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Foreign investors have a bigger role to play in growing Latin America’s startup ecosystem
There has been significant hype around Latin America’s startup success. For good reason, too: Startups have raised $9.3 billion in just the first half of 2021, almost double the amount in all of 2020, and mega-rounds are a growing trend.
But while the industry hails the rise of the region’s ecosystem and its growing fleet of unicorns, Latin America’s startup story has a far longer past. And it’s one we should keep in mind as entrepreneurs and investors around the world forge the region’s future.
People often ask me: How are consumers different in Brazil? How does the Peruvian market behave compared to the United States? These questions don’t really see each country for its inherent value, but instead gear people up to expect the unexpected from a historically economically disadvantaged region.
In fact, the evolution of business shares far more similarities across countries than we might expect. Latin America’s market has evolved over a very long time — as long as Silicon Valley and any other hub. This region has a global outlook, spectacular universities, a diverse population and an army of entrepreneurs.
It’s important for investors outside of Latin America to get involved in fundraising at earlier stages, when founders need extra support from everyone around.
That’s why the unicorns and megadeals should come as no surprise: They’re the natural evolution of the ecosystem, of more capital generating more success after years of hard work.
As Latin America has grown, competition has grown even more intense in the United States. VCs have more money than ever, and it’s getting increasingly expensive to invest in North America. So they’re looking to diversify their investments with high-potential opportunities abroad. Big funds are now dedicating resources to exclusively targeting Latin America, from SoftBank creating a region-specific fund, to Sequoia saying it will pay more attention to the region.
These incoming investors must bring more than money to ensure that entrepreneurship continues to grow in a healthy manner, rather than set it off balance. Investors should bring a local strategy that makes them an asset to Latin America’s startup ecosystem.
Investors should look for younger markets
Most Latin American companies reaching unicorn status and going public now were started around 2012. This is not very different from the timeline of businesses in other markets such as the United States. For instance, e-commerce giant MercadoLibre launched in Argentina around the time eBay was emerging.
What this tells us is that foreign investors would do well to keep a sharp eye on emerging opportunities beyond heavily covered markets like Brazil and Mexico. There is a huge opportunity to do what local investors did in Brazil and Mexico years ago, and play a significant role in the next chapter of countries with blossoming markets like Colombia, Peru or Uruguay.
U.S. investors remain shy
The amount of VC capital being funneled into Latin American startups has surged since 2017, with angel investment close behind. However, much of this investment comes from local and regional investors. Every top university in Brazil has a pool of angels. Investors in the Andean region cover Peru, Chile and Colombia. If today’s ecosystem is flourishing, it’s largely because native investors are lighting the spark.
Meanwhile, U.S. investor presence at the early stages is still low and risk averse. It’s much harder for a pre-seed or seed startup to get foreign investor interest than when they’ve already reached Series A or B. Investors also tend to come in on an ad hoc basis or as outliers brought about by a mutual contact. Foreign investors are the exception, not the rule.
It’s important for investors outside of Latin America to get involved in fundraising at earlier stages, when founders need extra support from everyone around. Investors should be pursuing a long-term strategy that will bring more consistency to the local ecosystem as a whole.
Money is not enough, investors should bring dedicated resources
Your contribution as an investor is largely about the resources you can offer. That’s especially challenging for a foreigner who has less of an understanding of the local industry and lacks a network and people on the ground.
While investors may say their your regular value offering is enough — network and U.S. customers — in truth, this won’t necessarily be of much use. Your hiring network might not be ideal for a Latin American company, and your thorough understanding of the U.S. market might not reflect developments in Latin America.
Remember that the region has a plethora of VC organizations who have worked with local startups over the course of a decade. Latin America is a very welcoming and open market, and local investors and accelerators will happily work with foreign investors, including in deal-sharing opportunities.
