Welcome to this week’s Brazil tech and innovation round-up. Here is a selection of key developments in Latin America’s largest economy, starting with a noteworthy deal for the Brazilian startup ecosystem, the Series C round announced by online education firm Hotmart. Next up, we have a few other interesting developments including the release of a new report on venture capital activity for Q1, the introduction of digital government and stalking laws, and more.
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On Tuesday (30), Hotmart, one of the Brazilian companies valued at over US$ 1 billion has announced a new investment round aimed at driving international growth. The online education company has attracted US$ 130 million in a Series C round led by TCV, a growth equity firm that has backed the likes of Netflix, Spotify and Peloton. Alkeon Capital has also joined the pool of backers for the company, which includes General Atlantic, Koolen & Partners and Singapore sovereign wealth fund GIC.
Headquartered in Belo Horizonte, Brazil, Hotmart offers a platform with functionalities and resources to enable content creators to develop, manage and sell courses online to audiences of any type and size. The company founded in 2011 employs around 1300 staff in 12 offices in Mexico, Colombia, Spain, France, The Netherlands and United States, where it acquired New York-based online education startup Teachable in a deal completed in 2020.
According to the company, the new round will go towards new acquisitions to boost Hotmart’s footprint outside Brazil, as well as product innovation to drive organic growth. Content creators across 100 countries already use the platform, reaching million of consumers in 185 countries worldwide. “By offering the tools for creators to spread their knowledge, we are fostering a new model of internet-based entrepreneurship “, says Hotmart’s chief executive and cofounder, João Pedro Resende. Hotmart’s current valuation remains undisclosed – rather, the company has stated the latest round has “strengthened its previously achieved unicorn status”.
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Over the last few months, Hotmart made a slew of acquisitions aimed at boosting the various aspects of its online education offering. As well as the Teachable buyout, the firm’s M&A movements in Brazil included the acquisitions of Wollo, a startup focused on monetization of websites, podcasts and YouTube channels through a subscription model, as well as Klickpages, focused on the creation of landing pages.
A new report has outlined the highlights for the Brazilian venture capital industry in the first quarter of 2021. Released on Thursday (1), the research by open innovation firm Distrito has found that Brazilian technology startups have attracted a total of US$ 1.9 billion in investments in the first three months of the year. The volume is split into a total of 155 investments and represents 54% of the US$ 3.5 billion invested throughout 2020.
Of all investments seen in Q1, four rounds concentrated around US$ 1.2 billion of the total received by startups over the period, all of them received by unicorns such as fintech Nubank, real estate marketplace Loft, online retailer MadeiraMadeira and logistics firm Loggi.
In March alone, US$ 962 million worth of investments went towards 61 investment rounds. The report highlights the US$ 425 million investment led by D1 Capital in Loft, the largest VC round ever recorded in Brazil, as well as the Hotmart deal announced this week, and the US$ 35 million investment in Brazilian fintech Vórtx by FTV Capital, a private equity fund which also has Brazilian cross-border payments unicorn EBANX in its portfolio.
According to the Distrito report, the Brazilian startup ecosystem is maturing: “That creates a fertile environment for the emergence of new businesses, allows more startups to reach more advanced stages, requiring larger rounds. This is undoubtedly one of the main factors of this expressive investment volume”, noted Tiago Ávila, leader at Dataminer, Distrito’s market intelligence arm.
Also according to the research, the first quarter has seen 56 mergers and acquisitions (M&As) involving startups in Brazil. In March alone there were 30 M&As, including the acquisition of martech RD Station by enterprise software firm Totvs, as well as the merger of credit fintechs Geru and Rebel.
On Tuesday, (30) the Brazilian government has sanctioned the Digital Government Law, which sets out rules for the expansion of public services on the internet. The framework is intended to “boost efficiency in the public sector, reduce bureaucracy, innovation, digital transformation and citizen participation”.
In essence, the law is aimed at broadening the scope of digitization seen in the federal government across states and municipalities, by setting out rules to provide a single platform for accessing information regarding public services. The framework comes as a response to the struggles faced by citizens across the various Brazilian states around renewing or accessing documents of all types, such as driving licenses and birth certificates, or engaging in administrative procedures alongside public sector bodies.
The various state and municipal bodies across Brazil currently deliver services in different formats, ranging from physical letters to mobile apps. The law aims to address that by getting organizations to provide a single digital platform for information regarding public services. This is to be accessed by companies and citizens through the taxpayer registration number, which, in the case of individuals, will be added to all documents such as the national identification card, as well as the public healthcare and voter ID.
Services provided by bodies across the Executive, Legislative, Judiciary branches as well as the Public Prosecution Service are included in the law, which is expected to take effect within the next three months.
On Wednesday (31), the Brazilian government has passed a law that criminalizes stalking in Brazil, in online and physical environments. Stalkers may face six months to two years imprisonment, and a fine.
The practice, which tends to be amplified through social networks, described in the new law as “harassing someone, repeatedly and by any means, threatening their physical or psychological integrity, restricting their ability to move around or, in any way, invading or disturbing their sphere of freedom or privacy”.
Authored by senator Leila Barros, the proposal is crucial in terms of tackling violence against women. Brazil ranks fifth in femicide — the killing of women as a result of domestic violence or due to gender, usually by a man and often partners — rates worldwide, according to the World Health Organization.It is estimated that 76% of cases of murder are preceded by stalking on the part of their partners.
The Central Bank of Brazil announced on Tuesday (30) that it has authorized WhatsApp to operate as a a “payment initiator”. Visa and Mastercard will intermediate the transactions. With the endorsement, the messaging app will be able to offer a domestic payments system. The launch date, however, has not yet been defined.
Brazil is one of the world’s largest markets for the Facebook-owned app. According to a study carried out in February by Mobile Time/Opinion Box, WhatsApp is installed in 98% of smartphones in Brazil.
Also this week, Uber announced plans to request ID from users paying for rides in cash as a means to tackle crime against drivers in Brazil. The company will be checking the ID details against its own records and data from credit information firm Experian and Serpro, the Brazilian government’s data processing service.