Why Silicon Valley needs more visas

When I hear protesters shout, “Immigrants are welcome here!” at the San Francisco immigration office near my startup’s headquarters, I think about how simple a phrase that is for a topic that is so nuanced, especially for me as an immigrant entrepreneur.

Growing up in Brazil, I am less familiar with the nuances of the American debate on immigration legislation, but I know that immigrants here add a lot of jobs and stimulate the local economy. As an immigrant entrepreneur, I’ve tried to check all of those boxes, and really prove my value to this country.

My tech startup Brex has achieved a lot in a short period of time, a feat which is underscored by receiving a $1 billion dollar valuation in just one year. But we didn’t achieve that high level of growth in spite of being founded by immigrants, but because of it. The key to our growth and to working towards building a global brand is our international talent pool, without it, we could never have gotten to where we are today.

So beyond Brex, what do the most successful Silicon Valley startups have in common? They’re also run by immigrants. In fact, not only are 57% of the Bay Area’s STEM tech workers immigrants, they also make up 25% of business founders in the US. You can trace the immigrant entrepreneurial streak in Silicon Valley from the founders of SUN Microsystems and Google to the Valley’s most notorious Twitter User, Tesla’s Elon Musk.

Immigrants not only built the first microchips in Silicon Valley, but they built these companies into the tech titans that they are known as today. After all, more than 50% of billion dollar startups are founded by immigrants, and many of those startups were founded by immigrants on H-1B visas.

Photo courtesy of Flickr/jvoves

While it might sound counterintuitive, immigrants create more jobs and make our economy stronger. Research from the National Foundation of American Policy (NFAP) has shown that immigrant-founded billion-dollar companies doubled their number of employees over the past two years. According to the research, “WeWork went from 1,200 to 6,000 employees between 2016 and 2018, Houzz increased from 800 to 1,800 employees the last two years, while Cloudflare went from 225 to 715 employees.”

We’ve seen the same growth at Brex. In just one year we hired 70 employees and invested over $6 million dollars in creating local jobs. Our startup is not alone, as Inc. recently reported, “50 immigrant-founded unicorn startups have a combined value of $248 billion, according to the report [by NFAP], and have created an average of 1,200 jobs each.”

One of the fundamental drivers of our success is our international workforce. Many of our key-hires are from all over Latin America, spanning from Uruguay to Mexico. In fact, 42% of our workforce is made up of immigrants and another 6% are made up of children of immigrants. Plenty of research shows that diverse teams are more productive and work together better, but that’s only part of the reason why you should bet on an international workforce. When you’re working with the best and brightest from every country, it inspires you to bring forth your most creative ideas, collaborate, and push yourself beyond your comfort zone. It motivates you to be your best.

With all of the positive contributions immigrants bring to this country, you’d think we’d have less restrictive immigration policies. However, that’s not the case. One of the biggest challenges that I face is hiring experienced, qualified engineers and designers to continue innovating in a fast-paced, competitive market.

This is a universal challenge in the tech industry. For the past 10 years, software engineers have been the #1 most difficult job to fill in the United States. Business owners are willing to pay 10-20 percent above the market rate for top talent and engineers. Yet, we’re still projected to have a shortage of two million engineering jobs in the US by 2022. How can you lead the charge of innovation if you don’t have the talent to do it?

What makes matters worse is that there are so few opportunities and types of visas for qualified immigrants. This is limiting job growth, knowledge-sharing, and technological breakthroughs in this country. And we risk losing top talent to other nations if we don’t loosen our restrictive visa laws.

H1-B visa applications fell this year, and at the same time, these visas have become harder to obtain and it has become more expensive to acquire international talent. This isn’t the time to abandon the international talent pool, but to invest in highly specialized workers that can give your startup a competitive advantage.

Already, there’s been a dramatic spike in engineering talent moving to Canada, with a 40% uptick in 2017. Toronto, Berlin, and Singapore are fastly becoming burgeoning tech hubs, and many fear (rightfully) that they will soon outpace the US in growth, talent, and developing the latest technologies.

This year, U.S. based tech companies generated $351 billion of revenue in 2018. The U.S. can’t afford to miss out on this huge revenue source. And, according to Harvard Business School Professor William R. Kerr and the author of The Gift of Global Talent: How Migration Shapes Business, Economy & Society, “Today’s knowledge economy dictates that your ability to attract, develop, and integrate smart minds governs how prosperous you will be.”

