early Stage Investment R$ 10.0 F(x) Fintech
2018 VC Inseed Investments Investment R$ 10.0 Intergado Ag Tech
Monashees Capital; 2018 VC Canary; Mercado Investment R$ 9.0 IDWall Fintech Livre Fazenda 2019 VC Monashees Capital Investment $ 8.5 Food Tech Futuro Yellow Ventures; Osher Tech; DGF 2019 VC Investments; 42K Investment R$ 8.0 Adianta Fintech Investments; Chromo Invest Global Founders Ca- 2018 VC Investment R$ 8.0 DogHero Pet Care pital; IGNIA Partners
2018 VC Inseed Investments Investment R$ 7.5 Zazcar Mobility
2019 VC IGNIA Partners Investment $ 7.0 DogHero Pet Care
2019 VC Astella Investments Investment R$ 6.8 Jota Law Tech
Inseed Investments; 2019 VC Investment R$ 6.5 Dom Rock IT EDP Ventures Brasil
2019 Impact Vox Capital Investment R$ 6.0 Celcoin Fintech
Monashees Capital; 2019 VC Mindset Ventures; Investment $ 6.0 Weel Fintech Banco Votorantim
2018 VC SP Ventures Investment R$ 6.0 Gênica Ag Tech
2018 VC SP Ventures Investment $ 6.0 Agrofy Ag Tech
2018 VC Inseed Investments Investment R$ 6.0 Bluepex IT
2018 VC Valorem Financial Investment R$ 6.0 Par Mais Fintech
Global Founders 2019 VC Investment R$ 5.7 Zen Fintech Capital
2018 VC E.bricks Early Stage Investment R$ 5.2 Vérios Fintech
2019 VC Fundo Miletus Investment $ 5.0 Braincare Health Tech
2019 Impact Kviv Ventures Investment R$ 5.0 Nutrebem Health
Smartbre- 2018 VC Inseed Investments Investment R$ 5.0 Ag Tech eder SP Ventures; Abseed 2018 VC Investment R$ 5.0 Aegro Ag Tech Ventures
11 Antera Gestão de 2018 VC Investment R$ 5.0 Fullface IT Recursos
2019 VC Canary Investment R$ 4.5 Shopper Retail Tech
2018 VC SP Ventures Investment R$ 4.5 Speclab Ag Tech
2019 VC Redpoint Eventures Investment R$ 4.2 Accountfy IT
2019 VC Domo Invest Investment R$ 4.0 Mlabs Ad Tech
Banco BTG (Boot- 2019 VC Investment R$ 4.0 Agro Now Ag Tech sLab)
2018 VC Domo Invest Investment R$ 4.0 Turbi Services
XP Asset; Monashees 2018 VC Investment $ 4.0 Rebel Fintech Capital; Jmalucelli Google AI Impact 2019 Corporate Investment R$ 3.0 Hand Talk Ed Tech Challenge
2019 VC Inseed Investments Investment R$ 3.0 VarejOnline Retail Tech
Agenda Edu/ 2018 VC Domo Invest Investment R$ 3.0 Ed Tech Agenda Kids
2018 VC SP Ventures Investment R$ 3.0 JetBov Ag Tech
Confrapar Participa- 2018 VC ções; Travel Capita- Investment R$ 3.0 Flapper Mobility list Ventures
2018 VC Pedralbes Partners Investment $ 3.0 Trocafone Marketplace
2018 VC Domo Invest Investment R$ 3.0 Goomer IT
2018 VC Bz Plan Investment R$ 3.0 Phonetrack IT
Eirene Solu- 2018 VC TechTools Ventures Investment R$ 3.0 Ag Tech tions
2018 VC Inseed Investments Investment R$ 2.6 Playmove Ed Tech
Crescera Investments 2019 VC Investment R$ 2.5 DataRisk IT (Ex-Bozano) Crescera Investments Bom Con- 2019 VC Investment R$ 2.5 Fintech (Ex-Bozano) sórcio
2019 VC Inseed Investments Investment R$ 2.5 Justto Law Tech
Kviv Ventures; Bossa 2018 VC Investment R$ 2.5 Hand Talk Education Nova Investments Crescera Investments 2018 VC Investment R$ 2.5 Paggcerto Fintech (Ex-Bozano)
12 Crescera Investments Auvo Tecno- 2018 VC Investment R$ 2.5 IT (Ex-Bozano) logia Canary; Monsanto 2018 VC Investment R$ 2.3 Grão Direto Ag Tech Growth Ventures SP Ventures; Capital 2019 VC Investment R$ 2.0 Pink Farms Ag Tech Lab
2019 VC Domo Invest Investment R$ 2.0 Instaviagem Services
2019 VC FGA Investments Investment R$ 2.0 Vexpenses Fintech
Indico Capital 2019 VC Investment R$ 2.0 Zenklub Health Tech Partners
2019 VC MSW Capital Investment R$ 2.0 Carflix Marketplace
2018 VC Inseed Investments Investment R$ 2.0 Onegrid Energy
Gofind. 2018 VC FIR Capital Investment R$ 2.0 Marketplace Online Escola em 2018 VC Cedro Capital Investment R$ 2.0 Education Movimento Rede Visto- 2018 VC FIR Capital; Bz Plan Investment R$ 2.0 Services rias Agente 2018 VC Vostok New Ventures Investment $ 2.0 Fintech Imóvel Viver Incor- Civil Cons- 2018 VC Paladin Partners Investment R$ 1.8 poradora truction
2018 VC Leblon Equities Investment R$ 1.6 Kria/Broota Services
2019 VC MSW Capital Investment R$ 1.5 Olivia Fintech
EDP Ventures, BMGup 2019 VC Tech; Bossa Nova Investment R$ 1.5 Delfos Energy Investments Xvision Tec- 2018 VC Cedro Capital Investment R$ 1.5 IT nologia Global Founders 2018 VC Investment $ 1.2 Creditoo Fintech Capital; Canary
2019 VC Redpoint Eventures Investment R$ 1.2 Ribon Services
Libbs Farmacêutica 2019 Corporate Investment $ 1.0 Pluricell Health Tech (Portas Abertas) Superjob Venture 2019 VC Investment R$ 1.0 Matchbox Services Capital Smart Money Ven- 2019 VC Investment R$ 1.0 Produttivo IT tures M3 Investments; GVAngels; MOR Capi- 2019 VC Investment R$ 1.0 PackID IT tal; Allievo Ventures; Aceleratech
13 2018 VC Canary Investment R$ 1.0 Lapag Fintech
Startfarm; Harvard 2018 VC Investment R$ 1.0 Incentiv Services Angels Superjob Venture Food and 2018 VC Investment R$ 1.0 Apptite Capital drinks
2019 VC Verus Group Investment R$ 0.8 Fix it Clean Tech
