Illustration by Felipe Mayerle

Counting 11 mega-rounds, Brazilian startups raised $5.2 billion in 2021

June was the month with the all-time highest volume of Brazil's venture capital, according to data from Distrito and Sling Hub

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Brazilian startups raised $5.2 billion in the first half of 2021, surpassing by 45% the total invested in 2020, of $3.5 billion, according to data released on Wednesday by the Brazilian innovation platform Distrito.

The period from January to June 2021 had about 35% more rounds than the first half of last year. In these first six months, 339 investments were made. In June alone, more than $2 billion was invested in 63 investment rounds.

According to Distrito, fintech was the hottest sector of the first half (with a volume raised of $2.4 billion in 72 rounds). Among the rounds above $100 million, Nubank, EBANX (the owner of LABS), and Mercado Bitcoin, all in June, stand out.

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Next came the real estate sector, which raised $829.4 million in 11 rounds. In third place startups focused on retail, which received $416.2 million in 36 rounds, and HRtechs (startups from human resources), with $231.8 million raised in 12 infusions.

Completing the ranking of the five sectors that received the most investments are supply chain startups, which received $223.9 million in 12 rounds.

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June was the golden month

June concentrated most of the investments made in 2021’s first half. Fintechs maintained their lead, with $1.5 billion raised in 15 investments. Then, the so-called HRtechs were the ones that received the most money in the month: in only three rounds, $220.6 million was raised, with a highlight to Gympass‘ Series E.

The spotlight is also in the mobility sector, with the round raised by Buser, of $138.9 million. Next comes the health tech, with $61.5 million in three investments, one of them in Memed.

Further away is the regtech sector, according to the industry jargon, that is the regulation and compliance startups, such as idwall, which secured $38 million.

Three of the top five rounds last month (Gympass, Mercado Bitcoin, and Buser) had SoftBank participation, which shows the growth of SoftBank Latin America Fund‘s participation in the country.

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New Brazilian unicorns

Among the new Brazilian unicorns of the half-year are Madeira Madeira, the first of the year, Hotmart, which is now preparing for IPO, and Mercado Bitcoin, valued at $2.1 billion, is the first crypto unicorn in Brazil and the eighth-most valuable unicorn in Latin America.

“If we have one more unicorn this year, we will already equal the number of unicorns created in 2019, the largest to date,” recalled the Head of Distrito’s Dataminer, Tiago Avila.

If we have one more unicorn this year, we will already equal the number of unicorns created in 2019, the largest to date.

Tiago Avila, Head of Dataminer at distrito

Distrito also counted C6 Bank as a unicorn this half-year. In December last year, C6 announced an investment of BRL 1.3 billion at a valuation of BRL 11.3 billion. Yet, according to Distrito, that valuation was merely indicative, i.e. a benchmark to mark up the price C6 hoped to achieve with its IPO. In June, JP Morgan Chase bought a 40% stake in the neobank. With that acquisition, the “unicorn” market value was de facto established.

Besides C6 Bank, other mergers and acquisitions drew attention in June (which had 26 moves), such as the acquisition of Elo7 by the U.S.-based firm Etsy, Monetus and Mobills by Banco Santander‘s Toro Investimentos, and the fintech Weel, which was bought by the BS2 neobank.

In all 2021 there have already been 113 mergers and acquisitions so far, 62 more deals than in 2020. “It is not difficult for us imagining to exceed 250 mergers and acquisitions in 2021,” Gierun said. “The market is growing strongly and capital is available.”

As the pandemic took place, large companies have accelerated digitization, and they have seen acquisitions of digital-native startups as a shortcut. The startups themselves, which, previously found themselves in the selling position, are now highly capitalized and buying other smaller startups.

In the first half of the year, more than half of M&A deals took place between startups or by startups.”Mergers and acquisitions solve part of the shortage of available manpower for tech companies,” Gierun recalled.

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Difference in reports

The Sling Hub platform recently reported that almost $4 billion was invested in Brazilian companies in June, with 80 contributions, a different figure to the one disclosed by Distrito. The difference, according to what Distrito explained in a press conference, is in the accounting of the acquisition of 40% of C6 by JP Morgan for $2 billion. Under the methodology adopted by Distrito, the transaction was considered an M&A and not an investment.

Still, both Distrito and Sling Hub say June was the month with the highest volume of capital in the history of the Brazilian market. “We have an overheated market, with record mega-rounds. There were 11 rounds above $100 million, which drives the total amount invested in these startups,” said Avila.