Sao Paulo-based crypto exchange raises $200M Series B

One of Latin America’s leading cryptocurrency exchanges, the Brazilian-based Mercado Bitcoin, has succeeded in raising $200 million in its recent Series B funding round. This latest investment in Mercado Bitcoin makes 2TM (Mercado’s parent company) the 8th most valuable unicorn in South America.

SoftBank’s Latin America Innovation Fund – with $2 billion to invest across Central and South America – led the round. The $200 million contribution represents SoftBank’s largest investment on the continent and makes true on their promise to “become a major investor in transformative Latin American companies that are poised to redefine their industries and create new economic opportunities for millions of people”.

Mercado Bitcoin will use the funds to increase the scale of its exchange operations in order to expand its offerings, alongside investing in infrastructure to meet the surge in demand for crypto in the region.

The company has seen significant growth over the past year, with its client base reaching 2.8 million in 2021 – more than 70% of the entire individual investors base on Brazil’s stock exchange.

Mercado Bitcoin was founded in 2013 by brothers Mauricio and Gustavo Chamati, who visualized the first crypto exchange in Brazil.

This Series B financing round comes only five months after Mercado Bitcoin’s Series A round in January 2021, led by G2D/GP Investments and Parallax Ventures with advisory participation from J.P.Morgan.

As a company Mercado Bitcoin has been profitable since 2018, and until a successful Series A funding round in January 2021 had been self-scaling, reinvesting its cash generation into exchange growth and cryptocurrency portfolio expansion, according to Parent Company CEO and 2TM Group Executive Chairman Roberto Dagnoni.

Mercado Bitcoin’s parent company 2TM became the first to tokenise public debt assets in 2019 and launched its own digital asset alongside Fifa last year.

Mercado Bitcoin has a pattern of partnering with other blockchain innovators in Latin America too, in 2018 funding partner SoftBank launched its own blockchain aimed at facilitating global mobile payments. Then in 2019, Mercado partnered with BitPay to bring cryptocurrency transactions to Mercado Livre (Brazil’s biggest e-Commerce network).

Source: CBInsights, LatamList, Statista, Crunchbase, PayspaceMagazine

Some analysts predict that Brazil’s FinTech economy will be worth $24 billion in the next decade, and cryptocurrency is becoming an attractive means of banking Brazil’s bankless. (Coinrivet)

Argentinian agtech, Beeflow, raises $8.3M series A

Bees are often underappreciated despite being essential for human existence and representing an estimated $15 billion in added agricultural value. These diligent creatures underpin the sustenance of life in this planet. It is estimated that one third of the food that we consume each day relies on pollination mainly by bees. In the US alone, around 80% of the US crop is said to be dependent on honeybees. Biodiversity is also dependent on them and is at risk as bee populations decline on a global scale facing many threats, from habitat loss to the use of toxic pesticides.

As pollinators, bees play a part in every aspect of the ecosystem and are the backbone of most agricultural industries. According to the U.S. Food and Drug Administration, bee pollination accounts for about $15 billion in added crop value. Pollination is vital to the approximately 250,000 species of flowering plants that depend on the transfer of pollen from flower anther to stigma to reproduce.

Source: Harvest Lane and Statista, As of May 2019

Beeflow, the Argentine-founded agtech, believes they can help. The startups announced the close of a $8.3 million Series A round, looking to both save the bees and help farmers be more efficient and effective at the same time.

The startup uses proprietary scientific technology that essentially makes bees healthier, particularly in cold weather. A wealth of research led the company to understand that certain plant-based foods and molecules, when fed to the bees, can reduce the mortality rate of bees by up to 70 percent, and help them perform better in colder weather.

Beeflow’s technology ensures that the bees are healthy, strong and can fly up to 7x more during colder weather than they’d be able to without it. This means that those bees are much more likely to pollinate crops effectively and efficiently for the farmers.

Beyond reducing the mortality rate of bees, the company also offers a second product called ToBEE, which trains the bees to target a specific crop, such as blueberries or almonds.

Beeflow’s business model is two-fold. They have their own bees that they loan out to farmers for pollination, and also work with beekeepers to bring them into the Beeflow network. Beekeepers do not pay for Beeflow’s technology, but do hand over the rights to their relationships with farmers.

The startup was founded by Matias Viel, who is from Argentina, and is mostly operational in Latin America and the West Coast of the U.S., with plans to expand to the East Coast and Mexico.

“The greatest challenge is operational and around execution,” said Viel. “There is so much demand and we need to scale our team and our operations now.”

The financing round was led by Ospraie Ag Science, with participation from Future Ventures’ Steve Jurvetson, Jeff Wilke, Vectr Ventures, SOSV’s IndieBio and Grid Exponential. (Techcrunch)

Combined, these Beeflow products have increased crop yields for farmers up to 90%.

Techcrunch on the two-tier venture trend

Last week the Exchange/Techcrunch posted a great article on how some Latin America startups, like US peers, are raising more seed capital before they work on their Series A quickly following by subsequent lettered rounds. Conversely, other startups are starting their alphabetic rounds earlier and earlier. What divides the two?