It’s crucial to create incentives within the ecosystem, which — like in the United States — largely means matching founders with unique opportunities. In North America, this often happens organically, because people are on the ground and actively engaged with what’s happening in the region, from networking events, to awards, and grants and partnership opportunities.
To create this in Latin America, foreign investors need to dedicate a team and money to their regional commitments. They will have to understand the local industry and be available to mentor founders with diverse perspectives.
In my experience helping EA, Pinterest and Facebook land in Latin America, we always had someone on the ground or working remotely but fully dedicated to the region. We had people focused on localizing the product, and we had research teams studying similarities and differences in user behavior. That’s how corporations land their products; it’s how VCs should land their money.
Only disrupt when it adds value
The idea is for foreign investors to strike a balance locally while creating disruptions when it helps startups look outward rather than attempting to overhaul steady, positive internal growth. That can mean encouraging companies to incorporate in the United States to make it easier for investors from anywhere to invest or preparing the company to go global. Local investors can help investors new to the region understand the balance of things that should or shouldn’t be disrupted.
Don’t be surprised when Latin America’s apparent “boom” starts happening in other emerging markets like Africa and Asia. This isn’t about a secret hack coming in from the outside. It’s just about creating the right environment for local talent to flourish and ensuring it maintains healthy growth.
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Kushki, an Ecuador-based fintech, raises $86M to build financial infrastructure in LatAm
Just about every week there’s a blockbuster round coming out of South America, but in certain countries such as Ecuador, things have been more hush-hush. However, Kushki, a Quito-based fintech, is bringing attention to the region with today’s announcement of an $86 million Series B and a $600 million valuation.
“We never thought that we would return home [from the U.S.] and build a company that was more valuable in Ecuador than we had built in the U.S.,” said Aron Schwarzkopf, CEO and co-founder of Kushki.
Schwarzkopf and his business partner, Sebastián Castro, previously built and sold a fintech called Leaf in the U.S. in 2014. The two are originally from Ecuador but moved to Boston for college, where they met watching soccer.
Unlike many other fintechs in LatAm that are out to help the unbanked, Kushki works behind the scenes building the tech infrastructure that companies like Nubank use to transfer money. Some of the functionalities they build enable both local and cross-border payment players in credit and debit cards, bank transfers, digital cash, mobile wallets and other alternative payment methods.
“We realized there was a gigantic opportunity to democratize and create infrastructure to move money,” Schwarzkopf told TechCrunch.
The company, which was founded in 2017, already has operations in Mexico, Colombia, Ecuador, Peru and Chile. The Series B will be used to accelerate growth and expand to Brazil and nine other markets in Central America.
Generally, expanding to Brazil is an expensive proposition, and therefore not a path that all companies can take, even though it can be an extremely profitable move if done right. Some of the challenges include the need to translate everything into Portuguese followed by the varying financial regulations.
That’s why Kushki’s approach has to be somewhat custom in each country.
“We focus on going into the markets and we basically rebuild an entire infrastructure, so we put everything into one API,” said Schwarzkopf.
Products similar to Kushki have been successful in other regions around the world, such as in India with Pine Labs, Africa with Flutterwave and Checkout.com, which now has 15 international offices.
To build all this infrastructure, Kushki, which means “cash” in a native Andes dialect, has raised a total of $100 million from SoftBank and an undisclosed global growth equity firm, as well as previous investors including DILA Capital, Kaszek Ventures, Clocktower Ventures and Magma Partners.
“From now until 2060, people will need servers and ways to move money, and we knew that the existing payment infrastructure couldn’t support that,” said Schwarzkopf.
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Miami-based Marco Financial is launching a revenue-based lending service for Latin American SMEs
Marco Financial, a new Miami-based startup, is looking to take a piece of the roughly $350 billion trade finance market for Latin American exporters with its novel factoring services business.
Small and medium-sized businesses in Latin America can have trouble getting the financing they need to launch export operations to the U.S. and Marco said it aims to bridge that gap with new risk modeling and management tools that can make better decisions on who should receive loans.