Voa Educa- 2019 VC MSW Capital Investment R$ 0.8 Ed Tech ção Bossa Nova Invest- 2019 VC Investment R$ 0.7 Play2sell Retail Tech ments Jovens 2019 VC Individuals Investment R$ 0.2 Ed Tech Gênios Samsung Creative 2019 Corporate Investment R$ 0.2 Hoobox IT Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Fofuuu IT Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Sinte Soft IT Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Epistemic Health Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Keep Smiling Health Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Olivas Ed Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Alltism Health Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Realvm Health Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Birdie Ad Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 NavegAM Retail Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Tarvos Ag Tech Startups Samsung Creative 2019 Corporate Investment R$ 0.2 Indwise IT Startups Starter Acceleration 2019 Corporate Investment ( - ) Pix Force IT Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) Thermo-Off IT Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) Já Entendi Ed Tech Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) Rio Analytcs IT Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) Fhrinck IT Program (EDP)
14 Starter Acceleration 2019 Corporate Investment ( - ) Blu365 Fintech Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) ColabApp Gov Tech Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) Neras Clean Tech Program (EDP) Starter Acceleration 2019 Corporate Investment ( - ) Loud Voice Ad Tech Program (EDP)
2019 VC Canary Investment ( - ) Spin Pay Fintech
Global Founders 2019 VC Investment ( - ) Swap Fintech Capital; Canary Astella Investments; 2019 VC Investment ( - ) Sallve Varejo Canary Crescera Investments 2019 VC Investment ( - ) Semantix IT (ex-bozano) Food and 2019 VC Unbox Capital Investment ( - ) Flormel drinks Valeta Ga- 2019 VC Vereeni Investments Investment ( - ) IT ming
2019 VC Harvard Angels Investment ( - ) Jobecam HR Tech
2019 VC BTG Pactual Investment ( - ) Resale Fintech
2019 VC Inseed Investments Investment ( - ) Alright Ad Tech
Superjob Venture 2019 VC Investment ( - ) Firgun Fintech Capital Superjob Venture 2019 VC Investment ( - ) Rocketpass Fintech Capital Superjob Venture 2019 VC Investment ( - ) Vittude Services Capital Crescera Investments 2018 VC Investment ( - ) Spume IT (ex-bozano)
2019 Corporate Eurofarma Synapsis Investment ( - ) Lean Survey Services
Plataforma 2019 Corporate Eurofarma Synapsis Investment ( - ) Clean Tech Verde
2019 Corporate Eurofarma Synapsis Investment ( - ) Gupy IT
2019 VC Canary Investment ( - ) Facily IT
Yunus Negócios 2019 Impact Investment ( - ) 4You2 Ed Tech Sociais
2019 VC E.bricks Early Stage Investment ( - ) Bcredi Fintech
2019 VC Inseed Investments Investment ( - ) Carenet IT
15 TreeCorp Invest- 2019 VC Investment ( - ) Zul Digital Fintech ments
2019 Corporate Positivo Tecnologia Investment ( - ) Agrosmart Ag Tech
2019 Corporate Positivo Tecnologia Investment ( - ) @ Tech Ag Tech
2019 VC Ipanema Ventures Investment ( - ) Homer IT
Banco BTG (Boot- 2019 VC Investment ( - ) Finpass Fintech sLab) Banco BTG (Boot- 2019 VC Investment ( - ) Digesto Law Tech sLab)
2019 VC Accion Venture Investment ( - ) Jeitto Fintech
2018 VC Cedro Capital Investment ( - ) GIRA Ag Tech
Qulture. 2018 VC Y Combinator Investment ( - ) Services rocks
2018 VC Kaszek Ventures Investment ( - ) Escale Services
Crescera Investments Desinvest- Ez Commer- 2018 VC (ex-Bozano); Triaxis ( - ) Retail Tech ment cer Capital Redpoint Eventures; 2018 VC Investment ( - ) Movidesk IT Abseed Ventures
2018 VC Canary Investment ( - ) Buser Logistics
Monashees Capital; Desinvest- 2018 VC Thrive Capital; Kas- ( - ) Oppa Retail ment zek Ventures Hitech 2018 VC Kick Ventures Investment ( - ) IT Eletric Bossa Nova Invest- 2018 VC Investment ( - ) Smarthint Retail Tech ments
2018 VC Cedro Capital Investment ( - ) Imedicina Health Tech
Desinvest- 2018 Impact Vox Capital ( - ) TEM Health ment Desinvest- 2018 VC DXA Investments ( - ) Zee.dog Retail ment
2018 VC Cedro Capital Investment ( - ) Kanttum Ed Tech
Superjob Venture 2018 VC Investment ( - ) Wuzu Fintech Capital
2018 VC CRP Participações Investment ( - ) Wevo IT
2018 VC Cedro Capital Investment ( - ) Getrak IT
16 Vox Capital; E.bricks 2018 Impact Investment ( - ) Editora Sanar Ed Tech Early Stage Virtual Avio- 2018 VC Portcapital Investment ( - ) Aeroespacial nics
2018 VC Canary Investment ( - ) Social Miner Services
FCP Innovacion; 2018 VC Investment ( - ) TriCiclos Education Ameris; Small Giants
2018 VC Canary Investment ( - ) Go Good Health
2018 Corporate Visa Investment ( - ) Conductor IT
2018 VC Monashees Capital Investment ( - ) Rebel Fintech
2018 VC Fundo Vit Investment ( - ) Beblue Fintech
2018 VC Kick Ventures Investment ( - ) Anestech Health
Superjob Venture 2018 VC Investment ( - ) ReCB Fintech Capital
2018 VC Garan Ventures Investment ( - ) Estuda.com Ed Tech
Fábrica Food and 2018 VC Leste Investments Investment ( - ) de Bolo Vó drinks Alzira Redpoint Eventures; 2018 VC Investment ( - ) Gesto Health Endeavor Catalyst
2018 VC Salesforce Ventures Investment ( - ) Bliive Marketplace
Agenda Edu/ 2018 Impact Omidyar Network Investment ( - ) Ed Tech Agenda Kids Redpoint Eventures; 2018 VC Bossa Nova Invest- Investment ( - ) Repassa Marketplace ments
Source: ABVCAP research (only publicly announced transactions included), from january 2018 to june 2019.
