Meru B2B ecommerce platform announces Series A funding

Meru is an ecommerce platform helping small and medium companies improve import and export efficiencies. This week the company announced $15 million in Series A funding. The round was co-led by Valor Capital and EMLES Ventures and included individual investments from a group of founders. To date, the company has raised $17 million.

Meru’s technology includes a marketplace and app that connects local and foreign manufacturers to the rest of the supply chain with a simple process and no price asymmetries, initially working between China and Mexico.

The traditional way of sourcing can make small businesses lose up to two days a week navigating through the process, which often includes up to five intermediaries. On top of that, 80% of transactions result in fraud, on average, he said. In contrast, Meru customers can select and purchase products in minutes with a guarantee from the company that they will receive those products and at the best market prices.

Source: Mercado Libre (2020)

The company was part of Y Combinator’s winter batch in 2021, and the new funding will assist Meru to become a one-stop shop for small businesses with the ultimate goal of becoming the Alibaba of Latin America.

Meru has more than 10,000 registered users and operates seven product categories. It also has fintech partners to assist with financing. It went from six employees last August, when Meru launched its marketplace, to now 210 employees in both China and Mexico.

The company will deploy the new funding into adding new verticals and categories, technology development and scaling its team. It is growing 40% to 50% in revenue monthly. (TechCrunch)

Latin America tops inflation charts

While prices are rising all over the world, the increases are especially striking in Latin America, which has the highest inflation forecast for both this year and next. Latin America has the globe’s highest inflation forecast for both 2021 and 2022. Price surges are busting through policy makers’ targets in all of Latin America’s major economies, with annual inflation prints this month of 6% in Chile, 10.7% in Brazil and a whopping 52% in Argentina. Consumer prices in Mexico rose 7.1% in the first half of November from a year prior, the highest in 20 years.

Source: Bloomberg surveys
Source: Bloomberg. Note: Mapped data show rate changes for distinct central banks. Net change is calculated in cases where there have been both hikes and cuts.

Is the Bovespa set for a 2022 Rebound?

The Bovespa stock index is down 13.7% year-to-date, headed toward the deepest annual slide since 2013, when Brazil was descending into a serious domestic crisis. The Bovespa is trading at 102,741 points, close to its lowest level in 12 months.

Local markets face a renewed surge of fiscal worries after the government relaxed its grip on the budget in a move seen as a sacrifice of austerity to shore up President Jair Bolsonaro’s dwindling re-election chances.

Sao Paulo stock exchange values are now so cheap that the Bovespa should recover 17.3% from its level on Tuesday, finishing next year at 120,500 points, according to the median estimate of 12 equity strategists polled Nov. 16-30.

Former President Luiz Inacio Lula da Silva leads opinion polls and last week met French President Emmanuel Macron, sparking an angry reaction from President Bolsonaro. Neither has officially declared their candidacy for the Oct. 2022 vote.

Source: TradingEconomics. Data as of Dec 2, 2021

The encounter with Macron and its fallout show how Lula aims to capitalize on Bolsonaro’s diplomatic isolation. This year, Brazil’s Supreme Court overturned Lula’s conviction in 2018 on charges of taking bribes from engineering companies.

Mounting concerns about Brazil’s politics have weighed on the Bovespa. The survey’s median estimate of 114,000 points by mid-2022 was well below 130,000 points seen in August.

Economic worries have added downward pressures on Brazilian stocks. High inflation and slow growth are expected to persist next year, according to a separate Reuters poll.

Meanwhile, Mexico’s S&P/BMV IPC stock index is up 11.6% so far in 2021, on track for its biggest annual gain since 2012. On Tuesday the index was at 49,171 points, and investors expect further gains next year.

Mexico’s IPC was forecast to reach 56,250 points at the end of 2022, about 14.4% higher from where it was hovering on this week, getting close to this year’s record levels just above 53,000 in the second-half. (Reuters)

Rapid digitalization rationale for Tencent’s first Latam Data Centre

The cloud unit of Chinese tech giant Tencent says that it will open its first data center in South America, located in São Paulo, Brazil. With the Latin American addition, Tencent Cloud’s network now covers 27 regions and 68 availability zones, highlighting the company’s ambitions to become an international digital infrastructure provider.

Tencent added that it would provide flexible computing, storage, big data, artificial intelligence, security and other cloud services to Brazil and other Latin American countries, a region with growing demand for digital infrastructure.

With many parts of South America digitalizing rapidly, especially following Covid-19, increasing the need for investment in digital infrastructure that underpins the modern economy. The infrastructure gap is clear as access remains uneven and often too expensive for the average citizen. Currently, less than 50% of the region has fixed broadband, according to a study by the World Economic Forum.

Tencent arrives following other US technology giants already operating throughout the region. Amazon Web Services started spreading beyond Brazil (the usual arrival nation) in 2019 and Microsoft’s Azure came to the continent back in 2013. Google Cloud Services launched in São Paulo in 2017.

Worth $466 billion in 2020, the data centers market will become a $948 billion industry by 2030, growing at a compound annual growth rate (CAGR) of 6.7% over this 10-year period, according to GlobalData’s forecasts.

The total investment in public cloud Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) in Brazil is likely to reach $3 billion in 2021, up 46.5% year-on-year, predicts market research company IDC. (Verdict.co.uk)

Potential lockdowns could disrupt coffee supply chains

Omicron could create another shock for the global coffee industry, Roberto Velez, head of Colombia’s national coffee federation (FNC), said on Tuesday.

“Once again the fear is that countries shut down and we return to a world where coffee is only consumed at home,” Velez told Reuters in an interview.

As well as depressing demand, the pandemic has already led to a sharp rise in the cost of transporting beans to major consuming countries in North America and Europe as a surge in demand for consumer goods and not enough ships as people stayed home due to the pandemic caused bottlenecks.

Colombia’s output of coffee has fallen in 2021 due to strong rains. However, the country has now caught up with coffee shipments after up to one million 60-kilogram bags were delayed amid social unrest and widespread protests from late April to mid-June, Velez said.

“We’re about to enter December and all shipments are up to date, as are all payments to exporters,” Velez said at his office in the north of Colombia’s capital Bogota, hours before the start of the National Coffee Growers Congress.

The South American country is currently in the grips of a heavy rainy season which has delayed flowering of coffee plants, which also happened during the first half of the year, cutting harvest levels in 2021 to between 13 million and 13.5 million bags.

Colombia’s coffee output hit 13.9 million bags in 2020, down 6% from the 14.8 million bags in 2019, when production saw the highest levels in 27 years.

“Between 13 million and 13.5 million (bags), that’s what I think is going to close the 2021 calendar year, which is far below the average of 14.1 million to 14.2 million bags at the close of the last six years, we’re talking almost a million bags less,” Velez said.

Exports are likely to be between 12 million and 12.5 million bags, he said, close to last year’s 12.5 million. (Reuters, S&P Global Platts)

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