“For smaller businesses in Latin America, accessing trade finance to export their goods is a major concern and a top reason why many don’t succeed,” said Javier Urrutia, director of Foreign Investments at PROCOLOMBIA, an organization that promotes foreign investment and non-traditional exports in Colombia, in a statement from the company. “In Colombia alone, a 1% increase in exporter productivity in our textile industry would result in 500,000 new jobs for the country.”
The company is backed by a small seed round from Struck Capital and Antler and over $20 million in a credit facility underwritten by Arcadia Funds.
“As a former owner of a small business in Latin America, I saw firsthand how difficult it is for SMEs in this region to access trade financing that will let them export their goods while retaining enough capital to keep their business running,” said Peter D. Spradling, COO and co-founder of Marco, in a statement. “Access to trade finance is one of the greatest hurdles in business operations and the traditional system dominated by banks is simply not working anymore, disproportionately hurting SMEs and further restricting economic mobility and job creation in emerging markets. Equity funding and a material credit facility let us serve this underserved market in Latin America and help build a healthier, more equitable trade ecosystem reflective of an increasingly borderless global economy.”
Spradling met his co-founder Jacob Shoihet through the Antler accelerator, a Singapore and New York-based early-stage investment and advisory services program that connects entrepreneurs and tech operators to launch new businesses.
Shoihet, a classically trained musician who fell in with the startup scene in New York through work at Yelp, was eager to launch his own company and connected with Spradling over shared interests in intermittent fasting and sports.
Small and medium businesses have a hard time receiving loans from traditional lenders thanks to tighter regulations and capital controls dating back to the 2008 financial crisis, according to Marco’s founders. And the long periods that companies have to wait between when goods are shipped and orders are payed can put undue pressure on business operations. Factoring solves the gap by lending to merchants based on their receivables.
Marco said that it can reduce the length of the loan origination process from over two months to one week and provide funding to approved exporters within 24 hours.
The company is initially focused on Mexico, Uruguay, Chile, Colombia and Peru, and chose those markets because of Spradling’s previous experience as an importer and exporter across the region.
“We look for companies that not only target massive, sleepy industries but also for ones that are led by management teams with fresh perspectives and asymmetric information that position them to upend incumbents,” said Yida Gao, partner at Struck Capital, in a statement. “In short order, Marco has assembled a world-class team to tackle the multi trillion-dollar trade finance market in a post-Covid time when SMEs around the world need, more than ever, reliable capital to fund operations and growth. We are excited to be part of Marco’s journey to support the suppliers that are the backbone of global trade.”
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Lana has launched in Latin America to be the one-stop shop for gig workers’ financial needs
Lana, a new startup based in Madrid, is looking to be the next big thing in Latin American fintech.
Founded by serial entrepreneur Pablo Muniz, whose last business was backed by one of Spain’s largest financial services institutions, BBVA, Lana is looking to be the all-in-one financial services provider for Latin America’s gig economy workers.
Muniz’s last company, Denizen, was designed to provide expats in foreign and domestic markets with the financial services they would need as they began their new lives in a different country. While the target customer for Lana may not be the same middle to upper-middle-class international traveler that he had previously hoped to serve, the challenges gig economy workers face in Latin America are much the same.
Muniz actually had two revelations from his work at Denizen. The first — he would never try to launch a fintech company in conjunction with a big bank. And the second was that fintechs or neobanks that focus on a very niche segment will be successful — so long as they can find the right niche.
The biggest niche that Muniz saw that was underserved was actually in the gig economy space in Latin America. “I knew several people who worked at gig economy companies and I knew that their businesses were booming and the industry was growing,” he said. “[But] I was concerned about the inequalities.”