Immigrants have made Silicon Valley the powerhouse that it is today, and severely limiting highly-skilled immigration benefits no-one. Immigrants have helped the U.S. build one of the best tech hubs in the world— now is the time for startups to invest in international talent so that our technology, economy, and local communities can continue to thrive.

President Bolsonaro should boost Brazil’s entrepreneurial ecosystem

In late October following a significant victory for Jair Bolsonaro in Brazil’s presidential elections, the stock market for Latin America’s largest country shot up. Financial markets reacted favorably to the news because Bolsonaro, a free-market proponent, promises to deliver broad economic reforms, fight corruption and work to reshape Brazil through a pro-business agenda. While some have dubbed him as a far-right “Trump of the Tropics” against a backdrop of many Brazilians feeling that government has failed them, the business outlook is extremely positive.

When President-elect Bolsonaro appointed Santander executive Roberto Campos as new head of Brazil’s central bank in mid-November, Brazil’s stock market cheered again with Sao Paulo’s Bovespa stocks surging as much as 2.65 percent on the day news was announced. According to Reuters, “analysts said Bolsonaro, a former army captain and lawmaker who has admitted to having scant knowledge of economics, was assembling an experienced economic team to implement his plans to slash government spending, simplify Brazil’s complex tax system and sell off state-run companies.”

Admittedly, there are some challenges as well. Most notably, pension-system reform tops the list of priorities to get on the right track quickly. A costly pension system is increasing the country’s debt and contributed to Brazil losing its investment-grade credit rating in 2015. According to the new administration, Brazil’s domestic product could grow by 3.5 percent during 2019 if Congress approves pension reform soon. The other issue that’s cropped up to tarnish the glow of Bolsonaro coming into power are suspect payments made to his son that are being examined by COAF, the financial crimes unit.

While the jury is still out on Bolsonaro’s impact on Brazilian society at large after being portrayed as the Brazilian Trump by the opposition party, he’s come across as less authoritarian during his first days in office. Since the election, his tone is calmer and he’s repeatedly said that he plans to govern for all Brazilians, not just those who voted for him. In his first speech as president, he invited his wife to speak first which has never happened before.

Still, according to The New York Times, “some Brazilians remain deeply divided on the new president, a former army captain who has hailed the country’s military dictators and made disparaging remarks about women and minority groups.”

Others have expressed concern about his environment impact with the “an assault on environmental and Amazon protections” through an executive order within hours of taking office earlier this week. However, some major press outlets have been more upbeat: “With his mix of market-friendly economic policies and social conservativism at home, Mr. Bolsonaro plans to align Brazil more closely with developed nations and particularly the U.S.,” according to the Wall Street Journal this week.

Based on his publicly stated plans, here’s why President Bolsonaro will be good for business and how his administration will help build an even stronger entrepreneurial ecosystem in Brazil:

Bolsonaro’s Ministerial Reform

President Temer leaves office with 29 government ministries. President Bolsonaro plans to reduce the number of ministries to 22, which will reduce spending and make the government smaller and run more efficiently. We expect to see more modern technology implemented to eliminate bureaucratic red tape and government inefficiencies.

Importantly, this will open up more partnerships and contracting of tech startups’ solutions. Government contacts for new technology will be used across nearly all the ministries including mobility, transportation, health, finance, management and legal administration – which will have a positive financial impact especially for the rich and booming SaaS market players in Brazil.

Government Company Privatization

Of Brazil’s 418 government-controlled companies, there are 138 of them on the federal level that could be privatized. In comparison to Brazil’s 418, Chile has 25 government-controlled companies, the U.S. has 12, Australia and Japan each have eight, and Switzerland has four. Together, Brazil-owned companies employ more than 800,000 people today, including about 500,000 federal employees. Some of the largest ones include petroleum company Petrobras, electric utilities company EletrobrasBanco do Brasil, Latin America’s largest bank in terms of its assets, and Caixa Economica Federal, the largest 100 percent government-owned financial institution in Latin America.

The process of privatizing companies is known to be cumbersome and inefficient, and the transformation from political appointments to professional management will surge the need for better management tools, especially for enterprise SaaS solutions.

