The following resource was shared with LAVCA by e.bricks Ventures based on a communication they sent to their investors. The statement shares insights on the challenges & opportunities brought by the COVID-19 pandemic to the Brazilian venture capital market, as well as actions taken by the fund and its portfolio companies and their views of companies they expect will navigate well under the current scenario.
SOURCE: e.Bricks Ventures
The Brazilian venture capital market: challenges & opportunities brought by the COVID-19 pandemic
Since the outbreak of this pandemic in Brazil by mid-March, we have had one agenda with the founders and CEOs of our portfolio companies: focus on cash preservation. This being said, we have worked with our portfolio companies to revise budgets, revisit investments and expenses, and overall extend the runway of their cash reserves.
We are also working on stress-testing revenue expectations to gain a more solid picture of what could lie ahead, as well as focusing on concrete measures to reduce or delay churn. The fund is also encouraging founders to stick to their core businesses and reduce/delay any initiatives with longer maturity cycles.
Behind this strategy lies our belief that raising capital will be very difficult in the short term and our companies should focus on taking every measure to survive.
Selected portfolio companies that we [e.Bricks Ventures] expect to navigate well under the current scenario
While the COVID-19 pandemic poses one of the greatest humanitarian and economic challenges in decades, it also accelerated changes in consumer behavior and regulatory framework that may ultimately benefit some of our portfolio companies.
Conexa Saúde: Conexa Saúde is a leading independent Brazilian telemedicine platform. The pandemic has accelerated both the patient adoption of digital medical appointments and the regulatory authorization of telemedicine. Patients now avoid highly contagious hospital facilities and are turning to internet-based options for diagnosis, monitoring and treatment. At the same time, regulatory restrictions have been relaxed to allow for wider use of telemedicine for most medical appointments. This resulted in booming demand for Conexa’s services. Conexa has won many blue-chip accounts such as Intermedica (3rd largest HMO in Brazil) and Prevent Senior (large HMO focused on elderly patients), and expects to grow revenues by more than 6x between February and April 2020.
Infracommerce: Infracommerce is a leading provider of end-to-end ecommerce solutions for multinationals like Nike and Unilever, as well as leading local companies like Alpargatas and AMBEV. Infracommerce’s B2B GMV is up by ~15%, benefiting from the rising demand by small supermarkets. The pandemic has had a profound impact on food and apparel retail, shifting demand from physical stores to online channels. The Company has also created a dedicated online channel for apparel brands to fulfill sales originated by physical stores’ sales personnel via digital messaging (ie. whatsapp) and social networks – using this solution, brands are able to pay sales commissions to store staff while orders are fulfilled by Infracommerce.
Labi Exames: Labi Exams is an innovative medical diagnosis company providing quality clinical analysis tests at competitive prices. Labi is one of the few medical diagnosis providers that offers in home blood collection. As patients are increasingly reluctant to visit healthcare facilities, demand for in-home blood collection is surging, not only from patients paying out-of-pocket, but also from payors, many of which are adding Labi to their accredited network. Labi is also in advanced negotiations with two providers of coronavirus tests, which should significantly increase the company’s revenues given the current shortage of tests in the Brazilian market.
Me Salva!: Me Salva is an educational platform focused in high performance learning solutions for K-12 and post-secondary students has been acting swiftly to provide free access to its courses for up to 50,000 users, including teachers and their students in addition to providing a 90-day trial access to its courses for two private schools in Porto Alegre. Overall, the coronavirus outbreak has led to a surge in demand for study-at-home products and the company has been working on a B2B platform to provide its online courses to schools; product and commercial offerings should be ready shortly.
Acesso Digital: Acceso Digital is a company that offers solutions for facial recognition, digital admission and electronic signature. To address the current scenario, Acesso Digital has been offering a limited contract suspension of its smaller clients and for the larger retailers, it is offering, on a case by case basis, a temporary reduction in their monthly base fee. Although we certainly expect a relevant slowdown of growth originally forecasted for 2020, Acesso Digital has the skills and tools to end the year with a strong cash position.
Avenue: Avenue is an American broker dealer that provides Latin American investors with access to U.S. equity markets. Avenue benefits from a first-movers advantage in the space and is currently experiencing great demand from (i) investors seeking to protect their wealth by investing in a stronger currency and (ii) investors who see falling stock prices in the U.S. as an attractive investment opportunity. As a result, daily deposits increased significantly since the beginning of the coronavirus pandemic.