Financing watch: Startups, July funding figures and more

Spanish-speaking Latin America has gained ground as a startup investment hub over the past five years as Brazil's lead in venture capital-backed companies declined, according to a new report from the Association for Private Capital Investment in Latin America (Lavca).

The number of VC-backed startups in the region outside Brazil has grown at a compound annual growth rate of 23% since 2020, predominantly concentrated in Mexico, Chile, Argentina and Colombia, said Lavca.

Outside major markets, Uruguay had one of the steepest rates at 40% compound growth, from seven startups in 2020 to 32 in H1 this year.

Also, according to Lavca, a third of VC-backed startups in Latin America have raised funds within the last 18 months. The report can be found in the Documents box in the top-right corner of the screen.

July funding tumbles

In July, LatAm startups raised US$304mn through 56 funding rounds, the lowest amount since February 2023, according to the monthly report by SlingHub carried out in partnership with Itaú BBA.

While Latin American startups typically raise less in July compared to June, this year’s month-on-month drop was the largest in the last five years at 57%. On an annual basis, the July funding decline was 62% and 33% in number of rounds.

Mexican autotech OCN’s US$86mn series A round was the largest in the month, putting the country in top spot in July with US$149mn across six rounds.

The number of mergers and acquisitions involving startups grew by 50% year-on-year in July with 15 operations.

Brazilian Q2 M&As on the rise

Led by ICT, Brazil saw 426 M&As in the second quarter of 2024, up 17% compared to the same period last year, according to a report by KPMG.

“The data shows a significant increase in the number of M&As. After the impacts caused by the global increase in interest rates and adjustments in price expectations, it is clear that companies are more active in these operations and that we should see a resumption in deals,” Paulo Guilherme Coimbra, partner in the M&A area of KPMG in Brazil, said in a statement.

Deals involving foreign companies were 170 in Q2. The countries that participated most in the transactions were: US (69), Canada (13), Mexico (10), Spain (9), Colombia (6), Switzerland (6), Argentina (5) and Germany (5).

Credicorp goes live with Temenos’ Multifonds

Credicorp Capital, the investment banking, asset management and capital markets advisory arm of Peru-headquartered Credicorp, went live this month with the Multifonds platform developed by Swiss core banking vendor Temenos.

The investment firm deployed the fund accounting and investor servicing solution, via software-as-a-service (SaaS), across 71 funds in an effort to “handle all back-office management of investors and funds across countries in one single instance,” according to a press release.

Based in Lima, Credicorp Capital maintains investment centers in Colombia, Chile, Panama, Peru, Mexico and the US, and claims assets under management of US$10.7bn in fixed income, equities, real estate assets and balanced portfolios.

CI&T ups AI investment

Brazilian IT multinational CI&T increased investments in sales and AI initiatives in Q2, although operating expenses fell 0.9% year-on-year to 119mn reais (US$22mn).

The figures are in the NYSE-listed company’s latest financial reports. Overall, CI&T reported net revenues of 566mn reais in the quarter, down 1.1% year-on year, with 44.4% of sales coming from North America excluding Mexico, 40% from Latin America, 11.0% from Europe and 4.6% from Asia Pacific.

CI&T posted a net profit of 48.5mn reais in Q2, up 24.5% on 2Q23.

SRM Ventures taps Tepmed

SRM Ventures, the VC arm of Brazil’s SRM Asset, invested 20mn reais in Tepmed, a financial solutions platform for clinics and hospitals.

With the investment, the fintech, which currently has more than 100 registered clients, aims to reach 300 by the end of the year and 3,000 in four years.

Tepmed is SRM Ventures' 12th investment to date. The fund's goal is to invest in six more startups by the end of the year.