Workers in gig economy marketplaces in Latin America often don’t have bank accounts and are paid through the apps on which they list their services in siloed wallets that are exclusive to that particular app. What Lana is hoping to do is become the wallet of wallets for all of the different companies on which laborers list their services. Frequently, drivers will work for Uber or Cabify and deliver food for Rappi. Those workers have wallets for each service.
(Photo by Cris Faga/Pacific Press/LightRocket via Getty Images)
Lana wants to unify all of those disparate wallets into a single account that would operate like a payment account. These accounts can be opened at local merchant shops and, once opened, workers will have access to a debit card that they can use at other locations.
The Lana service also has a bill pay feature that it’s rolling out to users, in the first evolution of the product into a marketplace for financial services that would appeal to gig workers, Muniz said.
“We want to become that account in which they receive funds,” he said. “We are still iterating the value proposition to gig economy companies.”
Working with companies like Cabify, and other, undisclosed companies, Lana has plans to roll out in Mexico, Chile, Peru and, eventually, Colombia and Argentina.
Eventually, Lana hopes to move beyond basic banking services like deposits and payments and into credit services. Already hundreds of customers are using the company’s service through the distribution partnership with Cabify, which ran the initial pilot to determine the viability of the company’s offering.
“The idea of creating Lana was initially tested as an internal project at Cabify,” Muniz wrote in an email. “Soon Cabify and some potential investors saw that Lana could have a greater impact as an independent company, being able to serve gig economy workers from any industry and decided to start over a new entrepreneurial project.”
Through those connections with Cabify, Lana was able to bring in other investors like the Silicon Valley-based investment firm Base 10.
“One of the things we’ve been interested in is in inclusion generally and in fintech specifically,” said Adeyemi Ajao, the firm’s co-founder. “We had gotten very close to investing in a couple of fintech companies in Latin America and that is because the opportunity is huge. There are several million people going from unbanked to banked in the region.”
Along with a few other investors, Base 10 put in $12.5 million to finance Lana as it looks to expand. It’s a market that has few real competitors. Nubank, Latin America’s biggest fintech company, is offering credit services across the continent, but most of their end users already have an established financial history.
“Most of their end users are not unbanked,” said Ajao. “With Lana it is truly gig workers… They can start by being a wallet of wallets and then give customers products that help them finance their cars or their scooters.”
The ultimate idea is to get workers paid faster and provide a window into their financial history that can give them more opportunities at other gig economy companies, said Ajao. “The vision would be that someone can plug in their financial information for services. If they’re working for Rappi and have never been an Uber driver and they want to be an Uber driver, Lana can use their financial history with Rappi to offer a loan on a car,” he said.
That financial history is completely inaccessible to a traditional bank, and those established financial services don’t care about the history built in wallets that they can’t control or track. “Today if you’ve been a gig worker and you go to a bank, that’s worth nothing,” said Ajao.
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Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million
Some of Latin America’s leading venture capital investors are now backing hotel chains.
In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.
Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.
Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.
The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.
Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.
“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.
Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.
“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.
The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.
Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:
The New York Times published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.
Whether Oyo, backed by billions from the SoftBank Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.
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Peru’s startup scene is ready for more
Greg Mitchell is regional director of Angel Ventures, a startup investor and advisor and is the creator of the blog Ruta Startup.
Funding of Latin American startups has doubled each year over the past two years.
And while most of this capital has been directed toward Brazil and Mexico, this surge is starting to have an effect on startups in the region’s smaller markets. The increased availability of capital for later rounds is creating more opportunities for startups to scale both regionally and globally. And while it may not be one of the largest countries in Latin America, Peru continues to have one of the best-performing economies and fastest-growing startup scenes.
In 2019, a new record was set for the amount of capital invested into Peruvian startups, at least $11 million, a 24% increase compared to 2018. Most of the money went to fintech (47%) and edtech (37%) startups. Over the past four years, more than $22.7 million in public funds went toward startup-related projects as well.