The commentary stemmed from a conversation with Rudina Seseri of Glasswing Ventures, who said abundant seed capital in the United States allows founders to get a lot done before they raise a Series A, effectively delaying these rounds. But after those founders did raise that A, their Series B round could rapidly follow thanks to later-stage money showing up in earlier-stage deals in hopes of snagging ownership in hot companies.

Source: LAVCA Industry Data, Bloomberg

Some of the highlights: Series As, she said, could come mere months after a seed deal, and Series B rounds were seeing expected revenue thresholds tumble in part to “large, multi-asset players that have come down market and are offering a different product than typical VCs — very fast term sheets, no active involvement post-investment, large investments amounts and high valuations.”

Focusing on just the Series A dynamic, the old rule of thumb that a startup would need to reach $1 million in annual recurring revenue (ARR) is now often moot. Some startups are delaying their A rounds until they reach $2 million in ARR thanks to ample seed capital.

While some startups delay their A rounds, others raise the critical investment earlier and earlier, perhaps with even a few hundred thousand in ARR.

What is different between the two groups? Startups with “elite status” are able to jump ahead to their Series A, while other founders spend more time cobbling together adequate seed capital to get to sufficient scale to attract an A.

The dynamic is not merely a United States phenomenon. The two-tier venture capital market is also showing up in Latin America, a globally important and rapidly expanding startup region. Brazilian fintech phenomenon Nubank, for example, just closed a $750 million round. (Techcrunch)

Mexico moving closer to cannabis legalization

Mexico’s Supreme Court struck down laws which criminalized the recreational use of cannabis. The decisive 8-3 ruling comes after advocates pushed for decriminalization to reduce drug-fueled cartel violence in the country.

The court declared the prohibition of cannabis unconstitutional in 2018, leading lawmakers to move forward on passing a bill.

However, after a bill signed by Mexico’s president Andres Manuel Lopez Obrador struggled to make it through Congress deliberations weeks after the set deadline, the court moved to vote.

Source: Prohibition Partners

Now to legally obtain cannabis, citizens must apply for a permit from the country’s health regulator, the Federal Commission for Protection against Health Risks (Cofepris), the Supreme Court said. Once permitted, anybody over 18 years of age can possess up to 28 grams of cannabis, the Supreme Court ruled.

Before, Mexican citizens were able to access cannabis but only after filing a court injunction. (Reuters)

Venezuela launching a return to the geopolitical stage?

Venezuelan president, Nicolas Maduro’s, government and his political opponents are preparing to restart negotiations to establish credible conditions for state and local elections on 21 November. During a recent hour-long interview with Bloomberg he expressed this motivation for “open” elections as rooted in efforts to address the Covid-19 pandemic and with the potential to accelerate discusses of sanctions relief. Experts are interested in the potential for a broader power-sharing arrangement and potential liberalization of the economic situation. Should the talks succeed, the US would gradually lift sanctions, unshackling the OPEC country’s national oil industry and galvanizing a new class of private investment after more than two decades of catastrophic state control over the economy.

In anticipation of the expected kick-off of the Norwegian-brokered talks next month, both sides are conferring with their international patrons. An opposition delegation led by Gerardo Blyde is in Washington this week before heading to Brussels. Venezuela’s foreign minister Jorge Arreaza met with his counterpart Sergei Lavrov in Moscow.

The negotiations will test an incremental strategy espoused by a moderate opposition wing led by former Miranda state governor and ex-presidential candidate Henrique Capriles, who is eclipsing hardliners embodied by prominent exile Leopoldo Lopez and his protege in Venezuela, Juan Guaido. The moderates advocate participating in elections however flawed and resolving day-to-day problems on the ground, even if that means working with Maduro. The Lopez-led camp has long pursued an all-or-nothing strategy manifested by an electoral boycott.

In parallel, some oil companies, investment firms and jilted bondholders are hoping for an on-ramp. Departing from the Bolivarian socialism ushered in by late president Hugo Chavez in 1999, Maduro is promoting “anti-blockade” legislation that would allow the private sector to hold a majority stake in upstream oil contracts, of which around two dozen have already been signed with unnamed local and foreign companies. Execution of the contracts rests on reforming the country’s hydrocarbons law to cement the elimination of Venezuelan state-owned PdV’s mandate of control, a proposition rejected by ideological purists in Maduro’s socialist party (PSUV).

Incumbent Western oil companies such as Chevron, which is on stand-by in Venezuela under a US sanctions waiver, hope the political talks and legislative reform converge into an opportunity to revive Orinoco heavy oil belt operations and tap long-neglected natural gas reserves. EU firms Repsol and Eni are eyeing export avenues for the gas they are already producing offshore. Peers with no Venezuela presence are unlikely to rush in because of political risk and the carbon intensity of Orinoco operations.

Current bond prices of as little as $0.03 on the dollar are expected to inch up in anticipation of a political deal and an easing of US restrictions on Venezuelan bond trading. Some bondholders want to exchange their debt for equity in privatized state-owned entities or reserves of oil and minerals, a mechanism quietly discussed with Maduro’s top financial adviser, Ecuador’s former finance minister Patricio Rivera. (Reuters, Bloomberg, AP)

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