Tivit Ventures, the investment arm of Brazilian technology company Tivit, plans to invest 100 million reais ($20.9 million) to buy Latin American high-growth startups to scale up.
Founded at the turn of the millennium, Tivit has a presence in 10 countries and 5,000 employees. With the aim of bringing new technology to a variety of sectors, the company sees startups as a faster solution in order to solve specific problems and meet specific needs.
The company has an innovation center, and sees growth through acquisitions as a way to not only to bring new products to market and generate new revenues, but also to bring onboard new people with an entrepreneurial mentality, Tivit’s CSO Eduardo Sodero told Bloomberg Línea.
“It is like Formula 1, we are looking for good cars, which are the companies, with good drivers, which are the employees, and we will fill them up with gasoline with additives. I don’t want to take the car and put a co-driver in, but I also don’t want to throw the car in the trash and take only the driver,” Sodero said, explaining that the operations of those companies acquired by Tivit remain autonomous.
“This is very good because, on the one hand, they preserve the startup mentality and the agility, the speed, the sense of ownership, but on the other hand they are part of a larger group. We can help these companies with internationalization; a company that was only selling in Brazil can now sell to other countries. We can also help these companies with mentoring, the commercial aspects, product development, marketing, and finance,” he said.
Software-as-a-Service
Tivit’s is mainly searching for Software-as-a-Service (SaaS) companies that are already in the more advanced stages, “with a proven thesis and traction”, according to Sodero.
And the search for startups is not restricted to Brazil, with Tivit also looking at scale-ups in other Latin American countries.
Tivit Ventures already encompasses seven startups.
“The companies are doing very well. We have companies that in this first year grew more than 400%,” Sodero says.
Technology is something that grows exponentially and the way that companies can bring this innovation is through partnerships or acquisitions, he adds.
“You can’t do it all by yourself. We have to be constantly open and engaging the market.”
Growth Through Acquisitions
This is also the vision of Locaweb, which has made a tranche of acquisitions since it went public. In a recent BTG Conference event, Locaweb CEO Fernando Cirne said that technology companies that want to grow need to make acquisitions.
And according to Denis Morante, founder and manager of Fortezza Partners, an investment boutique specializing in M&A, 2021 was a record year for M&As in Brazil, with large retailers buying logistics companies and fintechs, and large Brazilian companies buying startups to complement their growth strategy.
“Magazine Luiza and Locaweb bought several companies in 2020 and 2021. These companies started to be very attentive to smaller, more modern companies that can accelerate their strategy. In 2022 this will continue to happen”, Morante said.
And this is not restricted to Brazil. The Global M&A Report 2022 published by Bain & Company showed that in 2021 Brazilian companies conducted 179 outbound M&A transactions, with a total value of 49 billion reais ($10.2 billion), a volume well above that recorded in 2020, when there were 68 transactions of this type, according to data from Transactional Track Record (TTR).
Translated from the Portuguese by Adam Critchley
