Tech Roundup: Brazilian giants on startup-hunting spree

By Natália Scalzaretto

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazilian big retailers on startup-hunting mode; old problems prevent Brazil from becoming a leader in innovation; and how poor internet access is increasing inequality in Latin America. 

Amid e-commerce boom, big retailers hunting for startups

This week, two e-commerce giants went shopping in the local startup market, as the battle for dominance in a burgeoning sector becomes fiercer by the day. On Tuesday, Mercado Livre announced it had acquired a minority stake in last-mile logistics startup group Kangu, after a year of using its services. Two days later, Magazine Luiza made its entry into the food delivery market, purchasing startup AiQFome. 

• According to a report by Distrito.me, big companies were responsible for 58.1 percent of 44 startup mergers or acquisitions reported in H1 2020. The number is almost 52 percent larger than 2019 rates.
• Still, investments halved to USD 691.7 million — a sign that companies may be beefing up their portfolios at a lower cost amid the crisis.

Last-mile meets click-and-collect. Mercado Livre’s investment in Kangu is part of its strategy to reduce its reliance on state-owned postal service Correios, a company riddled with crisis and currently facing a nationwide strike.

• But Kangu is also a gamble on improving the consumer experience. The startup connects customers to small brick-and-mortar shops near their homes, giving Mercado Livre a way to implement click-and-collect delivery modes. So far, that strategy has been a competitive advantage of traditional retailers such as Via Varejo and Magazine Luiza.

Super-apps. Magazine Luiza openly talks about its aspiration of becoming “Brazil’s Amazon Inc.” Startup AiQFome will be the first food delivery service on its one-stop-shop super-app, which already includes e-commerce household names such as Netshoes (sporting goods and footwear), Zattini (clothing), and Época Cosméticos (cosmetics). The goal is to increase customers’ recurrent...