Is it a time of crisis or opportunity in venture capital and startups?

Bloomberg Line – In what line did the protagonists of tech & funding move in the last 7 days? Welcome to the weekly summary of the best of the world of startups in Latin America.

The crisis does not mean a cessation of investment for startups with promising business models, as long as they have healthy unit economics.

In times of crisis, funds encourage their companies to be more careful with their cash burn and runway, especially due to the uncertainty of how quickly they could raise more capital, he explained. Michelle Fischman, Head of platform at Nazca in an interview with Bloomberg Line.

Fischman delved into that before a fall in valuations of comparable public companies, the own expectations of future valuations in subsequent rounds are affectedso looking for your typical target return is often pressured to negotiate more favorable valuations towards the funds themselves.

The crisis represents the opportunity to focus on what is most important in a business: profitability. Now it becomes more relevant in growth stages, when startups already have a certain size that could make it feasible to search for it, explained the investor.

For the investor from Nazca – the fund that has invested in startups such as albo, Jüsto, Kavak, Crehana, Fairplay and Urbvan – the outlook is challenging but optimistic. “Currently hedge funds and cross-over funds are focused on rebalancing their portfolios and are temporarily on the sidelines of venture capital. We are not seeing term sheets being delivered over the weekend, but we still see liquidity for good companies,” she pointed out.

And he also stressed that “there is still significant dry powder to continue investing, since it reached a record level at the end of 2021″.

According to data from the LAVCA (Association for Private Capital Investment in Latin America), in the first quarter of 2022, US$2,763 million were invested.

If the same period is taken into account but from 2021, the investment is greater. The almost US$2.8 billion invested represents an increase of 67% compared to the first quarter of 2021 (US$1.7 billion) and an increase of 375% compared to the first quarter of 2020 (US$582 billion).

Although the Transactional Track Record data does not look so encouraging, since Latin America completed 423 Venture Capital operations for some US$4,860 million so far this year until May, which meant a 22% drop in the amount of the same in year-on-year terms.

Fischman stated that funds now pay more attention to investing in models with a clear road to profitability and healthy unit economics.

But one thing is for sure, Fischman concluded: “Good entrepreneurs and successful business models will continue to raise capital and funds will continue betting on them. Without a doubt, at valuations and prices more adjusted to the market, but they will not be paralyzed”.

In another interview with Bloomberg Line, Marcela Chacón Sierra, institutional spokesperson for TTRsaid that “the current environment of uncertainty has made small companies the target of investors with great financial muscle who can take advantage of this situation to close deals with an amount lower than that which could be reflected in previous periods”.

Chacón also stressed that “There is still investor appetite, with great momentum and interest from national and international financial investors who have liquidity and they continue to look for opportunities to expand their operations in Latin America.”

Marking line…

When one door closes, another opens. Faced with the crisis experienced by employees who have laid off startups in order to adjust their costs, some entrepreneurs have reached out and offered to relocate those former collaborators.

Powered by ID verification startup Truora, it emerged Pivot. It is a platform that wants to track the layoffs of technology startups in Latin America and help people find jobs quicklyunderstanding the current situation of the labor market.

This week the Mexican unicorn of buying and selling used cars, Kavak fired between 50 and 150 employees in Brazil, country in which it began operations in 2021. Also the Colombian online supermarket, Merqueo closed its activities in Mexico on June 8a country in which it had at least 100 collaborators after almost two years of operation.

These startups are added to the dozen that began to cut staff since last month. But at the same time, the tech ecosystem continues to hire aggressively. Truora is confident that there are a large number of companies looking to expand rapidly, who want access to this talent, given that it is highly skilled and available, which is why she was motivated to connect demand with supply.

This is how the venture capital line moves

Capital rounds continue to flow through the region, even in times of crisis. This week the paytech Kushki became the first unicorn in Ecuador and number 46 in Latin Americareaching a value of more than US$1,000 million dollars, after receiving an extension of its Series B for US$100 million dollars.

Kaszek Ventures, Clocktower Ventures, SoftBank Latin America Fund and DILA Capital, among others, participated in the capital extension.

“Reaching this milestone in times of economic uncertainty is evidence of the quality and resilience of our entire team and the enormous Latin American talent that exists in the region,” said Aron Schwarzkopf, CEO and co-founder of Kushki, in announcing its unicorn valuation. .

There were also big rounds, like the one in the Mexican fintech Klar, which raised a capital round for US$70 million led by the US private equity firm General Atlantic.

Likewise, the Colombian online supermarket, Muni, received US$27 million in a Series A and the Brazilian fintech Zippi that raised US$16 million in a Series A round led by Tiger Global, with the participation of Y Combinator, Volpe Capital, Rainfall Ventures , Globo Ventures, Hummingbird, Mantis, MSA Capital, Soma Capital.

This was the most relevant of the week, we are waiting for you in the next summary with the best events.

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