The government-backed program Innóvate Perú awarded approximately $13.8 million of its total investments almost exclusively to startups. Total venture capital investment will likely exceed US$25 million in 2020, doubling what was achieved in 2019, and will continue to grow from there.
In 2019, Peru’s development bank, COFIDE, announced a new fund of funds to invest in venture capital firms, mirroring similar entities such as Chile’s CORFO, Colombia’s Bancoldex and Mexico’s NAFIN. While there are plenty of opportunities to secure seed-stage capital in Peru, many startups still have to look abroad for growth capital. Keynua, Xertica, Turismoi and Runa are just a few of the Peruvian startups that sought international investors to lead their rounds over $1 million. Following in the path of similar funds, the fund of funds will invest $20 million in half a dozen venture capital firms, which would in turn invest in approximately 120 startups.
As government support for entrepreneurs continues to pour in, the Peruvian startup ecosystem is entering a new phase. More and more startups are launching, graduating from accelerator programs and seeking ways to reach their next milestone. Local early-stage investors are stepping in to fill the financing gap and have teamed up to form the Peruvian Seed and Venture Capital Association, PECAP, to share investment opportunities and lay a strong foundation for venture capital in Peru. Here’s a look at just a few of the opportunities for more venture capital to step in.
Fueling Peru’s growing fintech sector
A massive fintech boom is playing out across Latin America, with the size of the industry expected to exceed $150 billion by 2021. Peru is home to an estimated 120 fintech startups actively tackling the issues of financial inclusion and better servicing the region’s small and medium-sized businesses. Peru’s economy is still largely informal, with approximately 14 million people underbanked. In 2017, María Laura Cuya started Peru’s Fintech Association to work alongside regulators, academics and other organizations to improve financial literacy and access to financial products, with a focus on Peruvian SMEs.
A few of Peru’s fintech sectors stand out, including factoring and foreign exchange, where a number of startups are quickly gaining traction and already branching out to neighboring markets. Innova Funding, Innova Factoring, Facturedo, Kambista and Rextie are just a few examples. Peru’s membership in the Pacific Alliance also makes it an attractive initial market prior to launching in other Pacific Alliance countries.
In 2019, Peruvian fintechs Keynua and Apurata were selected for the Y Combinator accelerator program, putting them on the international radar. Traditional banks in Peru are also shifting their mindsets and warming up to fintech partnerships. The publicly traded Peruvian bank, Credicorp, for example, recently set up a corporate venture fund called Krealo. The bank made its first investments in Culqi, a local payments gateway, and Independencia, a lending platform.
Impact investing opportunities
Latin America is a top destination for impact investment capital, outpacing many other regions in the world, with a 15% compound annual growth rate over the last five years, according to the Global Impact Investing Network. Edtech represents a rising entry point across the region for impact investors thanks to its potential for both financial and non-financial returns.
According to an OECD report, approximately 30 million young people in Latin America are not participating in any form of education, training or employment, and 76% of this total are women. Laboratoria, co-founded by edtech thought leader Mariana Costa Checa, helps women develop technical skills and has expanded across the region from its headquarters in Lima to train more than 1,000 women so far. The startup has received praise from global companies, including Walmart and Facebook. In 2019, the skills development platform Crehana raised the largest-ever round for a Peruvian startup ($4.5 million) from both regional and global funds.
Peru attracted more impact investment capital than Mexico, a longtime leader in the region, for the first time in 2018. Much of this investment is focused on improving Peru’s education system. Local startups are addressing everything from early childhood education to workforce training, and as more success stories emerge, more resources will be needed to fully tap into Latin America’s large markets for these solutions.
Supporting long-term startup growth
The government-backed program Innóvate Perú has financed more than 3,400 entrepreneurial projects to date, and more than 25 private institutions are now accelerating, incubating and investing in Peruvian startups. New startup creation is at its highest rate ever; however, these companies are outgrowing their angel and seed-stage supporters and are now seeking ways to take their ventures to the next level.