17 Sector focus [Fintech]
With an annual GDP of over US$ 2 trillion and a population of about 212 million inhabitants, Brazil has one of the largest consumer markets in the world. A Central Bank study, in 2017, identified that 86.5% of Brazilians over 15 years of age have a bank account and that 44% of the adult population carries out credit operations.
The high concentration and the high cost of services offered by Brazilian banks genera- te many opportunities for new entrants that add technologies and operate dissociated from banking institutions. The new players, especially fintechs, are closing the gap left by traditional financial institutions and contributing to financial inclusion.
In parallel, regulatory changes are encouraging competition. In 2013, the Brazilian Gover- nment promulgated the Law 12.865 authorizing the Central Bank to act as controller. At that moment, a new regulatory milestone, introducing the concept of arrangement and payment accounts was launched. The new regulations implemented since then aimed at creating competition, with a non-discriminatory treatment of participants and keeping in mind the protection of traders, providing more freedom to choose the institution for deposit of funds and mechanisms to protect receivables.
Taking advantage of the conditions created in this new scenario and adapting the servi- ces to the market demand for increasingly digital services, Brazilian fintechs are playing an important role in creating solutions for the future of enterprises and consumers and leveraging from their flexible structures and low cost to gain more users.
There is a growing trend of foreign investment in Brazilian fintechs. The Chinese Tencent invested US$ 180 million in Nubank, followed by the last round, led by TCV, that valued the company over US$ 10 billion, Brazil´s first decacorn and now the six largest financial institution by number of customers in Brazil. Stone, a payment processor company, had its IPO in October of 2018, with Berkshire Hathaway of Warren Buffett, the Gávea Investimentos and Ant Financial, a subsidiary of Alibaba Group, among its shareholders. PayPal, another payment processor company, raised US$ 2.3 billion in its IPO on the New York Stock Exchange in the beginning of 2018.
Brazil is attractive to the payments market not only for its large population and develo- ping economy, but also because there is still a shy presence of electronic payments and products with simple technology that can boost the trade and stimulate Brazilian entre- preneurship. Fintechs tapping into the payment segment helped to develop new areas and expand the use of credit cards by people and companies that previously could not afford the rental costs of credit card machines. 18 Investments of venture capital in fintechs per continent 1T17-1T18 - R$ Million
North America Asia Europe South America
2793 2469 2170 2080 2066 2023 US$ Million
1373 1289
933 849 900 681 701 519 497 271 35 41 12 103
1T17 2T17 3T17 4T17 1T18
Source: PWC
Fintech is also the number one sector among venture capital investments in Latin Ame- rica, with US$ 540 million invested in 94 transactions from 2017 to mid-2018 with Brazil taking the center stage. Nubank highlights the growing importance that VC investors are putting in Brazil as an epicenter of fintech innovation in Latin America.
Number of investments in fintechs in Latin America FY17-1H18
44
24
8 8 5 4 1
Brazil Mexico Argentina Chile Peru Colombia Others
Source: LAVCA
19 Number of users of the main fintechs in the world FY18
5000
3000 (Thousand) 1500 1600 1046 796 450 600 600 100 120 200 210 250
N26 Loot Varo Neon Gimi Monzo Tandem Monese Chume Revolut Nubank Lunar WayGreenlight Starling Bank
Source: CB Insight
Main segments of fintechs in Brazil FY18
25 21
# 9 8 6 6 6 5 4 3 3 3 1 1
Others Insurance Efficiency Exchange Digital banks MultiserviceP2P Leading Accountancy Crowdfunding Mobile payment Digital currency
Credit and financing Financial management Investment management
Source: PWC
20 In Brazil and more widely throughout Latin America, the platforms of payments and loans continue to dominate investors’ interest. The negotiations involving Nubank, PagSeguro and Stone, among others, have positioned Brazil as one of the most important markets in the global scenario.
It is believed that by 2020 the fintechs may take more than 20% of businesses that to- day are made by traditional financial institutions around the world. And Brazil is strongly positioned to expand its services on a global scale, supported by technology.
Sample of fintech deals in Brazil
VALUE YEAR INVESTOR(S) TYPE TARGET COMPANY (BILLION)
2018 DST Global; Redpoint Eventures Investment R$ 495 Nubank
2019 Softbank Investment US$ 200 Creditas
2018 Tencent Investment US$ 200 Nubank
2018 FTV Capital Investment R$ 99 Ebanx
Point72 Ventures; IFC; Quona 2019 Investment R$ 75 Contabilizei Capital
2018 IFC; TheVentureCity; Ventech Investment R$ 72.6 RecargaPay
Monashees Capital; Omidyar 2018 Investment R$ 72 Banco Neon Network Vostok Emerging Finance; San- 2018 tander InnoVentures; Amadeus Investment $ 55 Creditas Capital Partners Vostok Emerging Finance; Atlant 2019 Investment R$ 42 Finanzero Fonder; Dunross & Co Ribbit Capital; Kaszek Ventures; 2019 Investment R$ 25 Warren Chromo Invest
2018 Innova Capital Investment R$ 22 Bom pra Crédito
Quona Capital; Monashees 2018 Investment R$ 20 Biz Capital Capital
2018 Movile Investment $ 18.3 Zoop
Vostok Emerging Finance; Mo- 2018 Investment R$ 17 Magnetis nashees Capital
2018 IFC Investment R$ 15 Koin
2018 Chromo Invest Investment R$ 15 Biz Capital
21 2018 Prosegur Tech Ventures Investment R$ 15 Concil
2018 Vostok Emerging Finance Investment R$ 12 Finanzero
2018 E.bricks Early Stage Investment R$ 10 F(x)
Monashees Capital; Canary; 2018 Investment R$ 9 IDWall Mercado Livre Yellow Ventures; Osher Tech; 2019 DGF Investments; 42K Invest- Investment R$ 8 Adianta ments; Chromo Invest
2019 Vox Capital Investment R$ 6 Celcoin
Monashees Capital; Mindset 2019 Investment US$ 6 Weel Ventures; Banco Votorantim
2018 Valorem Financial Investment R$ 6 Par Mais
2019 Global Founders Capital Investment R$ 5.7 Zen
2018 E.bricks Early Stage Investment R$ 5.2 Vérios
XP Asset; Monashees Capital; 2018 Investment US$ 4 Rebel Jmalucelli Crescera Investments (Ex-Bo- 2019 Investment R$ 2.5 Bom Consórcio zano) Crescera Investments (Ex-Bo- 2018 Investment R$ 2.5 Paggcerto zano)
2019 FGA Investments Investment R$ 2 Vexpenses
2018 Vostok New Ventures Investment US$ 2 Agente Imóvel
2019 MSW Capital Investment R$ 1.5 Olivia
2018 Global Founders Capital; Canary Investment US$ 1.2 Creditoo
2018 Canary Investment R$ 1 Lapag
Starter Acceleration Program 2019 Investment ( - ) Blu365 (EDP)
2019 Canary Investment ( - ) Spin Pay
2019 Global Founders Capital; Canary Investment ( - ) Swap
2019 BTG Pactual Investment ( - ) Resale
2019 Superjob Venture Capital Investment ( - ) Firgun
22 2019 Superjob Venture Capital Investment ( - ) Rocketpass
2019 E.bricks Early Stage Investment ( - ) Bcredi
2019 TreeCorp Investments Investment ( - ) Zul Digital
2019 Banco BTG (BootsLab) Investment ( - ) Finpass
2019 Accion Venture Investment ( - ) Jeitto
2018 Superjob Venture Capital Investment ( - ) Wuzu
2018 Monashees Capital Investment ( - ) Rebel
2018 Fundo Vit Investment ( - ) Beblue
2018 Superjob Venture Capital Investment ( - ) ReCB
Source: ABVCAP research (only publicly announced transactions included), from january 2018 to june 2019.