STEAM Education to Boost Brazil’s Tech Talent

Based on Bolsonaro’s original plan to move the oversight of university and post-graduate education from the Education Ministry to the Science and Technology Ministry, it’s clear the new presidential administration is favoring more STEAM courses that are focused on Science, Technology, Engineering, the Arts and Mathematics.

Previous administrations threw further support behind humanities-focused education programs. Similar STEAM-focused higher education systems from countries such as Singapore and South Korea have helped to generate a bigger pipeline of qualified engineers and technical talent badly needed by Brazilian startups and larger companies doing business in the country. The additional tech talent boost in the country will help Brazil better compete on the global stage.

The Chicago Boys’ “Super” Ministry

The merger of the Ministry of Economy with the Treasury, Planning and Industry and Foreign Trade and Services ministries will create a super ministry to be run by Dr. Paulo Guedes and his team of Chicago Boys. Trained at the Department of Economics in the University of Chicago under Milton Friedman and Arnold Harberger, the Chicago Boys are a group of prominent Chilean economists who are credited with transforming Chile into Latin America’s best performing economies and one of the world’s most business-friendly jurisdictions. Joaquim Levi, the recently appointed chief of BNDES (Brazilian Development Bank), is also a Chicago Boy and a strong believer in venture capital and startups.

Previously, Guedes was a general partner in Bozano Investimentos, a pioneering private equity firm, before accepting the invitation to take the helm of the world’s eighth-largest economy in Brazil. To have a team of economists who deeply understand the importance of rapid-growth companies is good news for Brazil’s entrepreneurial ecosystem. This group of 30,000 startup companies are responsible for 50 percent of the job openings in Brazil and they’re growing far faster than the country’s GDP.

Bolsonaro’s Pro-Business Cabinet Appointments

President Bolsonaro has appointed a majority of technical experts to be part of his new cabinet. Eight of them have strong technology backgrounds, and this deeper knowledge of the tech sector will better inform decisions and open the way to more funding for innovation.

One of those appointments, Sergio Moro, is the federal judge for the anti-corruption initiative knows as “Operation Car Wash.” With Moro’s nomination to Chief of the Justice Department and his anticipated fight against corruption could generate economic growth and help reduce unemployment in the country. Bolsonaro’s cabinet is also expected to simplify the crazy and overwhelming tax system. More than 40 different taxes could be whittled down to a dozen, making it easier for entrepreneurs to launch new companies.

In general terms, Brazil and Latin America have long suffered from deep inefficiencies. With Bolsonaro’s administration, there’s new promise that there will be an increase in long-term infrastructure investments, reforms to reduce corruption and bureaucratic red tape, and enthusiasm and support for startup investments in entrepreneurs who will lead the country’s fastest-growing companies and make significant technology advancements to “lift all boats.”

Byju’s targets global expansion for its digital education service after raising $540M

India-based educational startup Byju’s was widely reported to have raised a massive $400 million round and now the company is making things official. The ten-year-old company revealed today it has pulled in a total of $540 million from investors to go after international opportunities.

The round is led by Naspers, the investment firm famous for backing Tencent that also includes educational firms Udemy, Codecademy and Brainly among its portfolio. The Canadian Pension Plan Investment Board (CPPIB) provided “a significant portion” of the round, according to an announcement which also revealed that the deal included some secondary share sales. A source told TechCrunch that’s from Sequoia India, an early investor which is cashing in a piece of its winnings.

This round takes Byju’s to $775 million from investors to date. Its backers include Tencent, the Chan Zuckerberg Initiative — from Facebook founder Mark Zuckerberg and his wife — General Atlantic, IFC, Lightspeed Ventures and Times Internet.

The deal takes the company valuation to nearly $4 billion, a source told TechCrunch. That’s in line with what was reported by India media last week and it represents a major jump on the $800 million valuation that it commanded when it raised money from Tencent in July 2017. It also makes Byju’s India’s fourth highest-valued tech startup behind only Paytm, Ola and OYO.

Founded in 2008 by Byju Raveendran as on offline teaching center, it moved into digital courses as recently as 2015. The company specializes in grades 4-12 educational courses that use a combination of videos and other materials. Besides courses, the service covers exams, free courses and paid-for courses.

Byju’s says that 30 million students have registered for its online educational service Dhiraj Singh/Bloomberg

It claims to have registered over 30 million students, while more than two million customers have signed up for an annual paid subscription to date. Raveendran told TechCrunch in an interview that there are currently around 1.3 million paying users. He said that the service enjoys a renewal rate of around 80 percent, and that it is adding 1.5-2 million new students per month, some 150,000 of which are part of paying packages.

