Tech in Latin America: An entrepreneur’s guide to April’s startup news 

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Opinion, advice, and analysis by the TNW community

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Conrad Egusa

Story by
Conrad Egusa

CEO, Publicize & Espacio Media Incubator — Conrad lives in Medellin & NYC and profiles startup ecosystems during his travels. He is a Global Mentor at 500 Startups, Techstars and The Founder Institute, and is a Judge at the international a… (show all) Conrad lives in Medellin & NYC and profiles startup ecosystems during his travels. He is a Global Mentor at 500 Startups, Techstars and The Founder Institute, and is a Judge at the international accelerator programs Start-Up Chile and Parallel18.

It’s been nearly four years since influential French journalist and startup founder Anna Heim published her last “Tech in Latin America” round-up article on The Next Web, a news briefing about the technology startup industry in Latin America that I eagerly awaited as a startup founder living part time in Colombia. 

Much has changed in four years. Venture capitalists, for instance, have taken a shine to the region, with funding in just the first quarter of 2019 quintupling the $ 500 million that was raised by companies in all of 2016, and the number of unicorns — privately held startups that are valued at over $ 1 billion — having shot up from one in 2016 to 14 by the end of 2019.

As technology ecosystems throughout the region face new challenges presented by the COVID-19 outbreak, I thought to continue the prior series, taking a look at some of the biggest technology and startup news from the region each month.

Despite rising economic uncertainty stemming from the novel coronavirus, April still saw some startups in Latin America raise funding, while others focused their efforts on solving COVID-19-related issues. And one of the region’s oldest government-backed tech accelerators turned 10 years old! 

Here’s an entrepreneur’s guide on what happened in Latin American tech in April. 

The big players

March and April saw most countries in Latin America implement strict shelter in place rules on their populations to help stem the spread of the coronavirus. In late March, UNESCO calculated that more than 95% of Latin American children enrolled in school were no longer able to attend because of shutdowns. 

With social distancing measures in mind, Facebook announced that it would expand the release of its Messenger Kids app to 70 countries, including many in Latin America, as a means to help “kids connect with friends and family.” In 2018, when the company first expanded the app outside of the United States, Peru was one of the first countries, along with Canada, to gain access. Safety of the app still remains a concern though, as last year, TNW reported that Facebook had sent out alerts to parents about a design flaw in the app which allowed children to join group chats with unapproved contacts. 

American commercial real estate firm WeWork and Japanese holding company Softbank ran into trouble with regulators in Mexico this month, resulting in a USD $ 138,000 fine, according to a press release from COFECE, the country’s antitrust watchdog. The two companies are accused by the regulator of declaring a stock purchase by Softbank of WeWork shares more than six months after the deal had already been made. The announcement comes amid a fiery legal spat between the investor and the portfolio company, with WeWork’s board suing Softbank for its withdrawal of an offer to buy $ 3 billion in shares of company stock. The co-working space provider has locations in Mexican cities including Monterrey, Guadalajara and Mexico City. 

A merger in the delivery app space

Colombia is the latest backdrop for a showdown in the bustling South American delivery app marketplace. Bloomberg reported earlier this month that Brazilian food delivery app iFood acquired a 51% stake in the Colombian operations of Delivery Hero SE, the parent company of Domicilios.com, a direct competitor of the Andean nation’s startup darling Rappi. 

Regulators still need to approve the merger, however, iFood’s corporate vice president for Latin America operations already has high hopes for the market, telling Bloomberg’s Ezra Fieser, “Together with Domicilios in this new partnership we will be able to invest exponentially more than in the past. We will grab a lot of market space in Colombia.” 

Last year, Rappi, which was accelerated at Y Combinator and previously received investment from Andreessen Horowitz, received an enormous capital injection of $ 1 billion from Softbank, helping further expand its operations. 

Magma Partners, a venture capital firm headquartered in Santiago Chile, announced it was “doubling down” on Mexican startups by acquiring Guadalajara-based accelerator Rampa for an undisclosed amount of cash. 

In a blog post on the firm’s website, Magma Partners detailed how the firm has worked closely with Rampa for years, and will use this new relationship to accelerate its interests in Mexico, Latin America’s second largest market. The company noted that it had already invested in 12 Mexican startups, and with the addition of Rampa’s founder Mak Gutierrez, now counts 15 partners across Latin America in cities such as Guadalajara, Mexico City, Bogotá, Santiago, Buenos Aires, as well as cities in the U.S. 

In other news from Mexican startups, AI startup Omdena, accelerated by Tec de Monterrey’s Orion Startups, was featured on the NASDAQ billboard; Monterrey-based One Prize, incubated at USC’s prestigious incubator led by Paul Orlando, announced new milestones, while Startup Mexico announced its support for providing free online training and better support for doctors.

Entrepreneur.com en Espanol, via its Editor in Chief Martha Elena Violante De Santos, also introduced its list of entrepreneurs under the age of 25 that are changing industries.

Amid COVID-19, a few funding announcements

As venture capitalists around the globe tighten their belts amid the coronavirus outbreak, Latin America is no different. 

The region’s largest startup ecosystem, Brazil, witnessed a steep decline in funds invested in its venture capital market according to Reuters, with a drop of 85% in March compared to the same period last year. And Contxto reported major layoffs at Brazilian companies including GetNinjas, Conta Azul, as well as the Brazilian offices of Indian hospitality startup Oyo Rooms. 