23 Sector focus [Mobility]
The volume of investments in transport and urban mobility in Brazil is still below the ave- rage of the OECD (Organization for Economic Cooperation and Development) countries and even of their peers in Latin America. Because of the country’s continental propor- tions, there are great challenges in the construction, maintenance of roads and public transportation equipment among others.
A. Quality of infrastructure 1-7 (max.)
7 6 5 4 3 2 1 0 ITA CRI IND IDN ESP ZAF AUS USA JPN FRA RUS THA LAC TUR POL DEU CHL ARG KOR MEX COL GBR CAN VNM CHN OCDE BRAZIL
B. Investment rate in international comparison, 1990-2016
40 % of GDP
35
30
25
20
15
10
5
0 ISL ITA IRL IRL ISR FIN CRI EST LVA IND IDN ESP BEL SVK ZAF PRT LUX NZL AUS AUT USA CZE PHL JPN FRA FRA RUS MYS THA SVN TUR POL DEU NLD CHL ARG CHE KOR MEX COL DNK GBR SWE CAN GRC HUN VNM CHN NOR NOR OCDE BRAzIL
Source: OECD, 2017
24 Because of this lack of infrastructure and taking in consideration an excessively indus- trialization pushed by the auto industry, the huge fleet of cars in urban centers of the country significantly reduced the mobility of the population. This phenomenon, which is also observed in most cities in the world, created space for more solutions that consu- me fewer natural resources and less time of movement, for example.
Cooperatives and taxi companies held the monopoly of private transport of passengers in Brazil until the arrival of the urban mobility apps. From then on, the use of these tools has encouraged competition and provided more dexterity for drivers and taxi drivers to get to their end customers. Today, apart from private cars, this sector also uses apps from startups to serve their customers.
Transport weight on monthly income
9 Brazilian cities among the 18% 11 with the highest weight 16% 14% 12% 10% 8% 6% 4% 2% 0% Bern Paris Rome Tokyo Berlin Recife Lisbon Beijing Madrid Brasília London Moscow Curitiba Shezhen Medellin Santiago Salvador Montreal Shanghai New York São Paulo Wasington Melbourne Amsterdam Mexico City Los Angeles Los PortoAlegre Copenhagen Florianapólis Buenos Aires Kuala LumpurKuala Rio de Janeiro Belo Horizonte
Source: Mobilize.org, with data from IBGE, Numbeo, Statista and city halls
Services like Uber found a huge market in Brazil. In addition to the reduction of cost in relation to taxis, it also offered the possibility to share travels safely. Currently there are several solutions available, and companies are going beyond ground transportation, which is the case of Flapper, a Brazilian company that offers uber-like rides in private jets and helicopters. 2018 the company received a R$ 3 million investment from Travel Capitalist Ventures.
On the other hand, there is the lack of environmental sustainability for the current auto- motive industry in most places. Cars are responsible for 45% of global emissions of gre- enhouse gases, which contributes to global warming. Although convenient in places as Brazil, which has one of the world’s most expensive cost for public transport and where bike lanes are not yet as well developed. In this sense, the rent of bicycles and electric scooters are a promising bet, in a market that should grow a lot in the next few years.
25 Transport in the world: emissions per mode
Rail 3% Two and Three Wheelers 5% Buses and Minibuses 5% Shipping 11% Aviation 11% Trucks 21% Light Duty Vehicles 45%
Bikesharing evolution and growth in the world
Total number of bikesharing services New bikesharing services per year
1,766 2017 444 1,322 2016 243 1,079 2015 187 892 2014 216 676 2013 200 476 2012 96 380 2011 103 277 2010 106 171 2009 82 89 2008 41 48 2007 22
Africa Asia Europe
Latin America North America Oceania and the Caribbean
Source: Transport and Climate Change Global Status Report COP 24
26 99 – The first Brazilian Unicorn
Founded in 2012 by Ariel Lambrecht, Renato Freitas and Paulo Veras, the 99 started as a taxi app. With the arrival of shared- -trip apps, the company released the 99Pop and became the main competitor of Uber in Brazil. The company’s goal is to bring fast and cheap transport to people and democratize the use of this type of service.
The idea for the creation of 99 (former 99Taxis) started in 2012 from an experience of one of its founders, Ariel Lambrecht, when taking a taxi in Germany and find out the use of mobile apps to call the car. Ariel and his former college friends Paulo Veras and Rena- to Freitas invested about R$ 50.000,00 so that 99, created by the three of them in June 2012, could reach the market.
In their first year there were only about 200 registered taxi drivers. They focused solely on operations in São Paulo and developed an advantageous and practical app for the taxi driver, with the goal of gaining market through the nominations between them. Unlike its rivals, 99 did not charge fees and soon the number of taxi drivers increased rapidly. The first investment, seed round, occurred in July 2013, with a small amount from Mo- nashees, a Brazilian VC. With this investment, the partners decided to open operation in other cities and elected Rio de Janeiro as the second hub for 99.
Almost two years later, in February 2015, the company received its second round of investments fundraising US$ 15 million. The contribution was led by American fund Tiger Global, investor Netshoes and B2W in Brazil, and with the participation of some of its previous investors such as Monashees and Qualcomm Ventures. In early 2015, 80,0000 taxi drivers were using the app, and, in São Paulo, four out of five taxis were connected to the platform.