English learning for kids worldwide

This new money will go towards globalizing the service beyond India with an international English service for children aged 3-8, an entirely new category for the company, set to launch next year.

Raveendran told TechCrunch that the service will target English-speaking markets, as well as other major international countries including India.

“There’s a growing percentage of people wanting to learn English or [in countries where] it is becoming aspirational. Slowly but surely it is happening around the world,” he said in an interview.

The company will release the new services at the beginning of local academic years — which vary worldwide — with the aim of appealing directly to kids. If the youngsters enjoy the app, parents can buy the full experience for them. It’s a logical way to find a global audience — families prepared to spend on English tuition exist worldwide — whilst also expanding into a new customer base that could become users of the core Byju’s service.

While the company has developed the core content aspect of the service, Raveendran said he is on the lookout for acquisitions and partnerships that can add more to the appeal.

“They will all be product-based acquisitions that will be value-adds on top of our core product,” he said. “Over the last 12 months, we’ve scouted for core product acquisitions but went the other way around and decided to build it ourselves.”

Further down the line, Byju’s may develop more localized services in countries where it sees high demand for the children’s product, Raveendran added.

Byju Raveendran started the company ten years ago, but it entered the digital education space in 2015 [Photographer: Dhiraj Singh/Bloomberg/Getty Images]

Global investor base

That expansion is likely to be influenced by Naspers which has a very global portfolio, including deals in emerging markets like Southeast Asia, Latin America, Africa and Eastern Asia. Indeed, the deal sees Russell Dreisenstock — head of international investments for Naspers — join the Byju’s board.

Tencent also has experience and connections, having backed China’s Yuanfudao education platform, which is now reportedly valued around $2.8 billion. Alongside Sequoia — another Byju’s investor — it is also part of VIPKid, a hugely successful platform that connects U.S-based teachers with English language learners in China.

Despite that, Raveendran said those investments are unlikely to be core to this global push.

“We expect [our investors] to help us finding partners through portfolio companies or others [but] there is no significant overlap with what we will do,” he explained.

In the case of VIPKid, he said that if Byju’s “ever decides to do anything in China” then it is likely that it will complement VIPKid’s tutor-led approach to learning rather than take it on directly.

Still, Raveendran expects the global business to become profitable and self-sustaining within the next three years. Already, the India-based business is profitable as of this year, he said, but its appeal has grown globally somewhat even before this new product launch. Overseas is currently 15 percent of revenue, a figure that the CEO puts down to the Indian diaspora globally.

Cross-border fintech startup Instarem raises $20M for global expansion

Instarem, a Singapore-based startup that helps banks transfer money overseas cheaply, has raised a Series C round of over $20 million for global expansion.

The round is led by MDI Ventures — the VC arm of Indonesian telecom operator Telkom — and Beacon — the fund belonging to Thai bank Kasikorn — as well as existing investors Vertex Ventures, GSR Ventures Rocket Internet and the SBI-FMO Fund.

The money takes four-year-old Instarem to nearly $40 million raised to date, although Instarem co-founder and CEO Prajit Nanu told TechCrunch that the startup plans to expand the Series C to $45 million. The extra capital is expected to be closed by January, with Nanu particularly keen to bring on strategic investors that can help the business grow in new emerging markets in Latin America as well as Europe.

“We are a the stage where the color of the money is very important,” he said in an interview. “It is very key to us that we bring people into the round who can add value to our business.”

Nanu added that the company is speaking to large U.S. funds among other potential investors.

Instarem works with banks to reduce their overseas transfer costs, offering a kind of ‘Transferwise for enterprise’ service. Although, unlike Transferwise which uses a global network of banks to send money across the world, Instarem uses mid-size banks that already trade in overseas currencies. As I previously explained, the process is the financial equivalent of putting a few boxes on a UPS freighter that’s about to head out, thus paying just a sliver of the costs you’d incur if you had to find a boat and ship it yourself.

Focused on Southeast Asia primarily, it services over 50 markets with transfers. The company does offer a service for consumers, but financial institutions — which have ongoing demand and higher average spend — are its primary target.