Despite setbacks, a few startups in the country did record some investment in April. 

Sanar, an education platform for Brazil’s healthcare workforce, announced a Series B funding round led by Valor Capital and DNA Capital with follow-on funding from e.bricks Ventures and Vox Capital, who had previously invested in the company’s Series A in 2018. The investment brings the total amount of funding disclosed by Sanar to $ 11.5 million, according to Crunchbase. 

The company was founded in 2013 to help expand educational opportunities for healthcare workers in remote areas of Brazil, far away from larger cities where most doctors and nurses are concentrated. The move is somewhat of a timely investment considering Brazil is the most-affected country in the region with over 70,000 confirmed cases of COVID-19 as of this writing.  

Brazil’s PetLove, an online marketplace for pet supplies, raised $ 48 million from SoftBank according to Reuters. The company is the leading e-commerce pet store in the country, according to PETS International, an industry analyst, and total pet supply sales in the country reached $ 8.7 billion in 2019. PetLove had previously received investment from KasZek Ventures, Monashees and Tarpon, reported the Latin American Venture Capital Association (LAVCA). According to Startup Universal, Brazil accounts for most of Latin America’s VC investment, at about $ 1.3 billion.

Outside of Brazil, Latin American vocational skills training platform Aprende Institute announced that it raised a $ 1.6 million seed round of funding from Angel Ventures via its AV Pacific Alliance Fund II LP, Artisan Venture Capital, 500 Startups, Claure Group and other angel investors. The company, which is based in Coral Gables, Florida but services Latin Americans as well as the United States Hispanic market, aims to fill the gap between high-cost, high-commitment vocation institutes and free tutorials on YouTube and Google to help people make money in fields they’re passionate about including gastronomy, business and entrepreneurship, wellness, trade skills, and fashion and beauty. 

Accelerators and incubators

Techstars, a global startup and corporate accelerator, re-focused the latest series of their flagship Startup Weekend event to challenge entrepreneurs to build companies to solve problems related to the COVID-19 outbreak. Over 59 countries hosted virtual “Unite to Fight COVID-19” events at various dates throughout April, including 10 Latin American nations as well as the United States territory of Puerto Rico. 

In Colombia, organizers Marian Villa, Steven Rodriguez, Miguel Gonzalez and Flor Liévano brought together numerous startups for a 54-hour startup creation hackathon. Judges, which included Andrés Cajiao, co-founder of Torre; Sergio Granada, CTO of Talos Digital; Jim Glade, principal at Espacio; and Manuela Peña Gómez, startup coordinator at Universidad de La Sabana, crowned AportApp as the winner. Still in development, AportApp works as a reverse delivery service for donating food to vulnerable populations most affected by the COVID-19 labor shutdowns. Donors can use the app to select how many food packets they wish to donate, providers package the donated food and deliver it to families in need who’ve signed up for the service.

The company aims to help provide much-needed resources to at-risk communities including informal laborers which make up nearly 50% of Colombia’s workforce, and haven’t been able to go out into the streets to sell their wares amid country-wide lockdowns. 

Global startup accelerator 500 Startups is pushing forward through the economic slump brought on by the outbreak, announcing that it’s accepting applications for its 12th cohort in Latin America. Selected startups will receive $ 60,000 and work closely with 500 Startups mentors for 16 weeks — whether this will be in-person or virtually is still undetermined. 

Speaking with Forbes Mexico’s Alejandro Medina, 500 Startups Partner René Lomelí said, “With this work dynamic, the plans for 2020 continue to be carried out without changes, staying aware of the possibility of modifying the program to be remote by July.” 

Finally, one of the leading accelerator programs founded in Latin America turned 10 years old in April, and released some data that highlight its wins, as well as its short-comings. 

Startup Chile, the Chilean government-backed accelerator led by Sebastián Díaz Mesa that provides $ 40,000 equity-free funding to bring foreign entrepreneurs from as far off as Silicon Valley and Singapore to the Southern Cone, announced that during its tenure the program has accelerated 1,960 startups from 85 countries, created 7,241 jobs in the country, and raised over 17 times the amount of capital originally invested by the government. 

The accelerator also noted that it needed to do more to close the funding gap between male and female founders in the country. In Chile, of the total capital startup founders raised, women founders only captured about 12% of it, despite stats that indicate the strength of female-founded companies, including that Chilean startups that have at least one woman on the founding team survive more (60.7%) than those made only by men (49.4%), according to a report from local newspaper El Mercurio. 

According to the Chile’s government, the Startup Chile model has been replicated in over 50 countries, most notably in Puerto Rico, where former Startup Chile Executive Director Sebastian Vidal helped launch its government-supported accelerator, Parallel18, in 2015. Parallel 18 has since built a reputation off a number of successes, including agtech startup UAV-18, as well as healthtech firm Abartys Health.

Despite worldwide economic uncertainty, the tech scene in Latin America experienced a few ups along with the downs during the month of April. A clearer picture of COVID-19’s impact on the tech ecosystem could emerge in May. 

Featured photo by Filip Gielda from Unsplash

This post is part of our contributor series. The views expressed are the author’s own and not necessarily shared by TNW.

Published May 3, 2020 — 22:18 UTC

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