Brazilian edtech startups raised $222.5 million in the first quarter, up 770%

VC rounds raised by Descomplica and Hotmart are some of the quarter's highlights for a sector drawing investors' attention amid a new educational reality

Headquarters of the startup Descomplica in Rio de Janeiro, Brazil
Descomplica HQ in Rio de Janeiro. Photo: Descomplica/ Courtesy
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If in this first quarter of the year, Brazilian startups already raised more than half of the amount received through venture capital investments in 2020 – US$1.9 billion from January to March – sectors such as edtech lie behind those numbers.

According to the innovation hub Distrito, Brazilian education startups have received US$222.5 million in investments this year, a number that represents a 770 per cent increase compared to the amount raised last year: US$29 million.

Across 20 deals in these first three months, edtech startups such as Descomplica, which raised a BRL 450 million Series E round led by SoftBank and Invus Group in February, helped to put the industry in the limelight regarding venture capital deals. Along with edtech; fintech, proptech, and retail tech were the best performing sectors in this first quarter, says Distrito.

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Marco Fisbhen, CEO at Descomplica, shared with LABS the three main goals that the recently raised round will support: technology, portfolio growth and M&A. “We currently have one hundred people working on the development of digital products and we will make a massive investment in at least doubling that team,” revealed the exec.

Marco Fisbhen, CEO at the Brazilian edtech firm Descomplica. Photo: Descomplica/Courtesy

This round was co-led by SoftBank and Invus Opportunities, but it also brings very strong names among other investors: Valor Capital Group, Península Participações, Chan Zuckerberg Initiative (…) We are currently the leader in the edtech space in Latin America, both in terms of reach and revenue, but also with a strategic group of investors, with a global vision and high investment capacity.

As for new products, Fisbhen added that Descomplica aims at launching 18 new programs at the startup’s graduation unit, Faculdade Descomplica, by the end of 2021 and another 12 during the next year. “We want to reach 50 undergraduate programs as soon as possible. We have two major focus areas, Modern Management and Technology, and we understand that our mission is to train students for the jobs of the future.”

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Acquisitions are also a target of the Brazilian UOL EdTech, which acquired Passei Direto, an online study platform with 23 million users after an undisclosed amount of funding from SoftBank. “Passei Direto is totally platform-based and connects content producers to students. The platform’s scalability is in line with our strategy of accelerating learning” said Alex Augusto, UOL EdTech’s CEO.

For Distrito, infrastructure platforms such as Descomplica and Hotmart – a Brazilian unicorn startup that secured a US$130 million Series C round led by the California-based private fund TCV in late March – or conglomerates such as UOL Edtech, have been drawing the attention of investors as they offer solutions for a new educational reality in Brazil, imposed by the COVID-19 pandemic.

One of the largest rounds raised by an edtech firm in Latin America, the US$50 million deal secured by Buenos Aires-based Digital House and co-led by Mercado Libre, shows that Brazil isn’t the only country in the region where the edtech sector is quickly becoming targets of bigger bets from institutional investors.

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