Prajit Nanu founded Instarem in 2014 alongside Michael Bermingham

The company has offices in Singapore, Mumbai and Lithuania and it is opening a presence in Seattle as it begins to look to broaden its business, which already includes three of Southeast Asia’s top ten banks. Nanu said that the company will try to work with banks and financial services such as cross-border services which target users with links to Latin America and Mexico initially. In Asia, it is awaiting payment licenses in Japan and Indonesia which will allow it to offer more services in both countries.

TechCrunch understands that the company is on the cusp of a deal with Visa that will allow its customers to roll out branded prepaid cards, adding another financial service to its offerings. Nanu declined to comment when we asked about a deal with Visa.

TechCrunch has also come to learn that Instarem was subject to an acquisition approach earlier this year from one of Southeast Asia’s unicorns. Nanu declined to name the bidder, but he did tell TechCrunch that the offer “wasn’t the right timing for us.” He is, however, giving increased thought to an exit via IPO.

Last year, when Instarem raised its $13 million Series B, he suggested that it could go public by 2020. Now that target date has shifted back to 2021, with the Instarem CEO telling TechCrunch that the U.S. remained the preferred option for a public listing when the time is right.

Nigerian data analytics company Terragon acquires Asian mobile ad firm Bizense

Nigerian consumer data analytics firm Terragon Group has acquired Asian mobile marketing company Bizense in a cash and stock deal.

Based in Singapore, with operations in India and Indonesia, Bizense specializes in “mobile ad platform[s] for Telco’s, large publishers, and [e-commerce] ad networks” under its proprietary Adatrix platform—according to its website and a release.

The price of the acquisition was not disclosed.

The company lists audience analytics, revenue optimization, and white label SSP services among its client offerings.

Headquartered in Lagos, Terragon’s software services give its clients — primarily telecommunications and financial services companies — data on Africa’s growing consumer markets.

Products allow users to drill down on multiple combinations of behavioral and demographic information and reach consumers through video and SMS  campaigns while connecting to online sales and payments systems.

Terragon clients include local firms, such as Honeywell, and global names including Unilever, DHL, and international agribusiness firm Olam.

The company’s founder and CEO Elo Umeh sees cross-cutting purposes for Terragon services in other markets.

“Most of the problems we seek to solve for our clients in Africa also exist in places like South East Asia and Latin America,” Umeh told TechCrunch.

The Bizense acquisition doesn’t lessen Terragon’s commitment to its home markets, according to Umeh.

“We are…super focused on Africa right now, building out propriety platforms powered by data and artificial intelligence to help Telco’s, SMEs, FMCGsand financial institutions …increase their customer base and drive more transaction volumes,” he said.

Terragon’s CEO would not divulge the acquisition value, saying only that it consisted of  “a combination of cash and stocks, with the actual amount not disclosed.”

In an interview with TechCrunch earlier this year, Umeh confirmed the company was looking into global expansion.

Tarragon already has a team of 100 employees across Nigeria, KenyaGhana and South Africa.

Umeh indicated the company is contemplating further expansion in Asia and the Latin America, where Terragon already has consumer data research and development teams.

With the Bizense acquisition Terragon plans to “build out platforms, tools and machine learning models to help businesses…acquire new customers and get existing customers to do more.”

Bizense founder and CEO Amit Khemchandani will be involved in this process. “We are excited about the next phase of this journey as we innovate for Africa and other emerging markets,” he said.

With the exception of South African media and investment giant Naspers, acquisitions of any kind—intra-continental or international—are a rarity for Sub-Saharan African startups and tech companies.

Terragon’s acquisition in Singapore, and other moves made by several other Nigerian startups this year, could change that. African financial technology companies like Mines and Paga announced their intent to expand in and outside Africa. They would join e-commerce site MallforAfrica, which went global in July in a partnership with DHL.

Mexican venture firm ALL VP has a $73 million first close on its latest fund

Buoyed by international attention from U.S. and Chinese investors and technology companies, new financing keeps flowing into the coffers of Latin American venture capital firms.

One day after the Brazilian-based pan-Latin American announced the close of its $150 million latest fund comes word from our sources that ALL VP, the Mexico City-based, early stage technology investor, has held a first close of $73 million for its latest investment vehicle.

The firm launched its first $6 million investment vehicle in 2012, according to CrunchBase, just as Mexico’s former President Enrique Peña Nieto was coming to power with a pro-business platform. One which emphasized technology development as part of its strategy for encouraging economic growth.

