Climate Tech the Next Big VC Thesis for Latin America

As a leader in ESG investing, Integra Groupe is focused on the massive opportunity to scale climate tech solutions throughout Latin America. The space is already a mainstream VC category worldwide, but it is still relatively nascent in LatAm. Generally, climate tech encompasses a broad range of segments representing the challenges of decarbonizing the global economy. It can be grouped into three broad sector-agnostic categories:

1. Direct emissions mitigation or sequestration

2. Adaptation to the impacts of climate change

3. Enhancement of our ‘climate understanding’

Source: Image credit: PwC State of Climate Tech 2021 / Deal room

Currently, Latin America is not among the top destinations for climate tech capital, despite the region’s massive potential. Agrifood is predicted to be the hero of the climate crisis. Digitalization is increasing productivity per hectare; biotech is reducing agrochemical use; increase and optimization of infrastructure and carbon markets and market places for surplus food. [1]

Card Payment ‘Monopoly’ Hobbles Mexico Startups, Study Says

A group of financial technology firms conducted a study whereby they found that the Mexican monopoly of the country’s credit card payments network that is benefiting big banks and hobbling startups. Mexico’s top banks control two clearing houses for transactions, E-Global and Prosa. The study found that there is just one network, and it is run like a monopoly, which is making it much harder for local startups like Clip and Conekta or even global giants such as Stripe and MercadoLibre Inc to compete.

The report called on Mexico’s central bank and CNBV banking regulator to enforce a 2020 recommendation by the country’s antitrust ocmission’s investigative unit that top banks sell off their stakes of E-Global and Prosa among other measures, to foster fairness and draw more Mexicans into the formal banking system.

“Mexico has the historic opportunity to have competition between various payment networks and not continue with a monopoly, but to do this, it has to put an end to the conflict of interest where the banks own the clearing houses,” the study says. [2]

A Political Overhaul Can’t Shake Colombia Tech Boom

Colombia has expressed major interest in the tech boom. Colombia has the third largest population and is emerging strongly from decades of turbulence and into fast-paced economic expansion. Rappi, one of the region’s fastest growing and most ambitious startup unicorns. Medellin, known in the past as a city plagued by violence, it has rebranded into a bustling tech hub.

This Sunday gone, Colombians went to the polls and over half of them voted left. If these results were to hold in the upcoming presidential election, it would be the first time in modern history that Colombia was lead by the left. Colombia’s neighbors may be helpful in determining what the future may look like. [3]

Source: LAVCA’s 2021 Review of Tech Investment in Latin America
Source: Ebanx, Beyond Borders 2021/2022 Study

Agriculture Giant Brazil Nervously Eyes Ukraine and Russia War

Brazil is anxiously watching the impact of Russia’s war on Ukraine. As an agricultural powerhouse, Brazil could feel the upside through a boost to corn exports or a hit to its crucial fertilizer imports. Brazil exports agricultural products, including beef, chicken, soy and corn, which may experience a windfall from surging commodities prices, driven higher worldwide due to the war.

“The corn price has hit one of the highest levels ever seen, making it attractive for Brazilian producers, a factor driving an increase in planting area” for the second harvest, the biggest of the year, said Joao Pedro Lopes of commodity-market analysis firm StoneX. [4]

Latin American Stocks Shine in Gloomy Year for Global Markets

Latin American stocks have shined in a gloomy year for global markets. Shares in the region have been affected by surging commodity prices, and cheap valuations. It is easy to see why, as investors have poured $15bn so far this year into Brazil’s B3 stock exchange in Sao Paolo. The MSCI Latin American Index has climbed more than 15 per cent so far in 2022 in US dollar terms, while every other regional sub-index of developed and emerging markets has declined. The MSCI All-World index, a broad barometer for global developed and emerging market equities, has fallen more than 10 per cent on the same basis.

Latin American markets started 2022 on strong footing thanks to a combination of cheap valuations, a relatively calm political environment and rising commodity prices. The MSCI Latin America index is priced at 8.6 times expected earnings over the next year, about half of the valuation for the All-World index, Bloomberg data show. [5]

Source: World Bank

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