In April 2015, they received another round of investments in the amount of US$ 25 million, led again by Tiger Global, the world’s largest investor in internet and mobile. The fourth round of investments came in January 2017, when 99 received an invest- ment of US$ 100 million. The round was led by the giant Chinese Didi Chuxing and by American private equity fund Riverwood Capital, along with funds that had already invested in previous rounds. Both companies obtained right to a seat on the Board of Directors, bringing market knowledge for the startup. Part of the funds raised was
27 used to enlarge the category of transport by means of private cars, the 99 Pop, aiming to expand the services and remodel the competitive market profile in Latin America. By then 99 had more than 140.000 registered drivers and more than 10 million users throughout the region.
99’s investment rounds
VALUE TYPE OF ROUNDS DATE INVESTORS (MILLION) INVESTMENT Monashees Capital, Qualcomm Ventures, Not 1st July 5, 2013 Seed round StarCaps Ventures, Augusta Investments informed LLC and Adeyemi Ajao. February 2, Tiger Global Management, Monashees Capi- 2nd US$ 15 Series A 2015 tal, Qualcomm Ventures and GE32 Capital. Tiger Global Management, Monashees Capi- 3rd April 1, 2015 US$ 25 Series B tal and Qualcomm Ventures. Riverwood Capital, Didi Chuxing and Mo- 4th January 5, 2017 US$ 100 Series C nashees Capital.
5th May 24, 2017 US$ 100 Series C Softbank.
Acquisition January 3, 2018 US$ 900 Acquisition Didi Chuxing.
Sample of Mobility deals in Brazil
VALUE YEAR INVESTOR(S) TYPE TARGET COMPANY (MILLION)
2019 Monashees Capital; 500 Startups Investment US$ 150 Grow
2018 Softbank Investment US$ 100 Loggi
GGV Capital; Monashees Capital; 2018 Investment US$ 63 Yellow Base10 Capital; Glass 5 Global
2018 Monashees Capital Investment R$30.6 Yellow
2018 Confrapar Participações Investment R$12.8 Hands
Monashees Capital; Maya Capi- 2019 Investment US$ 10.5 Kovi tal; Y Combinator
2018 Inseed Investments Investment R$7.5 Zazcar
Confrapar Participações; Travel 2018 Investment R$3.0 Flapper Capitalist Ventures
Source: ABVCAP research (only publicly announced transactions included), from january 2018 to june 2019.
28 GP Profile LAURA CONSTANTINI Partner Astella
Astella is a venture capital manager that invests in the generation of entrepreneurs that will change the future of Brazil. With a diverse portfolio, it searches for business offering catalytic solutions to large-scale change. With more than 20 companies in the portfolio, the fund recently led an investment round in JOTA; a digital political information platform, Sallve; a skincare brand, Bom Pra Credito; a fintech, and Qulture.Rocks, an HRTech;
Give us an overview of Astella’s relationship time 10 times longer and performance and of the companies that profitable and 10 times less need of fixed comprise your portfolio. capital. These competitive advantages are generally explored through three business We created Astella 10 years ago with models: B2B, B2C and platforms of two or the strong purpose to prove that it is more sides. possible to create global companies and exponentials from Brazil with a lot of But for us, it all starts with talented and capital efficiency. We created along the daring entrepreneurs, driven by a pur- way a multidisciplinary, multicultural and pose and who use technology to create diverse team that combines different new businesses, new solutions and new views with the power of analysis and or- market categories. This is reflected in the ganization of knowledge that comes from creation of companies with consistent thousands of hours of study and interac- foundations, with cause and effect in the tions. A team that above all loves to roll growth process. up their sleeves and work together day to day with our entrepreneurs. Our participation is taken in a clear, fair and transparent way because we believe We believe that technology creates three in long-term relationships. We support types of competitive advantage: an acqui- entrepreneurs so that they achieve their sition cost 10 times cheaper, a customer dream and build value.
29 Our Fund III portfolio currently has six up, we do everything to make part of the companies: Omie, Bom Pra Credito, Zygo, journey of this entrepreneur. Sallve, Qulture.Rocks and JOTA. You led the investment round that How does the creation of the investment resulted in an investment of R$ 6 million thesis take place and how do you select on Bom Pra Credito, the first of Astella the companies? What characteristics are in fintech. Elaborate on the reason that desirable in them and their partners? brought you to position yourselves from a consumer credit company and the From our vision on how to create compet- plans for these resources. itive advantages through technology and characteristics of exponential entre- Our first investment (Seed) in Bom Pra preneurs, we seek to develop long-term Credito in 2017 was the result of a long relationships with all entrepreneurs who relationship with Ricardo Kalichsztein. He have the same dreams as we do. Taking and his associates had more than 10,000 this in consideration, we produce content hours of working together designing to share our learnings with the largest consumer credit operations. In addition possible number of entrepreneurs. From to the huge market, it was clear that the maturity level of the team, the prod- positioning itself as a platform for both uct and distribution strategy, we seek to sides - giving borrowers and systematiz- deepen the relationship and find a possi- ing the lives of lenders - we could build a ble investment. competitive advantage in the acquisition cost. The thesis proved itself and in the It is important to stress the significance following year we followed Series A led by of the maturity level. For each stage Innova. We intend to continue supporting of the life of a startup there is a set of the team on brand building and systems of ideal characteristics. At the beginning of relationship with creditor partners. the journey (pre-seed or angel) the prior experience of the entrepreneurs, the Tell us a little about other recent composition of the team and how they investments, such as in JOTA (journal- have worked together are crucial. Once ism). Although working in sectors often we are close to the product-market fit distinct, what do these investments have (seed), the focus, the depth of the use in common? of the product, the predictability of the distribution channel and the speed of We really believe in the power of the growth are mandatory. Finally, in more content. Almost all of our investments have matured moments (Series A), what mat- the content as strategic supporting pillar. ters is whether the growth unit is proven Whether in the case of the Education Por- and can be replicated endlessly with use tal and Ciatech, that had content as the of capital. main product, to the Resultados Digitais that uses it to ensure an endless stream Throughout the relationship, we align the of opportunities (inbound marketing), the maturity degree with the four pillars of content is the ultimate killer app. our thesis: people, product, process and participation. When these variables line