ALL VP founding partner Fernando Lelo de Larrea said he could not speak about ongoing fundraising plans.

And while the broader economy has stumbled somewhat since Nieto took office, high technology businesses in Mexico are surging. In the first half of 2018, 82 Mexican startup companies raised $154 million in funding, according to data from the Latin American Venture Capital Association. It makes the nation the second most active market by number of deals — with a number of those deals occurring in later stage transactions.

In this, Mexico is something of a mirror for technology businesses across Latin America. While Brazilian startup companies have captured 73% of venture investment into Latin America — raising nearly $1.4 billion in financing — Peru, Chile, Colombia and Argentina are all showing significant growth. Indeed, some $188 million was invested into 23 startups in Colombia in the first half of the year. 

Overall, the region pulled in $780 million in financing in the first six months of 2018, besting the total amount of capital raised in all of 2016.

It’s against this backdrop of surging startup growth that funds like ALL VP are raising new cash.

Indeed, at $73 million the first close for the firm’s latest fund more than doubles the size of ALL VP’s capital under management.

ALL VP management team

But limited partners can also point to a burgeoning track record of success for the Mexican firm. ALL VP was one of the early investors in Cornershop — a delivery company acquired by Walmart for $225 million earlier this year. Cornershop had previously raised just $31.5 million and the bulk of that was a $21 million round from the Silicon Valley-based venture capital firm, Accel.

International acquirers are making serious moves in the Latin American market, with Walmart only one example of the types of companies that are shopping for technology startups in the region. The starting gun for Latin American startups stellar year was actually the DiDi acquisition of the ride-hailing company 99 for $1 billion back in January.

That, in turn, is drawing the attention of early stage investors. In fact, it’s venture capital firms from the U.S. and international investors like Naspers (from South Africa) and Chinese technology giants that are fueling the sky-high valuations of some of the region’s most successful startups.

Loggi, a logistics company raised $100 million from SoftBank in October, while the delivery service, Rappi, raked in $200 million in August, in a round led by Andreessen Horowitz and Sequoia Capital.

In a market so frothy, it’s no wonder that investment firms are bulking up and raising increasingly large funds. The risk is that the market could overheat and that, with a lot of capital going to a few marquee names, should those companies fail to deliver, the rising tide of capital that’s come in to the region could just as easily come back out.

 

Monashees raises $150 million for its eighth Brazilian fund

As technology investment and exits continue to rise across Brazil, early stage venture capital firm monashees today announced that it has closed on $150 million for its eighth investment fund.

Commitments came from Temasek, the sovereign wealth fund affiliated with the Singaporean government, China’s financial technology company, CreditEase; Instagram co-founder Mike Krieger, the University of Minnesota endowment; and fund-of-funds investor Horsley Bridge Partners.

S-Cubed Capital, the family office of former Sequoia Capital partner, Mark Stevens, and fifteen high net worth Brazilian families and investment groups also invested in the firm’s latest fund.

As one of the largest venture capital firms in Latin America with over $430 million in capital under management, monashees has been involved in some of the most successful investments to come from the region. Altogether, monashees portfolio companies have gone on to raise roughly $2 billion from global investors after raising money from the Sao Paulo-based venture capital firm.

“We are excited to further advance our partnership with the monashees team,” said Du Chai, Managing Director at Horsley Bridge Partners . “Over the course of our partnership, we have continued to be impressed by monashees’ strong team, platform and their ability to attract the region’s leading entrepreneurs.”

In the past year, investment in Latin American startup companies has exploded.  The ride-hailing service 99 was acquired for $1 billion and Rappi, a delivery service, managed to raise $200 million at a $1 billion valuation. Another delivery service, Loggi, caught the attention of SoftBank, which invested $100 million into the Brazilian company.

Public markets are also rewarding Latin American startups with continued investment and high valuations. Stone Pagamentos, a provider of payment hardware technology, raised $1.1 billion in its public offering on the Nasdaq with an initial market capitalization of $6.6 billion.

“monashees brings a truly unique set of skills to the table, with a disciplined investment strategy, as well as the unmatched local expertise and knowledge that leads the team to identify and invest in the region’s best founders,” said Stuart Mason, Chief Investment Officer at the University of Minnesota . “The recent billion-dollar acquisition of 99 by DiDi is not only a milestone for the local ecosystem, but validation of this sentiment and suggests that there’s no liquidity hurdle for great companies in Latin America. We are excited to partner with monashees as it continues to find and nurture the best opportunities going forward.”

