A star of the pandemic digital shift, from massive mobile commerce growth to attracting FinTech investment, Brazil is cementing its position as an epicenter of digital innovation in Latin America.
According to the Global Digital Shopping Index: Brazil Edition, a PYMNTS and Cybersource collaboration, 41% of Brazilian consumers say they are very or extremely likely to use digital-first features to make purchases across product categories in 2021, surpassing the interest levels in other major international markets PYMNTS studied this year.
Get the study: The Global Digital Shopping Index: Brazil Edition
It gives a sense of corporate aspirations in the largest Latin American nation, where a prime mover is Movile, a tech-centric venture capital firm backing iFood, the region’s leading restaurant and grocery ordering and delivery platform, and payments platform Zoop, to drop some names.
As Movile CEO Patrick Hruby told PYMNTS’ Karen Webster, Movile is capitalizing on pandemic-era digital momentum as it seeks new investments in Latin America — and in newer frontiers like the metaverse.
“Latin America has finally found its moment in venture capital,” Hruby told Webster. “We’re bullish on Brazil specifically but also on the Spanish-speaking countries of Latin America, and we’re not alone. There’s a lot of competition and a lot of interest.”
In its pursuit of connected economy initiatives, Hruby said FinTech is considered “the launchpad” for products and services that can be thought of as part of an interoperable ecosystem — and he sees it as a natural extension of Movile’s role as VC backer and incubator for the best and brightest in the space.
For example, as iFood went into hypergrowth mode, reaching more that 236,000 restaurants on the platform by late 2020, the MovilePay unit developed the iFood Digital Account, giving operators access to a suite of free online financial tools, as well as access to business loans.
The lending dimension has even earned iFood a moniker: “the bank for restaurants.”
“Most restaurants on iFood today receive their payments on a free MovilePay account,” Hruby said. “We are now the biggest grocery eCommerce player in Latin America. That happened in the past year and is still growing. Because of that flow and the transactions we see happening on iFood, we are able to extend credit at much higher approval rates than other players.”
From AI-Guided Logistics to Embedded Finance
With much of Movile’s investments leaning into food, and given the astounding growth of iFood alone, Hruby said logistics is another area of intense interest going forward.
“iFood has a huge logistics arm, basically dedicated to serving our existing restaurants and [grocery stores],” he said. “Today, that’s a bundled service. You can imagine in the future that becoming unbundled and [offered to] additional players. So, there’s option value in many directions for iFood that we’re very excited about.”
Movile has hired an artificial intelligence (AI) firm to improve its logistics operations, Hruby said.
“Think of optimizing the routes that drivers take [using AI],” he said. “It gives them more rides per hour, makes food or groceries arrive at your house quicker, the restaurant is able to serve more — it makes the entire ecosystem work.”
He added that AI-guided logistics will also allow grocery delivery workers to earn more “without increasing the cost to consumers or to restaurants. That’s a huge part of our investment. That’s a big part of what makes this a technology company and not just an operations company.”
In a country where eCommerce orders can take 15 days to arrive, logistics is a game changer.
Noting that building iFood into a Latin-American powerhouse involved more than 30 merger and acquisition deals over a five-year period, Hruby said Movile is applying what it learned in the process to new investments.
“We’re doing the same thing with logistics and embedded finance,” he said, pointing to how the Zoop payments platform was used to help launch Brazil’s Pix real-time payments scheme.
See also: Unlocking Brazil’s Open Banking Potential
Movile in the Metaverse
Turning from food to fun, Movile is already establishing a presence in the metaverse.
“Gaming for us is a story of innovation and disruption within the company,” Hruby said.
Movile’s PlayKids unit is essentially two business lines: a subscription books line and the PlayKids video app, which he calls “a Netflix for young kids. It’s been around for many years, it’s quite mature, profitable, but growing at a slow pace.”
He half-jokingly said, “We tend to like hockey stick businesses,” meaning those whose growth charts up and to the right. Mature businesses usually don’t, so Movile pulled a metaverse pivot.
“We created what we call ‘Jet Skis,’ which are small projects with a few people, and one of them had four folks in a room and we said, ‘OK, you guys, go innovate in gaming and see what happens,’” he said. “They bootstrapped and created three games. One of them was a complete flop. One of them was decent success about 4 million monthly users, which is nothing to snort at. But then we had one home run, which has now 40 million active users all over the world.”
That game, called PK XD, is described as “an open-world social game” in which users can create avatars, build virtual houses and visit virtual attractions. That entire unit is now a freestanding metaverse company called Afterverse.
“It’s really hit a nerve in this metaverse space,” Hruby told Webster.
“We spun off that company into a company that’s now bigger than the company it was originally [part of], and that’s happened in the course of a year,” he added. “You can see what innovation can happen from within. We didn’t have to go buy that innovation externally.”
Overall, Hruby said, “I’m very bullish on 2022. Every day, a new FinTech is opening in Brazil. You have to think that there’ll be lots of new, interesting businesses that will be helping people’s lives, increasing access to credit, increasing access to bank accounts. Brazil is very advanced in some areas of its payment infrastructure but it’s also very behind [with] a big proportion of the population just shut out of a banking system with concentration in five big banks.”
Sounds like an investment opportunity for an enterprising VC firm.
Read also: Brazil, Colombia Lead Latin America for FinTech Growth
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