30 In the case of Jota, in addition to a team There is a huge correlation between with a lot of experience in political jour- the frequency of our interactions with nalism and data analysis, we believe that the progress of the companies. Does the use of data, information and political it mean we do magic? Far from it, knowledge will explode in the next decade. the frequency of contacts means only Just like Gartner became an information that entrepreneurs keep learning and platform about technology and Bloomberg evolving, either through our team or the became the financial information plat- multitude of talents around them. form, we will witness the political plat- forms era. Among the sectors that you have been analyzing in search of opportunities, We believe that Jota will be a national which are more interesting in the medium and international leader in this arena. The to long term and for what reasons? combination of content (journalism in this case) and systems (data and deci- Venture capital is the industry that creates sion-making processes) is the future. the future. So instead of trying to predict which are the sectors that will stand out, In which stage of the business does we prefer to wait for daring and talented Astella look for startups? Tell a little entrepreneurs to show us what the future about your work and what tools are used can be, and if we believe in this dream, to add value to invested companies. we are dedicated to it. Venture Capital is also an industry that lives of crops and it Primarily we like to invest as early as pos- is very difficult to predict when each crop sible in the life of a company and join it will mature and which its potential is. We for longer than we can. We typically allo- had a crop of ecommerce that was not cate 50% of the fund for the first invest- very good. Then we had a crop of SaaS ment and 50% for the follow-ons. Our first that has been amazing. We are living in investment generally takes place when the a fintech crop and witnessing the begin- company reaches the product-market-fit. ning of a consumer-oriented (the native It means that we invested in the Seed vertical digital brands). Our job is not to stage (R$ 5 MM to R$ 8 MM round size). predict but investing in crops with the But when we know the entrepreneurs very greatest potential. well, as it is the case of Sallve and Qulture. rocks, we also invest in the pre-seed (R$ Have you already performed the 1 MM to R$ 3 MM round size). From there outflow of some investment? Among the we look for participating significantly in possible alternatives in the Brazilian the Series A (R$ 20 MM to R$ 30 MM) and market, which do you consider the most follow up the Series B (R$ 80 MM+). promising, considering the current portfolio? We seek to add value to entrepreneurs in five areas of knowledge, our ma- Our first fund, the Journey I, had 4 strate- chines: product, sales, operations, and gic outflows and yielded 31% a year (IRR). financial talent; participating in a more This MVP proved that it is possible to intensive way according to the needs make money investing in venture capital in and desires of each team, through Brazil and that the market has an incred- almost daily contacts with all of them. ible liquidity for midsize M&A transac-
31 tions. In Journey II we have already sold participation in intermediate rounds (Series Bs and Cs), which shows that the liquidity between funds is also abundant. Finally, the conquest of other funds from the sale of 99 and the IPO of Stone, shows that the market has strength to the outflows of billions of dollars. We are extremely confortable in continuing to secure great returns for our investors and entrepreneurs.
What is your perception about the evo- lution of the venture capital ecosystem in Brazil?
We stopped being a Brazilian market to be inserted in the global market. We stopped being copycats market to be a market that creates products and distribution channels. We stopped being a market with novice entrepreneurs to an environment where founders at global level prolifer- ate. We stopped being a market with few resources for a liquid system, with angels, seed funds, Series A funds in a significant increase of demand for more advanced stages. This generation of entrepreneurs is just a sample of what is yet to come.
32 Company Profile
MARCELO FUJIMOTO CEO Mandaê
Created in 2014, Mandaê proposes to develop technology solu- tions to generate competitive advantages to the business logis- tics stage. Between 2014 and 2016 raised about US$ 9 million in Series Seed and Series A rounds with investors as Monashees, Performa Investimentos, Qualcomm Ventures, Valor Capital Group and Kima Ventures. In 2018, the company raised more than US$ 8 million on each round of Series B led by the IFC, the private arm of the World Bank. The round also had the partic- ipation of UPS Strategic Enterprise Fund, Mercado Libre Fund, Tekton Ventures, FJ Lab, in addition to the ones that already are investors, such as Monashees, Performa and Qualcomm.
Tell a little about the history and Give us an overview about the funding operation of Mandaê. rounds and about how you structured the company to create the interest Mandaê started in 2014 aiming to optimize of investors and receive the first the logistics of e-commerce of the city of investments. São Paulo. In its early years, its business model contemplated the pick-up and We received three rounds of investment: packaging of the orders for their custo- Seed Series, Series A and Series B, all with mers, most formed by small shopkeepers. different processes. In the Seed Series, A few years later, it no longer offered the for example, we only had a PPT and the service of packaging to aim medium and idea that we wanted to sell to start our large e-commerce companies. Currently business. In the Series A we had knowle- Mandaê uses intelligence and world-class dge to show investors the paths that we technology to offer a logistic platform ca- were touring in order to achieve the goals. pable of managing all this step within the Finally, in Series B, the investors assessed business, ensuring efficiency and intelli- the performance of growth and, in this gence to the processes. case, we were already well positioned, and
33 we wanted to raise funds to invest and to take the first steps to perform it. Now, structure our business. the Series B investments allowed us to invest in our growth, mainly of teams as It is important to say that in all rounds of Sales, Product, IT and Developers, who funding our biggest focus has always been are fundamental for the development and to sell our vision to investors, show them expansion of the business as a whole. Yes, the objective that we must transform the we have already planned new rounds of market and the industry as a whole – and investment. that’s what helped us to secure these investments. Being in the logistics sector, what do you consider the the main bottlenecks Talk a little about the expectation on for the development in the country? investors participation and value creation for the business. What were the main The logistical challenges in Brazil are differences observed in the three rounds numerous, but I understand that all of of fund raising. them represent opportunities for us. We have worked to develop solutions that The rounds in general are different from reduce these impacts and contribute to one another. In our first one, in which a healthier sector. we had the support of Kima Ventures, there were not much involvement on the When I think of challenge, the biggest investors’ part. But on Series A, in which one for me today is to find talent to we received investment from firms such compose our team, after all they are the as Monashees, Qualcomm and Valor ones who make the deal happen. We Capital, we found aboard of investors who need to have focus, make good choices understood the startup world and the pain and transmit our vision to these people, of their entrepreneurs, and that made the that will be a part of building something support even more meaningful. Finally, in valuable to the market. Series B, in which we raised capital from the IFC and UPS, the demanding patterns The technology developed by you helps were higher, which put Mandaê on an companies and new entrepreneurs in even higher level. In order to get a better their distribution cost reduction. Thinking view, we were the first company in Brazil about the new demands of these custom- to receive investment from UPS, without ers, what do you consider a problem still mentioning the support we constantly had unresolved and a problem Mandaê can from Hans Hickler, former CEO of DHL, help to solve? Is there interest to expand and who stood by us since the first round, the technology to other segments? contributing with his business, manage- ment visions, and knowledge on logistics. Today Brazil suffers from a series of logistical inefficiencies. One of them is How are you using the capital raised? the fact that often more than one carrier Do you plan new rounds and what are delivers on the same street, on the same the goals? day – and sometimes even at the same ad- dress. This could be solved with the use Basically, the Seed Series and Series A of technology and intelligence. The goal of were made to structure our business and Mandaê is precisely this: to bring intelli-
34 gence to the supply chain, making logistics more efficient. This strategy represents a great opportunity for improvement, since it contributes to boosting sales and the emergence of new business (and no other company is perched on it).