 

Nubank is now worth $4 billion after Tencent’s $180 million investment

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.

Tencent has long been interested in financial services startups, and with its $90 million direct investment and another $90 million investment in the secondary market, the company now has access to what is arguably the largest digital banking company in the world.

With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.

News of the investment was first reported by The Information, which included the $4 billion figure.

For Nubank co-founders David Velez and Cristina Junqueira, the investment from Tencent means the addition of a strategic partner whose financial services products and transaction platform is unmatched by anything in Western Europe or the U.S.

Velez stressed that Nubank, which had raised $150 million in a February financing round led by DST, did not need the additional capital. “We found so much value in partnering with Tencent,” Velez said. “Particularly everything there is to learn about the Chinese financial market.”

Velez hopes to take those lessons and apply them back to the market in Brazil. China is in the forefront of financial services globally because of its technology companies’ ability to offer multi-product platforms. “They have built the playbook of how to use mobile.”

Through the investment, Tencent will gain an understanding of how Nubank has managed to service 5 million credit card holders, and the game plan the company is deploying to develop its own savings accounts and other banking services.

“Over 20 million people have applied for the card,” said Velez. “There are active, engaged, customers that want to get everything from us.”

Junqueira estimates the company will soon be able to serve tens of millions of Brazilians with either a savings account, a checking account or credit.

The opportunity could be even bigger as Brazil’s central bank investigates the possibility of instant payments as well, looking to India’s experiment with demonetization as an example.

Both Junqueira and Velez said the opportunity for financial services startups to achieve significant scale was far higher in emerging markets like Brazil than in developed markets, because the barriers to banking are so much higher.

Financial services, Velez said, has been controlled by massive oligopolies that have erected unfair obstacles to wealth creation for the masses. Nubank and other companies like it are working to change that.

Now the company has the benefit of Tencent’s guidance as it continues to push the envelope.

Base10’s debut fund is the largest-ever for a Black-led VC firm

Adeyemi Ajao (above left), the co-founder and managing director of Base10 Partners, was surprised to hear his firm’s $137 million fund was the largest debut to date for a black-led venture capital firm.

He and his co-founder — managing director TJ Nahigian (above right) — found out from none other than their fund’s own limited partners, who told them they should seek out institutions looking to invest in diverse fund managers.

“Oh man, I was like, ‘yeah, I know I’m black but so what?'” Ajao told TechCrunch. “I can be a little bit naive about these things until they become extremely apparent.”

Ajao is African, European, Latin, and now, having spent a decade in San Francisco, American. Growing up in between Spain and Nigeria, it wasn’t until landing in the Bay Area that he was forced to confront a social dynamic absent in his international upbringing: racial inequality and being black in America.

“The U.S. is pretty different about those things,” he said. “I was surprised when at Stanford I got an invitation to a dinner of the Black Business Student Association. I’m like, ‘why would there be a Black Business Student Association? That’s so weird?’ It took me a while, a good, good while, to be like ok, here there’s actually a really entrenched history of a clash and people being treated differently day-to-day.”

In the business of venture capital, the gap in funding for black founders and other underrepresented entrepreneurs is jarring. There’s not a lot of good data out there to illustrate the gap, but one recent study by digitalundivided showed the median amount of funding raised by black women founders is $0, because most companies founded by black women receive no money.  

Ajao certainly hadn’t thought the color of his skin would impact his fundraising process, and, in retrospect, he doesn’t think it did. Still, he recognizes that pattern recognition and implicit bias continue to be barriers for diverse founders and investors.

Now, he plans to leverage his unique worldview to identify the next wave of unicorns others VCs are missing. Base10 doesn’t have a diversity thesis per say but it plans to invest in global companies fixing problems that affect 99 percent of the world, not the Silicon Valley 1 percent. 

I sat down with Ajao in Base10’s San Francisco office to discuss his background, the firm’s investment focus and the importance of looking beyond the Silicon Valley bubble.

Automation of the real economy

Base10 is writing seed and Series A checks between 500,000 and $5 million. It’s completed 10 investments so far, including in Brazilian mobility startups Grin and Yellow, which closed a $63 million Series A last week.