Over the past few years, Latin America has proven that it is a place where startups can scale and succeed. Now, with more startups coming out of the region’s smaller, underserved markets, like Peru, there is an opportunity to deploy capital effectively and bring impactful solutions to millions of people across the region.
*Angel Ventures was an investor in Culqi before it was sold to BCP. Neither Angel Ventures nor Greg Mitchell currently hold any shares.
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Pachama launches to support global reforestation through carbon markets
The world’s forests are ablaze, under threat from illegal logging and disappearing due to the less dramatic environmental degradation wrought by drought and other signs of climate change.
It’s part of the negative feedback loop that seems to be accelerating climate change as greenhouse gases accumulate in the atmosphere, but one startup company is trying to facilitate reforestation by supporting carbon offsets that specifically target the world’s flora.
Pachama has raised $4.1 million to create a marketplace where companies can support carbon offset projects. The company is backed by some big names in tech investment, like former Uber executive Ryan Graves, through his private investment firm, Saltwater, and Chris Sacca, a prominent early investor in Uber, through his Lowercase Capital firm.
Founded by Diego Saez-Gil, a serial entrepreneur whose last company was a startup selling a “smart-suitcase,” Pachama is aiming to bring reforestation projects to the carbon markets whose impacts can be independently verified by the company’s monitoring software to ensure their ability to offset emissions.
“We were making a smart connected suitcase which got banned,” says Saez-Gil. “After that I decided to take some time off and I was quite burnt out. I wanted to do some soul searching and tried to decide what I wanted to put my efforts [into].”
He traveled to South America and did a trip through the Amazon rain forest in Peru. It was there that Saez-Gil saw the effects of deforestation in an area that represents a huge carbon dioxide offset for the planet.
“There are about 1 billion hectares on the planet that could be reforested,” says Saez-Gil.
That opportunity — to contribute to the perpetuation of independently validated carbon markets around the world — is what convinced investors like Paul Graham, Justin Kan, Daniel Kan, Gustaf Alströmer, Peter Reinhardt, Jason Jacobs and Chris Sacca from Lowercase Capital, as well as funds such as Social+Capital, Global Founders Capital and Atomico, to contribute to the company’s $4.1 million funding.
It’s a pretty big consortium to finance what amounts to a small capital commitment (given the size of the funds under management that these investors have at their disposal), but investors are right to be a little wary.
Carbon markets are driven by policy, and policymakers have been reluctant to draft legislation that would put a high enough price on carbon emissions to make those markets viable.
“Pachama’s carbon credit marketplace is launching at a pivotal moment when awareness of the climate crisis is reaching an all-time high, and businesses are increasingly looking to become carbon neutral,” said Ryan Graves, Pachama’s lead investor and new director said in a statement. “What attracted me to Pachama was the company’s use of technology to bring trust to an industry that desperately needs it, and gives the verifiable results to the purchasers of carbon credits.”
Awareness doesn’t equal political action, however, and Pachama needs the political will of both governments and consumers to move the needle on creating viable carbon trading markets.
Pachama’s business becomes profitable only when the price of carbon moves beyond $15 per ton of carbon dioxide (or similar emissions) offset. Currently, there are only two markets in the world where that threshold has been reached — the California market and Europe, according to Saez-Gil.
For Pachama’s founder, forest preservation and reforestation projects can have outsized benefits. “There are only 500 forest projects that are certified today… we need tens of thousands,” says Saez-Gil. “There are one billion hectares on the planet available for reforestation without competing with agriculture.”
The restoration of native forests can contribute to replenishing global biodiversity, and captures more carbon than cultivating forests for industrial use, but both are better than destruction to grow row crops or support animal husbandry, Saez-Gil says.
Pachama sources projects that are approved by existing certification bodies, but offers its customers monitoring and management services through access to satellite imagery and sensors that provide information on emissions and carbon capture on reforested land.
