Ep. 42: Is a FEMSA acquisition the new goal for startups?
Welcome to Miranda Scenius: Your weekly newsletter on technology, innovation, and startups in Mexico.
Last week we talked about how Corporate Venture funds are taking on a bigger role in the startup scene. Seems like this week they decided to go shopping, probably attracted by down-to-earth valuations. Is FEMSA becoming the new Microsoft in terms of acquisitions for LatAm?
On the startup side, funding remains complicated. With no equity or debt rounds this week, fintech Covalto also delayed its expected IPO on the Nasdaq.
Luckily, our Peruvian friends are here to shake things up. This week we welcome two promising startups to the Mexican ecosystem and wish them good luck in their future endeavors.
Startups News
Fintech Covalto is delaying its IPO
The merger between Mexican fintech Covalto and Liv Capital Acquisition Corp II, a special purpose acquisition company (SPAC) listed on Nasdaq, may take longer than anticipated. Originally, the agreement was scheduled to be completed during the first quarter of 2023 but it has now been pushed back to February 10, 2024.
Established in 2015 as Credijusto, Covalto provides loans to small and medium-sized enterprises. Since its founding, it has raised over $400 million in capital and debt. The company became the first fintech in Mexico to acquire a bank with the purchase of Finterra in June 2021.
Unicorn Clara announces an alliance with Afirme
The partnership between the fintech and the traditional bank aims to provide innovative and competitive financial solutions to 200 companies in Mexico with a total credit line of 1 billion pesos.
Afirme will offer credit lines up to 15 million pesos to Clara's clients, complementing Clara's current credit card and expense management options. In March, Clara obtained a credit line of US$90 million to consolidate its operations in Colombia, after entering the market in 2022.
Techreo launches a marketplace to support local vendors in Mexico
The marketplace will enable merchants from small communities to offer their traditional Mexican products to new markets. The platform plans to establish strategic pick-up and delivery points to overcome the systemic obstacles faced by local merchants when trying to sell online. Techreo's marketplace will launch this spring and support the growth of small businesses by increasing their visibility nationally.
MoonPay and Airtm join forces to promote financial inclusion in Latin America
Only 54% of adults in Latin America have a bank account, and 90% of small and medium-sized enterprises report difficulties accessing credit. To address this problem, Mexican startup Airtm and Web3 startup MoonPay have combined their technologies to offer solutions for digital entrepreneurs to access the digital economy. Airtm's dollarized account can now receive funds from 150 countries and MoonPay customers will have access to Airtm's extensive Web3 infrastructure and network in Latin America.
VC - M&A News
FEMSA is walking the walk
Two weeks ago, the firm better known as Coca-Cola’s bottler doubled down on its plan to enter the financial services market in Mexico, following initial success with its new digital wallet and debit card, Spin by Oxxo. Today, the group took another step towards consolidating its position as a financial services provider by taking full ownership of Netpay, a startup that offers payment methods for small and medium businesses - in which it was already a minority stakeholder.
Walmart acquires Mexican fintech Trafalgar
In the same vein, the giant US supermarket chain Walmart is also betting on the fintech sector in Mexico. It is rumored that Walmart de México is acquiring Trafalgar, one of the first fintechs to be granted the right to operate as an IFPE (Institución de Fondos de Pago Electrónico), aka a digital wallet. The rumors are based on numerous sources and a sudden stop in the fintech’s operations by the end of March due to an “evolution” of its business.
Rest of the World
Peruvian Netzun lands in Mexico
The edtech aims to revolutionize the industry by combining education with entertainment. To do so, the team offers a wide variety of one-minute educational videos, similar to TikTok, which are free for students, in addition to longer classes in dynamic formats to increase participation and knowledge retention. To this end, the startup has partnered with more than 100 educational content creators, who upload new free one-minute videos and full courses on the platform daily. Furthermore, Netzun offers a B2B service to provide engaging content for companies to train their employees. After successfully onboarding nearly a million students in Peru and raising a seed round, the team is now focusing on launching the Mexican market.
Peruvian Legal Ventures comes to Mexico
The legaltech startup that connects on-demand lawyers with founders, became the first legaltech to win as the "dynamic businesses" category of the government-backed incubator StartUp Peru. Now, the team plans to expand its solution to Mexico not only to provide legal services to startups already operating there but also to serve as a bridge for companies in the region that want to launch operations in the country.
Community
Every week we share what we have been reading or listening:
We subscribed to Latamstartups newsletter to discover Mexico’s (and LatAm’s) next iconic startups.
An interesting view on YC startups’ new valuations.
A fascinating take on the role of comms in SVB’s crash from Fast Company.
Javier Amozurrutia is the co-founder and CEO of Mazmobi, a B2B car rental platform. He considers himself a crazy dreamer, always thinking about new ways of doing things that could help everyone. He studied marketing but loves technology. So much so that he used to have a company to help small companies implement technology, from a computer or telecom. After facing failure, he went back to marketing and sales and then landed a job with a big international company, where he learned that he’s not “employee” material. After that, he founded Mazmobi with the vision to develop new mobility options.
What would you have liked to know before starting your company?
It is not my first time as an entrepreneur, but it is my first time with a startup. Even though there is a lot of material on how to start, what I miss is all the “don’ts” and what to avoid when creating your startup, including the legal part, like what kind of entity to open and where, and your options for raising your first dollars (please don’t offer equity, use SAFE from the beginning).
What outsiders often fail to understand about your company?
We are in the business of Ownership, where we want to have assets, even if we don’t need them or use them. Talking about companies and vehicles, most of them are used for other business purposes, like cargo vehicles. But there is a big opportunity to share vehicles and use them only when you need them and change the model from Ownership to Usership (pay-as-you-go). This has been a challenge but companies are starting to understand that a flexible solution still allows them to have the vehicles they need. Normally, for example, in the case of executive fleets, the cars are parked 95% of the time, so they are paying for assets that are not being used.
Our model is to find the assets that are parked and put them to work through our shared vehicle solution; our main targets are car dealers or truck dealers that have used vehicles for sale. We are working with them to change their mindset because they are used to buying and selling vehicles and changing to a model where they can rent them is a breaking point. But, as we can find in other countries, people are no longer buying vehicles and are using subscription models that give them greater flexibility.
What's one thing you can keep talking about for hours?
Lately, all the Shared Economics options, because we need to stop paying for things we don’t use and change to pay-as-you-go models. This will give this world some rest from this sick mentality of produce to sell.
What’s the weirdest job you’ve ever had to do?
When I was young, I use to sell a program to help you learn English while you were sleeping.
What makes you bullish on the Mexican startup ecosystem?
Mainly the entrepreneurs, even if it’s not easy to start anything here. Every day I meet awesome people that believe in what they are doing and working to achieve. And there is the mentality of always trying to help other founders. The strength of the founders is what is making the difference.
See you for the next edition. Have a question or any feedback? Just hit reply. We'd love to chat!