Cross Border Capital Markets Report: USA Investors and LATAM Companies in 2020
This report outlines the announced investments made by USA investors in Latin American companies in 2020. Focus is placed on deal count, volume, and industry. Data may be underreported since only announced deals are analyzed. Our investor spotlight includes Valor Capital Group; our deal spotlight includes a growth equity in Nelogica for $100 million.
Latin American Market Overview: USA Companies
In 2020, 124 cross-border deals were announced from USA-based investors in 118 Latin American companies for a total of $3.51 billion. This report outlines the volume, industry, and number of deals completed in this cross-border category.
FIGURE 1: Investments Over Time
- In 2020, 118 Latin American companies received investments from USA investors. Of them, 108 are located in South America and 10 in Central America. The average deal size was $30 million.
- Of those investments, $2.53 billion, or 80%, was raised from venture capital sources, while only $640 million, or 20%, were deployed by private equity firms into Latin American deals.
- In Q3 there was a rise in the capital raised, as $800 million, or 59%, of the capital was deployed. Significant deals included Neon, a Brazilian digital banking platform, Rappi, a Colombian delivery platform, and dLocal, an online payments platform from Uruguay. Active investors in this quarter were 10X Capital from New York, 8VC from San Francisco, and Accion from Massachusetts.
- The largest deal was announced in Q2 for Global Cloud Xchange, an operator of information technology infrastructure, for a total of $400 million.
- More than 80% of the capital raised was directed into online services, digital solutions, or cloud-based product businesses.
USA Investors and LATAM Investments: Investments by Industries
USA investors deployed capital into Latin American companies operating in technology markets. Active sectors included financial software, financial services, or similar companies in B2B spaces. Finance-related industries saw large capital deployments and deal counts, while most B2C industries were significantly lower.
FIGURE 2: Capital Breakdown
- Finanical software accounted for the majority of deals with over $1.3 billion raised, while the least amount of capital was invested in automotive deals, likely as a result of the pandemic and consumer spending along with the rise of new mobility solutions such as Bird, Uber, and others.
- IT consulting, telecommunications, and systems management companies had very low deal counts, yet their capital raised was consistently close to $400 million in 2020.
- Information technology companies were not negatively affected by the COVID-19 pandemic due to their ability to operate regardless of location.
Investor Spotlight: Valor Capital Group
Valor Capital Group is a venture fund headquartered in New York. It was the most active USA cross-border investor in Latin American companies. Valor conducts global investments and has a historical preference for deploying capital in USA and Brazilian companies.
Valor focuses on technology companies, with a special interest in companies in financial services. The firm participated in 12 deals in 2020. They deployed $14 million on average per deal in their 2020 financing activities.
Figure 3: Valor Capital Group Deals Overview
Deal Spotlight: Nelogica
Nelogica is a financial service company from Porto Alegre, Brazil, with Marcos Boschetti serving as its CEO. Nelogica aims to provide information to its clients to train them in auctions, assets, and other trade-related activities in simulated scenarios that take historical results and create a virtual setup for users.
Nelogica’s main product is called Profit, a platform that provides resources for analytical and operational profiles, along with customization tools to differentiate from other traders. It is divided into four product lines, but optional modules are also available.
- ProfitTraining: Provides market replays to train subscribed users by monitoring past auctions, identifying how asset movements occurred, and acting in a simulated environment so users interact with the markets in a computer-generated setting.
- ProfitOne: Platform with analytical resources, charts with regular technical analysis intervals, and the Renko chart. It compiles technical indicators and graphical study tools.
- ProfitPlus: Delivers resources for different profiles, such as day-trade, tape reading, and technical analysis features, with graphic data features.
- ProfitPro: Integrates software modules and extra functionalities. The system is designed for scalpers and day-traders. Tools offered to cover flow analysis (tape reading), price action, systematized operations, and other useful features.
Most Recent Financing Status
The last deal to date was a $100 million growth capital raised from private equity sources. The placement was completed on November 26, 2020. This has been the only round the company has made, and only two investors actively funded the firm: Crescera Capital from Brazil and Vulcan Capital from Seattle. Both investors hold a minority stake in the company.