LatAm dealmaking woes continue despite signs of improvement

Dealmaking across Latin America fell 23% year-on-year by volume to 1,447 transactions and 30% in terms of aggregate value to US$35.6bn in the first six months of the year, according to the latest report published by TTR Data.

Of the total, 764 were M&As, 420 were venture capital (VC) deals, 197 asset acquisitions and 71 private equity transactions. According to TTR, VC deals alone were down by 37%.

In the top six regional markets, Brazil led in both volume and value, said TTR. In volume terms, Chile was ranked second, followed by Mexico, Colombia, Argentina and Peru. However, in aggregate value, Mexico was second, followed by Chile, Peru, Colombia and Argentina. 

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Latin American private equity and venture capital association Lavca saw VC investments in Latin American startups stabilize in 2Q23 compared with 1Q23, reaching a preliminary total of US$800mn.

Early-stage funding (Series A-B) comprised the bulk of that, with US$400mn, the association said in its latest report.

The venture debt area also continued to be “well represented” among the biggest deals for the period, with notable financing transactions for Habi (US$100mn), R2 (US$100mn) and Stori (US$50mn), according to Lavca.

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The SlingHub platform, in partnership with Itau BBA, said 2Q23 results for Latin American startups were “mixed.”

There was US$1.1bn in startup investments in the quarter, down 12% from 1Q23 and 63% lower year-on-year, which was the smallest amount raised for any quarter since 2Q20, it said.

However, the number of funding rounds increased by 11% compared with 1Q23 and there was a 5% increase in the number of first-time funding efforts by startups, according to SlingHub.

The platform tracked 224 funding rounds in 2Q23, down 31% year-on-year, led by Brazil (126), Mexico (33) and Chile (21). Seed rounds were the most common type of startup funding, it added.

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Brazilian software and digital solutions firm UDS is targeting 70% revenue growth this year, hoping to reach around 90mn reais (US$18.3mn) in sales, founder and CEO Rafael Sapata told BNamericas.

“We see large companies seeking to develop solutions to profit more from their own financial flow, launching platforms for benefits, credit and other financial solutions for their customer base and partners,” said the executive.

“The replacement of leased software by proprietary platforms is also in great demand in some sectors, mainly due to companies' search for customizations that differentiate them from competitors, speed up innovations and have a better use of capital invested in technology,” he added.

UDS aims to invest another 10mn reais in technology this year, funded with its own cash, according to the executive. 

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Brazil’s logistics startup Cobli raised US$20mn in a funding round led by the World Bank’s IFC and with the participation of Fifth Wall, Qualcomm Ventures, NXTP Ventures and GLP.

Of the total, IFC is contributing US$8mn to the company.

The company aims to use the proceeds to enhance its fleet tracking technology, notably with more powerful AI capabilities.

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Another Latin American ‘logtech’, Chilean firm Amplifica, which is focused on e-commerce shipments, is looking to raise 500mn pesos (US$600,000) to expand to Peru and Mexico.

The fundraising is being carried out via crowdfunding platform Broota and has reached 69% of the target.

According to Chilean press reports, Amplifica is seeking to achieve the necessary metrics to qualify for a Series A round. The company reportedly serves around 115 brands in the country.

"The challenge is great and we opted for these countries for two main reasons. Peru has shown growth potential that opens lots of doors for us and Mexico is one of the largest e-commerce countries in the region, so the market is looking for tools like ours," co-founder and CEO José Antonio Carvallo was quoted as saying by local paper Emol.

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The latest edition of Mexican e-commerce discount event Hot Sale exceeded 29.9bn pesos (US$1.8bn) in total registered sales, which was 29% more than in the 2022 edition, according to recently announced data from local e-commerce association AMVO.

The event took place from May 29 to June 6.

Around 29.2mn units were sold and 11.1mn purchase orders were reported, said AMVO. Some 12.7mn individuals, that is, 51% of internet users over the age of 18, declared that they made a purchase during the event, according to the association.