In Latin America, venture capital investment in 2020 was the second-best year on record, following a blockbuster 2019. Meanwhile, in Brazil, last year was actually the top one for the VC sector’s history in the country, as $3.51 billion were invested across 506 deals.
However, as data from innovation platform Distrito shows, 2021 is about to claim a new record: in this first quarter alone, Brazilian startups already raised $1.93 billion, 54% of the total amount received by these tech companies in 2020.
2021 has barely ended its first quarter and is already the third year with the highest volume invested in venture capital in Brazil, as shown in the graph above. Across the 155 deals, a few mega-rounds from Brazilian unicorns can take some credit as they leveraged this record of investments:
- Home-selling unicorn Loft raised a $425 million round from a wide range of global investors, reaching a $2.2 billion valuation;
- In January, Nubank raised a $400 million Series G round, hitting a US$25 billion valuation;
- The e-commerce for household articles MadeiraMadeira, from Curitiba, received a $190 million round that prompted the startup to reach the unicorn status;
- Logistics unicorn Loggi raised a $212 million Series F round at the beginning of March;
- And a few days ago, Hotmart secured a $130 million Series C round led by TCV.
According to Distrito, the maturing of the ecosystem, with more startups reaching advanced stages and requiring larger rounds, is one of the main factors behind the staggering amount.
“Companies that are the big ones, such as Nubank, Creditas, and Loggi are naturally getting bigger – and so are the late-stage rounds,” says Anderson Thees, managing partner at the São Paulo-based VC firm Redpoint eventures.
While seed and other early-stage rounds spurred the number of deals, responsible for 119 out of 155 rounds in this first quarter, Series C to G rounds pulled the amount invested, accounting for $1.6 billion out of the $1.93 billion raised from January to March.
For Distrito, it is also worth highlighting the strong performance of international investors and the growing interest of private equity funds in startups’ business models.
As for sectors, it comes as no surprise the one leading VC deals in Brazil also in this first quarter: fintech startups accounted for $586.4 million invested across 30 deals; followed by proptech ($425.9 million), retail tech ($295.7 million) and edtech ($222.5 million).
Brazil‘s breakdown per sector is in line with what happened in Latin America as a whole during 2020, as investors made most of their bets on fintechs, e-commerce players and proptechs, according to data from LAVCA, the Association for Private Capital Investment in Latin America.
M&As: a few players, a lot of deals
Mergers and acquisitions were not left behind as pointed out by Distrito’s report. With 56 transactions in the first quarter, most of the deals were clustered in the retailtech sector, with 16% of the total. Trailing just behind came fintech, with 14%, and IT, with 12%.
For the innovation platform, as the M&A market involving startups heats up, at this pace, 2021 is likely to overcome the previous year in the number of transactions. 2020 accounted for 166 mergers and acquisitions in the Brazilian innovation ecosystem.
Florianópolis-based martech RD Station, acquired by Brazil‘s largest retail management platform TOTVS earlier this month by around $320 million, was one of the main deals of this first quarter, while the merger of the credit fintechs Geru and Rebel caught the market’s attention as the newly created holding Open Co will be in charge of managing a BRL 1.5 billion credit portfolio.
With a busy schedule, some of Brazil‘s largest buyers from January to March include the retail giant Magazine Luiza, which acquired the online retail platform Vip Commerce, as well as two food delivery operations: ToNoLucro and GrandChef.
Web services company Locaweb scored first place, with four acquisitions in the first quarter alone, while the credit information company Boa Vista acquired the anti-fraud solutions provider Konduto and the fintech focused on online negotiating debts Acordo Certo.