Brazil gears up for a boom in tech startup exits in 2019
When asked about the global trends that will take place in the startup ecosystem in 2019, most people agreed that the major trend would be the technology initial public offerings (IPOs).
Private companies like Uber, Lyft and Slack have raced to list their shares on a public stock exchange, in the so-called IPO, to become publicly traded companies.
However, aside from this trend, there are many more micro trends that are worth looking into – especially geographically, such as Brazil in South America.
According to Romero Rodrigues — an entrepreneur-turned-venture-capitalist who sold his comparison website Buscapé to South African media and entertainment company Naspers in 2009 and is now a managing partner at Redpoint ventures — the Brazilian startup scene continues to develop regardless of the instability the country has seen of late.
The recent rise of unicorns and IPOs in Brazil is a sign of a maturing market.Romero Rodrigues, managing partner at Redpoint ventures
2018 saw Didi Chuxing buy 99, Latin America’s ride-hailing service. Later last year, 99’s founders saw the launch of Yellow, a dockless bike and scooter sharing startup that raised the largest Series A in the region. Moreover, Nubank, one of the world’s largest digital banks based in São Paulo, acquired a unicorn status.
That’s not all, Brazil’s delivery startup, iFood, raised the largest funding round Latin America has ever seen. Besides, Pagseguro and Stone Co, both payment processors held successful IPOs.
These point to the theory that startups in Latin America take 8-9 years to mature. Considering many of them started operation around 2011, Rodrigues suggests that we can expect them to exit soon.
"I have no doubt whatsoever that exit deals will be much more frequent. We can see that dynamic in our portfolio and in the market as a whole - the best companies in our own portfolio could be sold today, even though we won't do that."Romero Rodrigues, managing partner at Redpoint ventures
The local ecosystem in Brazil has seen some notable improvements. One of the major ones is the launch of Cubo—technology entrepreneurship hub—that came into existence due to a joint venture between Rodrigues’ Redpoint eVentures and Itaú, Brazil's largest private bank.
The United States is not the only country that could see considerable startup exits – Brazil has seen many maturing startups that are gearing up to exit either through acquisition, like Mr Rodrigues’ startup, or IPO, like Spotify.
A parallel can be drawn to the MENA region, which is just as nascent as that of LAtin America, even thought there are many difference in the economy, market, ease of doing business, investment potential and growth. We've seen the likes of Souq.com and Careem exit through acquisitions. It will be interesting to see how Brazil's ecosystem evolves, and how the trend if comparable to the Middle East and North Africa region.