Speaking of expansion, this is an idea for the future, but for now our goal is to stay focused on the fractional loads, in which there are still many inefficiencies and a lot of potential for development.
Your business is strongly impacted by the consumption, which has slowed down in recent years and has been revived since 2018. How did it affect the company’s operations and what measu- res do you consider important to shield the group against these oscillations?
Regardless of the economy in general, the e-commerce have grown in an accelera- ted way throughout the world, especially in Brazil. And this will continue to be a trend for at least another 10 or 20 years.
Fortunately, we are focusing on a good market with great opportunities. The logistics of today represents a major barrier to business growth, so our goal is to help boost this growth. We have not made our operation international yet, but our product is in a stage of development that can enable its internationalization in the future.
35 Corporate Venture JOSÉ CLÁUDIO CYRINEU TERRA Director of Innovation and Digital Transformation Eretz.Bio Eretz.Bio is an initiative of the Sociedade Beneficente Israel- ita Brasileira Albert Einstein (Israeli Beneficent Society Albert Einstein) who works as an incubator of startups focused on innovation in the health sector. Currently, there are more than 30 startups in the initiative’s portfolio. These startups, hosted in Eretz.Bio co-working space in Sao Paulo, are de- veloping their solutions in an environment of innovation and collaboration, having access to the infrastructure of labo- ratories and equipment, in addition to the support of inno- vation experts. They also benefit from consulting on issues ranging from intellectual property and software development, fundraising and access to financing.
Tell a little about the performance of 34 incubated startups, being that there Eretz.Bio. How many startups are incu- are two modalities of incubation: on- bated at the moment and how does the -site, when the startup has a dedicated generation of value for these compa- team in coworking; and virtual incuba- nies happen? tion, in case of those startups that are headquartered in other cities or states, Eretz.bio is the coworking space in the but that have the support of Eretz on area of innovation at the Albert Einstein several fronts and have access to moving Hospital. The space was inaugurated in positions, meeting rooms and unique November 2017, when the hospital was initiatives for incubated companies. already working with startups for some years and realized that having a space Value generation takes place through to welcome some of these companies various forms of support, ranging from would make sense, as much for them as mentorships with professionals of the for the hospital itself. Currently we have hospital itself and market professionals, to
36 pilot projects or projects of co-develo- apply this technology in the area of health. pment, also passing by specific interac- An application of their algorithm develo- tions, such as support on issues related ped in partnership with Intel allows users to business development, intellectual with mobility difficulties to ride electric property and fundraising. wheelchairs with their facial expressions and this had prominence at CES earlier How is the startups selection and what this year. features are you looking for in these companies and entrepreneurs? Other startups that deserve to be highligh- ted for their applications include Phelcom, The selection is made continuously N2B and Gntech. The first developed a throughout the year. In this context, we portable retinograph with equivalent qua- have a team that is constantly prospec- lity to the best equipment on the market, ting for new opportunities for startups to but lighter and cheaper. This solution work together and also often receive new must democratize access to retinal exams. proposals. An alternative for entrepre- N2B, in turn, is a digital health startup that neurs who want a relationship with the developed tele nutrition app. In addition Eretz.bio is to make an appointment on to reviews of meals based on AI/Machine the pitch session, which takes place mon- learning, users can access evaluations thly (agenda available on our website). made by the nutritionists’ team. Finally, the Gntech works with personalized medi- In order to have the startups selected cine in pharmacogenetic line. they need to go through three filters: (i) possess at least one MVP; (ii) have a pro- Tell a little of your vision on the health- ject that generates relevant impact on care industry in Brazil and what are the the health environment; and (iii) we need critical points for the development in to understand how incubation in Eretz. your opinion. bio can add value to this project. The healthcare sector in Brazil it is cha- Regarding the entrepreneurs, we seek racterized by being a mixed system and those with a strong knowledge of the the private system acting as complement problem they look to solve and has a to the SUS (the public health system). A team that demonstrates implementation point that draws attention is that, regar- capacity. dless of the volume of investment in the sector, the country still ranks low positions Are there segments or types of techno- in the rankings of health system efficien- logy that stand out in the midst of the cy. In this context, it is clear that there incubated startups? are important points of improvements that go from better resource allocation Within the health sector the Eretz.bio to institutional improvements. Among the works with virtually all types of techno- key points for development are those that logies from digital health to life Science. affect the financing capacity of the sector There are, however, some cases that (both public and private) as well as those deserve prominence, as the HOOBOX, that extend the efficiency in management. startup that developed algorithms for the recognition of facial expressions and
37 When you observe the investment levels are solutions that allow the care or remote of the countries considered references monitoring of patients. Such solutions in health, you can see that Brazil still can contribute both to a more efficient underinvests in the sector, with very re- service and to an even bigger reduction levant participation of private initiative. of hospitalization of patients, making the How do you assess the current invest- system as whole much more efficient. ment volume in health in Brazil and In addition, we have a healthcare system what measures do you deem necessary that is fairly fragmented in terms of data. for the country to achieve the appro- However, the new technologies allow a priate volume? consolidation of such data. To the extent that new arrangements can reduce this Investment in health in Brazil is around fragmentation or consolidate this data, it 8% of the GDP, and of these, 3.8% refer opens up space for relevant efficiencies to public investment. Those numbers ranging from population health initiatives put the country below the average of for preventive and personalized medicine. developing countries. Overall, investment in health is inserted in the context of re- New technologies promise to revolutio- sumption of economic growth, especially nize the health industry in Brazil. Which when you think in public spending. In are presented as the most promising? private scope, in addition to the upturn of the economy, regulatory and legal The health sector in Brazil still shows great safety are also essential. opportunities for improvement. Among them include those associated with the It is important to note that just as technologies that facilitate access to heal- important as the volume is the quality th services, such as call center and the use of the investment. In this sense, Brazil of artificial intelligence. already does a good job with regard to investment in primary care, but consi- In addition, the new models that could dering characteristics of population and emerge from the use of the data genera- ageing, attention need to be focused on ted by the new technologies can add great preventive care associated with chronic value to health services disease and tends to be an investment that pays good dividends.
Being an important player in the health innovation ecosystem, what are the main opportunities in the Brazilian market?
