When Headline partner Romero Rodrigues got an inbound for the São Paulo, Brazil-based payment processing startup Pismo in 2016, it was good timing. Rodrigues had been mapping out the payments sector—on the lookout for a company that would try to tackle some of that sector’s infrastructure problems.
In a following meeting, Rodrigues tells Fortune the team was an easy sell: Engineer Daniela Binatti—who fervently believed that rapid product turnaround times at newer banks were going to threaten incumbents, according to Rodrigues—had convinced her former boss, Ricardo Josua, to pause his retirement plans and build a company that would help these banks keep up. Later Binatti’s husband, Marcelo Parise, and sister, Juliana Binatti, would get on board, too.
That inbound would become the diamond in Headline’s Latin American portfolio. At the end of last month, Visa announced its plans to acquire Pismo for $1 billion—which, pending regulatory approvals, would be the largest M&A deal for a Brazilian startup since Didi Chuxing’s acquisition of rideshare company 99 five years ago. And it more than doubles Pismo’s valuation—up from the approximately $410 million valuation it had garnered from its Series B round in 2021, according to Rodrigues. That was when SoftBank, Accel, and other investors had come on the term sheet, too. By the time the acquisition was announced, Pismo had scaled to 80 million accounts and was processing $40 billion in transaction volumes a year, and it had just signed a commercial agreement with Citibank.
For its part, Headline had accumulated a 30% stake in the company over three funding rounds by the time of the Visa deal. Do the math and, once the deal closes, that will equate to an approximately $300 million exit across multiple Headline funds, including one of its local-focused funds Headline Brazil.
The deal gives another nod of confidence to Rodrigues, a former Brazilian founder who had made a name for himself after selling his company BuscaPé, a price comparison website he started in 1998, for $374 million in 2009. At the time, it was one of Brazil’s largest exits. Founders had started pinging him to get coffee or ask for mentorship—eventually leading him to start angel investing and, after about 30 investments, to try his hand at venture as a partner for Headline.
Now, it’s Pismo raising the bar for what’s possible within Latin America’s tech ecosystem—right as funding figures are drying up.
Prior to the second quarter, when the Pismo deal was announced, there hadn’t been any acquisitions worth more than $100 million in Latin America this year, according to Crunchbase data. Both early stage and growth-stage deals have been taking a big hit. And the number of deals at the end of the first quarter was down 71% from last year.
All of this is familiar to Rodrigues, who describes the post-Dot Com period between 2001-2009 as a “nuclear winter” for LatAm. Exits dried up, and, with it, funding. “Everyone who wanted to start a company back then was bootstrapping—there was no other way,” Rodrigues says.
The market eventually picked back up around 2010, Rodrigues says—particularly with growth-stage funds like SoftBank or Tiger Global swooping in and writing big checks, he says. But those same firms have scaled back from check-writing in the region recently, according to Crunchbase.
“[It’s] not easy to raise,” Rodrigues says, noting later that “eventually we might see some of these big companies…failing.” Thus far, growth-stage companies are adapting business models or have cash in their bank accounts to survive. But early-stage valuations “are half of what they were one or two years ago” and there are “a smaller number of funds that are active with fresh money to invest in the companies,” he says.
Headline says founders are still trying to get funding: The firm’s Brazilian fund has received nearly 2,500 pitch decks in the last 10 months—partners are still on the hunt for new deals as well as upping their investments in existing portcos.
“We have at least three companies in the portfolio that we are having conversations with right now [about new rounds],” Rodrigues says.
Sequoia lays off one-third of its operations team…On Friday, Sequoia laid off seven members of its talent team—one-third of the people focused on helping its portfolio companies with recruiting, according to a Forbes report yesterday. Sequoia COO Sumaiya Balbale told Forbes the layoff event was unrelated to the five investors who have left the firm in recent months.
Benchmark #6…Benchmark announced it had added a new general partner to the mix yesterday, hiring Victor Lazarte, the former CEO of Brazilian gaming startup Wildlife Studios, as its newest GP. With Lazarte part of Benchmark’s small, elite team, the venture firm now has six GPs—who all share an equal cut of the firm’s profits.
In other news…Andreessen Horowitz said in a blog post this morning it had scooped up Anjney Midha, Discord’s vice president of platform ecosystem, as a general partner to oversee its A.I. efforts. Midha, who had set up Discord’s first developer platform organization and launched its partnership with Midjourney, has been an angel investor in A.I. companies including Antrhopic, Eleven Labs, and Infinitus AI.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
– Unstructured, a Sacramento, Calif.-based LLM data preprocessing solutions provider, raised $20 million in Series A funding. Madrona led the round and was joined by Bain Capital Ventures, M12 Ventures, Mango Capital, MongoDB Ventures, Shield Capital, and other angels.
– UpLift, a Tampa Bay, Fla.-based behavioral health company, raised $10.7 million in Series A funding. Ballast Point Ventures led the round and was joined by Kapor Capital, Front Porch Ventures, and B Capital.
– Inspectify, a Seattle-based property inspection platform, raised $5.76 million in funding led by Fundrise.
PRIVATE EQUITY
– Rithm Capital agreed to acquire Sculptor Capital Management, a New York-based asset manager. The deal is valued at about $639 million.
– Ardian agreed to acquire Attero, a Wilp, Netherlands-based waste management and circular economy platform. Financial terms were not disclosed.
– Lone View Capital acquired a majority stake in Smartlinx, an Iselin, N.J.-based workforce management solutions provider. Financial terms were not disclosed.
OTHER
– Public Storage agreed to acquire Simply Self Storage, an Orlando-based storage company, from Blackstone for $2.2 billion.
– Bristol Myers Squibb agreed to invest $35 million in Immatics, a Houston, Texas- and Tuebingen, Germany-based clinical-stage biopharmaceutical company.
IPOS
– Busy For You, a China-based snack shop chain, is considering an initial public offering that could raise between $100 million and $200 million, according to Bloomberg.
FUNDS + FUNDS OF FUNDS
– TitletownTech, a Green Bay, Wis.-based venture capital firm, raised $70 million for a fund focused on early-stage companies in the Midwest.
PEOPLE
– Headline, a San Francisco-based venture capital firm, hired Kamran Ansari as a venture partner. Formerly, he was with Greycroft.