The firm is looking for entrepreneurs who have spent years in their industries, whether that be agriculture, logistics, waste management, construction, real estate or otherwise, and are trying to solve problems they’ve experienced first-hand.

“We are much more likely to fund someone that actually worked for eight years on a construction site and was like, ‘you know what, I think this could be done better and maybe I can make my life easier with automation,’ rather than a Ph.D. in AI out of the Stanford lab that says ‘I think construction is inefficient and it can be done without people,'” Ajao said. “[We are] kind of flipping the paradigm in that sense.”

The firm has also backed birth control delivery startup The Pill Club, on-demand staffing company Wonolo and Tokensoft, a platform for compliant token sales. 

Beyond the bubble

Ajao and Nahigian have a mix of operational and investing experience.

On the VC side, Nahigian, a Los Angeles native, spent seven years investing via Summit Partners, Accel, then Coatue Management. In 2014, he co-founded Jobr, a mobile job platform that was later acquired by Monster, where he became the VP of product and head of mobile.

Ajao was most recently a VP at Workday where he led the launch of Workday Ventures, a VC fund focused on AI for enterprise software. He joined Workday after the company acquired his startup, Identified, in what was his second successful exit to date. Before that, he co-founded Spanish social media company Tuenti, which Telefonica paid $100 million for in 2010

He also helped incubate and launch Cabify, a Spanish ride-hailing company based in Madrid. The Uber competitor raised $160 million at a $1.4 billion valuation earlier this year.

Ajao was Nahigian’s first investor in Jobr, which was also backed by Tim Draper, Redpoint Ventures, Eniac Ventures, Lowercase Capital and more. The pair stayed in touch, discussed startups and potential deals, ultimately deciding to go into business together. 

They agreed Base10 should support companies solving real problems and that as investors, they needed to be able to see beyond the Silicon Valley bubble.

Do we feel a little bit of a responsibility? Like … ‘hey, you should help Silicon Valley be more aware of global issues.’ Yes,” Ajao said. “I try to spend a lot of time meeting with founders that either look different or are trying to make it here and I try to be super open about my journey and my travels.”

His piece of advice to other VCs is one that countless diverse founders and investors have been shouting at the top of their lungs: Invest in underrepresented founders, it’s just good business.

“If you have the same company and one is run by a female and one is run by a male, and it’s the same stuff, you should probably invest in the female, because that person probably had a harder time getting there,” he said. “It’s actually good business. I believe that.”

“The more open and comfortable we get about talking about these things, the better it is for both parties.”

Tickets are now available for São Paulo’s Startup Battlefield Latin America

We’re very excited to announce that tickets are now available for TechCrunch’s Startup Battlefield Latin America, which will be held at São Paulo’s Tomie Ohtake Institute on November 8, 2018.

Tickets are free and available through a simple application process, which you can find here. We will select applicants on a first come, first served basis for people actively involved in the Latin American startup ecosystem. Our partner in this event, FbStart, will be hosting the Latin America Tech Week Celebration that will include multiple workshops for startups, high-school students, women in tech, universities and more!

We’re also pleased to announce more details on the show itself:

The heart of the day is the Startup Battlefield competition, which will feature 15 top, early stage startups from throughout Latin America. We received over 400 applications, and will make final selections and notify contestants in a few days. Each company will pitch to a panel of judges in one of three preliminary rounds, and five will advance to a final round. The judges, all top VCs and founders, will pick a winner, who will receive a $25,000 check as well as an all-expense paid trip for two to participate in an upcoming TC Disrupt.

In addition to the Battlefield, we have a great speaker line-up. Here are a few highlights:

  • Christina Junqueira and David Vélez, founders of NuBank, the Brazilian fintech company disrupting financial services
  • Hans Tung, Managing Partner at GGV Capital, one of the top venture firms working between the US and China
  • Veronica Allende Serra, founding partner of Brazil’s Innova Capital
  • Sebastian Mejia, Co-founder of Rappi, the Colombian on-demand delivery company rapidly expanding across Latin America
  • David Arana, Co-founder of Konfio, the Mexican online lending platform for small businesses
  • Hernan Kazah, Co-founder and managing partner at Argentina’s Kaszek Ventures
  • Antonia Rojas Eing, partner at Chile’s Manutara Ventures

We’ll announce the speakers and Startup Battlefield judges soon. Apply for a ticket now while they last.