Ep. 21: All about Mergers and Acquisitions; Casai running out of Cash; Bye Bye Bnext.
Welcome to Scenius Mexico: Your weekly newsletter on technology, innovation, and startups in Mexico.
Since Scenius began covering the Mexican tech ecosystem, we have seen a fair amount of fundraising announcements each week. For the last couple of weeks, the pace has clearly slowed. And today, for the first time, we are covering more acquisition deals than fundraising rounds. This is certainly a sign of something.
In addition, rumor has it that the famous Mexican Startup Casai is going bankrupt. It comes from a long investigation published by Bloomberg and, in our opinion, is most probably true as the company was based on a fragile business model with all the characteristics of the grow fast or die culture.
On a more positive note, HRTech Hitch closed a respectable Seed round and Google Cloud is coming to Mexico.
Funding Rounds
HRTech Hitch closes a US$1.5 million Seed round
Hitch provides an integrated suite of hiring solutions including job advertising, candidate screening and onboarding for small to midsize businesses throughout Mexico, and Latin America.
Difficulty filling roles and high turnover is a duo that has put recruiting squarely in the spotlight for Mexican companies. Recruiting is already a time-consuming process that covers a range of activities and includes multiple steps. And there’s more data to sift through than ever.
It’s easy to see why the sector is still attracting funding and Hitch might be well positioned to take advantage of the technology switch in the hiring.
Sector: HRTech - Hiring
Total Raised: US$1.5 million
Founders: Gabriela Ceballos, Daniel Pardo
Investors: Evergreen Mountain Equity Partners, StartFast Ventures
Startup News
Google Cloud is coming to Mexico
When it launches in the Mexico City area, this new cloud region (a geographical zone with high-bandwidth, and low-latency network connections to other zones in the same region.) will be Google third in Latin America after Santiago, Chile and São Paulo, Brazil. It will allow Google to better serve its local users with lower-latency access to its cloud services while offering these users data residency and compliance options.
This new infrastructure deployment in Mexico is part of Google’s commitment to invest $1.2 billion in Latin America over the next five years to support economic development and digital transformation in the region.
PropTech Casai is looking for a way out of Bankruptcy
Bloomberg published a long investigation about Casai’s current economic situation and the latest round of layoffs in Mexico and Brazil.
In 2020, the Startup made the headlines with its record-breaking US$48 million Series A led by Andreessen Horowitz (a16z) and was supposed to close a US$70 million Series B by the end of 2021.
As it seems, the Startup never found a product-market fit with its product - short term rental focused on the luxury market - and is now facing a tighter funding environment.
Its aggressive growth strategy might also have accelerated its fate. In the April edition of Scenius Mexico [Link], We were covering their acquisition of Brazilian startup Loopkey, an access control company that provides an entry management system with electronic locks.
From various sources interviewed by Bloomberg, the company is now running out of cash and, in addition to laying off employees, is in talks with Brazilian Nomah by Loft to sell its assets.
If you want to dig deeper into the matter, you can read the full investigation by Bloomberg here (in Spanish)
VC - Accelerators - M&A News
Mercado Bitcoin is looking for an acquisition target in Mexico
The Brazilian crypto exchange is deploying its US$200 million capital raised from Softbank a year ago to grow externally in the region.
While the company has been facing economic challenges and lay-offs in the last few months, the leadership team is still focused on accessing the Mexican market and starting operation before the end of the year.
While no potential targets have been announced, the Startup stated that it was not looking for only crypto exchanges to acquire and is still waiting for regulator approval before making a move.
Mexican B2B payments startup Yaydoo merges with US PayStand
The Mexico City-based B2B software and payments company provides three products, VendorPlace, P-Card, and PorCobrar for managing cash flow, optimizing access to smart liquidity, and connecting small, midsize and large businesses to an ecosystem of digital tools.
PayStand is using cloud technology and the Ethereum blockchain as the engine for its Paystand Bank Network that enables B2B payments with zero fees. Last year the company raised $50 million Series C funding with participation from SoftBank’s SB Opportunity Fund.
The rationale behind the deal is for PayStand to gain access to the Latin American region and be able to cover the full continent with its technology. The two Startups have been working with each other for almost three years before this deal and they probably saw an opportunity to join forces in this tougher environment.
Mexican Healthtech Daisies acquires wellness app Aplícate
Founded in 2021, Daisies is a subscription based health program in LATAM designed specifically for women. They use an AI powered protocol to offer to their users a monthly access to nutrition, psychology, skincare and gynecology consultations.
Aplícate is a wellness app for employees that creates comprehensive and personalized health programs. The app generates nutrition, mental health, and exercise programs in an automated and personalized way.
While founded only 9 months ago, Aplícate already boasted 1500 users from 6 different companies and was looking to raise its first round. The macroeconomic environment and a good fit with Daisies’ products and team might have changed the founders’ mind to take the path of acquisition.
Rest of the World
Spanish-based Bnext is closing its Mexican operations
The Challenger Bank reached the Mexican market in early 2020 with the intention to kick-start its Latin American expansion.
To operate in the country, the Startup partnered with Cacao Paycard - recently acquired by Brazilian startup Dock [Link] - a Mexican startup offering banking infrastructure, or Fintech as a Service.
But in 2021, local regulator CNBV (Comisión Nacional Bancaria y de Valores) denied Cacao the authorization to operate as an Institution of Electronic Payments (Institución de fondos de pago electrónico) under the FinTech Law. At the same time, it financially sanctioned Cacao, Klar, and Bnext for false and misleading communication on their websites.
As it seems, Bnext never found an alternative to Cacao and has been struggling in complying with local regulator rules. The company is now officially closing its operations in Mexico and will explore other markets for its expansion plan.