Throughout 56 investment rounds, Brazilian startups raised $ 722 million from VCs in August, states latest report from innovation platform Distrito.
A 300% growth compared to August of last year when startups from the country received $ 191 million from investors. From January to August of 2021, startups in Brazil raised $ 6,6 billion from 457 investment rounds — the volume already surpasses all capital raised in 2020.
“We have seen more international funds aspiring to understand what is happening in the Brazilian market. And not just venture capital funds. The more unicorns appear and companies go public, the more the market develops. And also more attention is drawn from funds all over the world”, comments the Distrito’s co-founder and COO, Gustavo Gierun.
Distrito’s report also highlights QuintoAndar’s extension of its Series E and Petlove’s investment raised from Riverwood Capital as highlights from August.
According to the report, the hottest sectors for investment in startups in Brazil 2021 are:
- Fintechs — US$ 2,6 billion — 105 transactions
- Real Estate — US$ 631 million — 50 transactions
- Edtech — US$ 294 million — 40 transactions
- Healthtech — US$ 222 million — 39 transactions
- Martech (marketing ) — US$ 49 million — 29 transactions.
The data does not take into consideration NuvemShop, as the company has its HQ in Argentina. The report also leaves Movile’s $ 1 billion round out of the picture, as the company will probably reinvest it in smaller startups.
CVC and M&A drive bigger rounds
Distrito’s head of data, Tiago Ávila, believes the appetite for M&A and corporate venture capital from big companies proves how mature the Brazilian innovation market is. It also reflects on bigger rounds.
“Companies are looking to CVC and M&A deals to accelerate their business”, says Ávila. The presence of international VC behemoths, such as Softbank, is getting more usual. The Japanese VC fund is driving growth from late-stage startups in the country.
Distrito’s Gierun also points out there is no evidence that records are hiding a bubble. In addition, Gierun does not believe that investment by the funds will be held back due to the economic scenario in the short term in Brazil. On the other hand, major structural changes — such as tax reform making foreign investment more costly — could hurt the future of startups.
“Everyone has understood that the Brazilian market is experiencing a good moment: the population is going digital, entrepreneurs are more mature. Of course, any kind of institutional crisis could reflect in VC investment. But it’s not something we believe will happen”, explains Gustavo Gierun.