Welcome to this week’s Brazil tech and innovation round-up. Here is a selection of three key developments in Latin America’s largest economy, starting with a key story from the week that was: the mega-round announced by logistics unicorn Loggi. Next up, Mercado Libre’s Brazil operations get an investment boost, and Accenture’s latest Brazilian acquisition.
This week started with big news for the Brazilian startup ecosystem, as logistics firm Loggi announced a US$212 million Series F round on Monday (10), the largest since the company’s inception in 2013, bringing its current valuation close to US$ 2 billion.
Led by Brazilian technology fund CapSur Capital, a new investor in the company, the round was also joined by new backer Verde Asset Management. In addition, about 75% of the startup’s current investors supported the company once again, including monashees, Softbank Vision, Softbank Latam, GGV, Microsoft and Sunley House.
According to the firm’s CFO, Thibaud Lecuyer, the company was overwhelmed with investor demand, and the round could have easily reached US$ 300 million. “It could have been a mega-round,” he argued, downplaying the size of the investment, while noting an IPO could be on the horizon.
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“We have to think of what’s enough to execute our plan and be responsible with the money from our investors.” Loggi’s previous round was in June 2019, when it raised US$ 150 million in a round led by SoftBank and Microsoft, bringing its valuation to US$ 1 billion.
The new funding will go towards enhancing the company’s platform, based on an artificial intelligence algorithm that optimizes delivery routes with the aim of speeding up delivery and reducing cost. The company has seen a 360% increase in deliveries in 2020 in relation to the prior year, due to the sharp rise in e-commerce driven by the Covid-19 pandemic. Loggi delivers approximately 350,000 packages daily.
To cope with the increased demand, the company led by CEO and cofounder Fabien Mendez opened dozens of branches throughout Brazil and 6 new distribution centers. The goal for 2021 is to open 7 new hubs in areas of the country that are not currently covered by Loggi such as the South and Northeast of Brazil – the company estimates that it serves 50% of the population – and to focus on small and medium businesses (SMBs).
Loggi also serves a slew of large clients, including a number of local high street retailers as well as marketplaces Amazon and Mercado Libre, both companies that have been investing in improving their own logistics. Lecuyer is unfazed by the developments: “We only do logistics, rather than a marketplace or financial services at the same time, and that focus gives us a clear advantage”, he noted.
According to a survey from the Brazilian Electronic Commerce Association (ABComm) and Neotrust, e-commerce sales saw a 68% boost in 2020 in relation to the prior year, the best performance the sector has ever had. About 20.2 million Brazilians made an online purchase for the first time last year, according to the association, with more than 301 million purchases made online in 2021, at an average ticket of 419 reais (US$ 73).
When it comes to e-commerce uptake within one of Loggi’s key target audiences for this year, the SMB sector, adoption of digital channels has also reached an all time high: 70% of micro and small businesses in Brazil have resorted to the Internet to sell their wares after the emergence of Covid-19, according to the Brazilian Micro and Small Business Support Service (Sebrae).
E-commerce behemoth Mercado Libre also grabbed the headlines this week in Brazil. The Argentine marketplace firm headquartered in São Paulo announced that it will invest 10 billion reais (US$ 1.7 billion) in enhancing its Brazilian operations. The investment is equivalent to the amount the Latin American firm invested in the country over the last four years.
The money will go towards trucks, planes and five new distribution centers to boost the firm’s own logistics network. In addition, Mercado Libre plans to broaden consumer credit provision through its financial arm Mercado Pago. It will also add supermarkets to its marketplace: this is particularly relevant, since Brazilian firms from that sector still face barriers relating to consumption habits and logistical difficulties around distribution of perishable items, even though supermarkets claim the largest share of retail sales in the country.
Presenting the company’s results for the fourth quarter of 2020, Mercado Libre noted its Brazilian operation delivered the strongest sales performance of the group, up 84% during the last three months of the year. Of the 19 Latin American countries served by the company, Brazil represented 54% of the company’s total Q4 revenue, of US$ 1.3 billion.
Mercado Libre is considered to be Latin America’s largest company in market value, surpassing the likes of Brazilian mining firm Vale, oil and gas giant Petrobras and Itaú Unibanco, one of Brazil’s largest banks, according to a study released by consultancy firm Economatica in August 2020.
This week, global consulting firm Accenture announced its third acquisition in Brazil in less than a year. The latest purchase is Joinville-based Pollux, an industrial robotics and automation solutions firm. The move is part of a strategy to boost Accenture’s capabilities for clients in consumer goods, pharmaceutical and automotive industries. The terms of the transaction were not disclosed.
Founded in 1996, Pollux develops designs, engineers and deploys fully functional assembly lines that include robots and other hardware, plus the software that controls them, as well as visual analytics inspection solutions, autonomous mobile robots and robots-as-a-service offerings for shopfloors and warehouses. Its solutions are in place in large pharmaceutical and food companies, as well as car manufacturers.
As part of the deal, Pollux’s more than 290 professionals and operations in Brazil, Ecuador, Mexico, Canada and the United States will join Accenture’s manufacturing-focused group Industry X. Prior to Pollux, Accenture acquired information security firm Real Protect in January 2021 and cloud specialist Organize Cloud Labs in August 2020.
Mergers and acquisitions involving Internet and information technology companies stood out the most in the analysis of that type of transaction last year, according to a report from another consultancy giant, KPMG. M&As of tech firms rose 6.8% in the comparison between 2020 and 2019, with the number of deals going from 451 to 482. KPMG predicts that key areas for potential mergers in the tech space in Brazil in 2021 will include robotics and artificial intelligence, as well as e-commerce, digital payments, consumer experience and demand generation.