One of the funniest moments in last week’s first BayBrazil Summit since 2019 took place during KLog CEO Janan Knust’s introduction to his Chilean logistics company. He described his trepidation in making his way through the U.S. Customs and Border Protection maze at the airport, only to be enthusiastically greeted by a border guard after describing how KLog helps optimize logistics and the supply chain. “Oh, you’re here to help us with our supply-chain backlog?” exclaimed the guard to Knust’s happy amusement.
Given the amount of venture capital pouring into Latin American tech startups this year and the unprecedented digital acceleration the region has experienced, it’s not surprising that a logistics CEO from Chile would be instrumental in helping to solve one of the U.S.’s biggest commerce challenges at the tail-end of 2021.
The latest edition of the BayBrazil Summit was held at the charming and historic Testarossa Winery in the Los Gatos hills about 22 miles from Silicon Valley’s famous Sand Hill Road, the epicenter of venture capital, and co-sponsored by the likes of EBANX, Foley, Itau, J.P. Morgan and Silicon Valley Bank.
BayBrazil was founded more than a decade ago by CEO Margarise Correa to serve as a bridge between the business communities in Brazil and Silicon Valley. The nonprofit organization provides information and strategic guidance for its members and seeks to establish bilateral ties through a series of programs that nurtures both entrepreneurial ecosystems and encourages networking amongst the tech communities.
Following networking and lunch, BayBrazil’s Latin America Digital Summit opened with an on-stage conversation between Correa and Hans Tung, managing partner at Menlo Park’s GGV Capital, which currently has 18 unicorns in its portfolio and more than $9 billion in assets under management. Tung is a Tawainese and Asian-American investor who’s a nine-time Forbes Midas Lister and #3 globally in 2021.
During the public chat, Tung compared the macro-opportunity in Latin America today to China about five to six years ago – including the fact the region is now ripe for more manufacturing, logistics and payments innovation to build out the full digital-commerce infrastructure. He noted that LatAm’s mobile penetration is now much higher than China’s was back then, and the convergence of fintechs paving the way to broader financial inclusion for LatAm consumers and small to medium-sized businesses (SMBs) will increase the cycling of capital to add more jobs and bolster the economy more quickly. He sees the “next wave” of e-commerce opportunity being driven by SMBs’ technology proliferation in LatAm.
Tung sees similarities between the rise of payments players in China, including WeChat Pay, with the recent introduction of new e-wallets from food tech players iFood and Rappi in Latin America. He encouraged the Latin American founders in the room to pay close attention to the lessons from China and to benchmark the synergistic businesses in Asia to validate new approaches in LatAm countries.
“There’s a lot of synergy in sectors such as food delivery and social commerce that can be shared across geographies,” said Tung. “It’s inspiring to see the entrepreneurial spirit and people being driven to stay up all night long to make a difference and change society” in blossoming hotspots like Brazil and India.
“Blockchain will replace the whole, old financial industry in 5-10 years.”
One of the most intriguing and bold predictions for what lies ahead: a new financial system based on blockchain – came from Luiz Silva, CEO and co-founder of CloudWalk, who was one of the featured speakers during “The Unstoppable Fintech Revolution” panel. His Sao Paulo-based payments fintech just became a “two-horned unicorn” by reaching a $2.15 billion valuation with a new cash infusion last week.
In the last 24 months in which CloudWalk has been operating, the Brazilian payments fintech has acquired 150,000 SMB customers in 4,300 cities and experienced 5,000% growth. CloudWalk is building a bridge to a new era in payments using blockchain technology, its own brand of stablecoins (Brazilian Digital Reals) it rewards users with for each transaction, and traditional processors like MasterCard and Visa, which makes the company’s approach quite unique, according to Silva.
“Brazil is kind of broken, especially in the payments space because Brazilian merchants making sales with MasterCard or Visa don’t receive the money the next day. They don’t get it for 30 to 60 days, and sometimes even as long as 90 days,” said Silva. “And when they do receive their money, they typically pay from 45% to 50% in payment fees. It’s super-expensive compared to Europe or the United States where merchants making sales with MasterCard or Visa receive their money the next day and only pay about 3% to 5% in fees.”
In terms of making payment transactions safer, especially in Brazil which is averaging a cyberattack about every eleven seconds, Silva believes the security model that’s embedded in centralized blockchains are much better and more secure than traditional payments rails.
BayBrazil’s Correa believes the fast tech adoption and digital acceleration LatAm has experienced since the last in-person BayBrazil Summit in 2019 is absolutely key to solving the region’s longtime “plague of inequality.” “This next-generation tech innovation will ‘lift all boats’ in the region,” said Correa.