When you evaluate the trajectory of health care costs and the aging trend of the population, you can observe that innovations that democratize the access to better quality services or contribute to reduce costs associated with health, constitute good opportunities. An example of an opportunity in line with this trend
38 Legal Point of View
RODRIGO MENEZES PEDRO FERREIRA Founding Partner Senior Associate
Derraik & Menezes Advogados
Corporate Venture: Aspects companies should think prior to establishing their CVC Units
Every year, the number of active corporate venturers increases substantially, and in 2018 exceeded 3,000 active companies (whether or not with a CVC Unit), according to the Global Venture Capital annual review.
In Brazil, in the past two years we saw and have been approached by many companies pur- suing any form of engagement to startups, some with more structured approach and others only testing the waters . The number of entities that intend to start activities in this field is much larger than the corporate venturers that have already implemented and consolidated their CVC units.
The purpose of this paper is to provide you with the main aspects that businesses must discuss and define before commencing their CVC projects. The Global Corporate Venturing calls it the “8 Arms of Intelligent Corporate Venturing”, having an octopus as symbol, and they are divided as follows:
1. Capital Sourcing. As any other project, a CVC must have its own separated budget and source of funding. It must be organized from the beginning as a standalone activity, sin- ce corporate venturing is a long-term endeavor, in which the bad results appear first (the famous write-offs). Therefore, having an individualized funding source already defined for the whole term of the project is mandatory to avoid its discontinuity or having the project stopped in the middle.
2. Team: Internal x External hiring. Needless to say that people are key to the success of a project. Therefore, before initiating the CVC project, entities should evaluate the team that will be involved, their abilities, qualities, mindset, knowledge of the market, and if they have experience in this market. In short, the CVC team must run the show. Another key point would be to analyze if hiring someone from outside the organization is worthwhile to accele- rate the project – usually training someone would take a long time.
3. Independent CVC Unit. It is extremely important to organizations to structure the CVC unit as an independent body. It can be a different team of people placed in a detached depart- ment or even a separated entity in the more mature CVC, but more importantly is a standa- lone self-running team with powers to take the decisions and lead the project.
39 4. Independent VC Fund Strategy. All the mature corporate venturers invest in startups as the last mile of a corporate venturing project. Therefore, even before starting a CVC project, defining the investment thesis will serve as compass for the actions. Some organizations use CVC to develop and improve its core business (for instance, Qualcomm Ventures invested in 99 taxis to increase the selling of smartphones that contains microchips manufactured by Qualcomm) and others invest looking for new markets or new products related to its core business (e.g., car companies investing in autonomous cars). Among other factors, the thinking process for CVC projects, should start on defining the verticals (areas of engage- ment), market and territory.
5. Deal Flow, Valuations and Legal Documents. Upon definition of the source of funding, team, CVC Unit and funding strategy, it is time to get the “hands dirty”. The goal at this point is to find the right approach on identifying good investment opportunities and building a good deal flow. Also, the focus should be on the adoption of its own evaluating method of the target companies, such as comparing to other startups that have been invested or inves- ting as co-investor, as well as validating the price suggested by the leading investors (usually a VC Fund). Finally, it is essential having a specialized legal team supporting the organization on all the legal themes, including the drafting and revision of the deal documents, performing the legal due diligence and helping on the negotiation of the deal terms.
6. Portfolio Management and Value Creation. Once a startup is invested, it becomes a part of the organization portfolio. This is the time to create value for the startup. The corporate venturers at this point should define means to support the startup on their path. Suppor- ting can be made in several different ways, including using the startup as supplier, as pilot programs to solve organization’s bottlenecks, by mentoring executives or by simply presen- ting the startup business opportunities. The CVC should be viewed, in some way, as a “smart money” to the startup.
7. Exits and Survival Strategies.As Brazilians say, “every carnival has its end” and the CVC investments are not different. As a result, preparing for the exits for the investments is cru- cial for the success of the project. The most common exit strategies for VC Funds are IPOs (Initial Public Offerings), M&A (mergers and acquisitions) or the sale to a strategic player. Concentrating on CVCs, we can add the purchase of the startup by the organization that made the investment, mainly if the services are connected to its core business. A successful outcome on an exit strategy is a big incentive for the life and survival of the CVC project, as well as for providing another CVC project circle.
8. Performance Measurement: Strategic X Financial / Internal x External.Businesses and organizations are driven by results. Accordingly, the performance of the CVC project should be measured from day one to justify to the high-level management and to the stakeholders its results and benefits in the long term (“if you can’t measure it, you can’t manage it” – W. Edwards Deming). Measurement should involve not only the financial, but also the strategic results that the project brings to the organization. Also, it is relevant defining whether the measurement will be made by an organization internal team or by an external consultant.
The foregoing is just a flavor of the issues to be discussed and reflected before organizing a CVC Unit and it is vital to have high quality thoughts on such topics for the achieving the desired success in a CVC project. 40 Sample of local VC firms active in Brazil
›› A.b.seed Ventures ›› IndicatorCapital ›› A5 Capital Partner ›› Inseed Investimentos ›› Altivia Ventures ›› Invest Tech ›› Antera Gestão de Recursos ›› Invest Tech ›› Arpex Capital ›› Investimage ›› Astella Investimentos ›› Kaeté Investimentos ›› Bemtevi ›› Kaszek Ventures ›› Bossa Nova Investimentos ›› Maya Capital ›› BR Opportunities ›› Mindset Ventures ›› Canary ›› monashees ›› Cedro Capital ›› MOV Investimentos ›› Confrapar ›› Oria Capital ›› Crescera Investimentos ›› Performa Investimentos ›› CRP Companhia de Participações ›› Pitanga ›› CVENTURES ›› Portbank Capital ›› DGF Investimentos ›› Qualcomm Ventures ›› Distrito Ventures ›› Queluz ›› DOMO Invest ›› REAG Investimentos ›› e.Bricks Ventures ›› Redpoint eventures ›› EB Capital ›› SP Ventures ›› Fin Health ›› The Next Company ›› FIR Capital ›› Triaxis Capital ›› Fundepar ›› Trivèlla M3 Investimentos ›› Gera Capital ›› Vox Capital ›› Gris Investimentos ›› Yellow Ventures ›› GROW+ ›› IdeiasNet
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Executive Editor Cristiane Nascimento, ABVCAP
Production Editor Yasmin Zogbi, ABVCAP
Data and Research Victor Medeiros, ABVCAP
Supporting Team Jorcianne Ferreira, ABVCAP
Translation Forum Traduções
Text and Layout ESTUDIO CRU
External Contributor Derraik & Menezes Advogados
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