It’s a potential solution to the problem of deforestation that’s plaguing countries like Brazil. “The government in Brazil, they want to generate income for the country,” says Saez-Gil. If carbon markets paid as much as ranching, it would reduce the need for animal husbandry and plantation farming in Brazil, Indonesia or places like Peru.
Today, most investments in reforestation projects are done through middlemen, which increases opacity and the chance that projects are being double-counted or sold, according to Saez-Gil. Pachama has a person who is contacting forest project developers so that they can list the projects independently. Then the company verifies the offsets with satellite imaging systems.
The company currently has 23 forest projects — three in the Amazon rain forest in Brazil and Peru and projects in the U.S. in California, Vermont, New Jersey, Connecticut and Maine .
Saez-Gil has high hopes for the future of carbon markets based on demand coming, in part, from new regulations like those imposed on the airline industry.
“Airlines will have to offset part of their emissions as part of CORSIA,” says Saez-gil. That’s an offset of 160 million tons of emission per year. “There is all this demand coming for different offsets for different markets that will make the price go up.”
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Nowports raises $5.3 million to become Latin America’s digital shipping answer to Flexport
Nowports, a developer of software and services to track freight shipments from ports to destinations across Latin America, has aims to become the regional answer to Flexport’s billion-dollar digital shipping business.
Almost 54 million containers are imported and exported from Latin America each year, and nearly half of them are either delayed or lost due to mismanagement.
Nowports is pitching shippers on its digital management software to keep track of each container, and has signed on a number of leading venture capital firms to fulfill its mission.
The Monterrey, Mexico-based company raised $5.3 million in its seed round of financing. The round was led by Base10 and Monashees, with participation from Y Combinator and additional investors like Broadhaven, Soma Capital, Partech, Tekton and Paul Buchheit.
“In Nowports we saw a very strong combination: well prepared and ambitious team using technology to help thousands of customers to improve their importing and exporting processes. By adding efficiency, reliability, and transparency to change a multi-billion dollar industry, Nowports has been able to attract many clients that saw significant improvements in their daily routines by using the solution” said Caio Bolognesi, general partner from Monashees, in a statement.
The company said it would use the money to expand into new markets, grow its team and integrate with more companies involved in the (very fragmented) Latin American logistics industry. It’s a market that needs a range of better logistics technologies.
“Even though over 90% of the world’s trade is carried by sea, the most cost-effective way to move goods en masse, there has yet to be a solution that’s able to connect suppliers, customs brokers, carriers and transportation companies to provide an efficient and reliable service,” said Maximiliano Casal, founder and chief executive of Nowports, in a statement. “This is why we launched Nowports, combining our 10 years of industry expertise to fill this void and are currently working with over 40 customers in the region and growing.”
The company now has offices in Chile and Uruguay, and is planning to expand to Brazil, Colombia and Peru.
“With platforms, algorithms with AI and integrations, our platform allows companies to take control of their shipments and plan and predict the best timing to move the freight based on the needs of their own company,” said Alfonso De Los Rios, founder and CTO of Nowports.
As the company looks to expand, it has a strategic road map it can follow in the growth of Flexport, the Silicon Valley startup that has become a billion-dollar business by applying technology to the outdated shipping industry.
The two co-founders of Nowports met at a program at Stanford University, with De Los Rios hailing from a family with deep ties to the shipping industry. He and Casal linked up and the two began plotting a way to make the deeply inefficient industry more modern and transparent. To familiarize himself with the market for which he’d be developing a technology, Casal worked in a freight forwarder in Kansas City that had been operating for more than 30 years.
In all, freight providers are getting paid nearly $40 billion per year to move freight into Latin America.
“Alfonso and Max are the ideal founders we look to invest in as they are industry experts and passionate about evolving the industry using technology and automation,” said Adeyemi Ajao, general partner from Base10. “We are proud to be investors in Nowports alongside our friends at Monashees and look forward to watching the company’s continued growth.”
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