Welcome to the Advertising and Media Insider newsletter, our weekly roundup of all the big stories we've been covering. It's looking to be a quiet holiday week, so it's a good time to get caught up on everything you might've missed.

First, IBM's spinoff of its marketing cloud business had people talking. There's been action in this area lately because there's a lot of demand for marketing tech. The spinoff business wants to go hard against Salesforce, Adobe, and Oracle, with its artificial intelligence expertise.

I'm curious to know what people think. Will the spinoff really give them a run for their money, or is the separation just a way to get acquired at a high multiple? Email me at This email address is being protected from spambots. You need JavaScript enabled to view it. or securely on Signal (917-209-8549).

Here are other stories we've been reporting. (You can read most of the articles here by subscribing to BI Prime; use promo code AD2PRIME2018 for a free month.)

Lauren Johnson was all over Facebook advertising news last week.

It’s not easy to raise growth-stage capital in Latin America, but it’s getting easier. As startups begin to flourish in the region’s largest markets, available funding is evolving to suit the needs of these maturing companies. However, Silicon Valley-style Series A rounds in Latin America are still rare, especially outside of Brazil and Mexico.

Even in Silicon Valley, only a small percentage of startups can bring together enough pieces to raise a Series A round. Jacob Mullins, a partner at Shasta Ventures, recently published an article on Medium on what it takes to raise a Series A round in San Francisco today, which inspired my take for the Latin American ecosystem.

In the piece, he lays out the table stakes for any startup looking to raise Series A capital, including product-market fit, a strong revenue model, 2x or 3x YOY growth, a data-driven go-to-market strategy, a compelling market opportunity, a great team and a great story. These prerequisites apply to startups anywhere in the world. However, if these requirements are the minimum needed for a Series A in San Francisco, startups outside of the Valley, including in Latin America, will have to work even harder.

Latin America’s exceptional growth in VC funding over the past 12 months speaks to the growing number of later-stage rounds startups are raising across the region. 2018 was Latin America’s inflection point for startups, with four big trends:

Record-breaking rounds: Mexico’s Grin Scooters raised Latin America’s largest seed round, and Brazilian bike and scooter-sharing startup Yellow raised Latin America’s largest Series A round to date (then they merged!). Food delivery startup Rappi became Colombia’s first unicorn, raising $200 million (and then $1 billion from SoftBank shortly thereafter), and Brazil’s iFood also raised $400 million, one of Latin America’s biggest rounds ever.

Soaring Asian investment: Brazil’s most popular ride-hailing app, 99, was acquired by Didi Chuxing, China’s version of Uber . Tencent invested in Brazilian fintech Nubank; Ant Financial invested in Brazilian POS company StoneCo; SoftBank invested in Brazil’s logistics provider Loggi, Brazil’s Gympass and Colombia’s largest hotel chain, Ayenda Rooms. SoftBank also committed a $5 billion fund for Latin America, outstripping all previous funds by an order of magnitude.

Exits to Latin American and U.S. corporates: Chilean-Mexican grocery delivery startup Cornershop went to Walmart for $225 million and e-commerce company Linio was acquired by Falabella for $138 million. These deals reveal a growing concern from large companies in Latin America about competition from startups.

More YC grads: Latin America sent at least 10 startups to the Y Combinator, and many more to other international accelerators, in the past year. These companies include Grin, Higia, Truora, Keynua, The Podcast App, SkyDrop, UBits, Cuenca, BrainHi, Pachama, Calii, Cuanto, Pronto and Fintual.

2018 really was a breakout year for Latin American startups.

So who is raising Series A rounds in the region?

Within the list of 30 or so companies that have managed to raise a Series A in Latin America in the past year, most of the startups fit into a few categories. There is also significant overlap between the investors who are pursuing tickets of this size, most of whom are located in major markets like Mexico and Brazil, or have offices in Silicon Valley. A closer examination of these startups reveals patterns in what it takes to raise scale capital in the Latin American market today.

Copycats

Copycats — or startups that copy a successful business model from another market — are a good business in Latin America. Among those to raise Series A rounds within the past year were:

Grin and Yellow (now Grow Mobility): Bird/Lime clones raised $150 million as Grow Mobility from GGV Capital and Monashees.

LentesPlus: 1-800-Contacts clone raised $5 million from Palm Drive Capital, with participation from IGNIA and InQLab.

Mercadoni: Instacart clone raised $9 million from Movile.

Uala and Albo: Monzo/Revolut clones raised $10 million from Soros, Greyhound Capital, Recharge Capital and Point 72 Ventures, and $7.4 million from Omidyar, Greyhound and Mountain Nazca, respectively.

International investors often see copycat models as less risky, because the model has been tested before.

Logistics and last-mile delivery

Brazil’s CargoX, the “Uber for trucks,” is leading the market for logistics solutions in Latin America, receiving international investment from Valor Capital and NXTP Labs starting in their first round. They have also received funding from Soros, Goldman Sachs and Blackstone in later rounds. Recently, logistics startups like Colombia’s Liftit and Mexico’s Skydrop have raised multimillion-dollar rounds from Silicon Valley investors, including IFC, Monashees, MercadoLibre Fund, Variv Capital, Sierra Ventures and Sinai Ventures . Startups like Rappi, Loggi and Mandaê have also raised Series A rounds, and beyond.

Brazilian startups

In many ways, the Brazilian market operates separately from the rest of Latin America, and not only because of the language difference. Brazil has Brazil-centric funds and its startups follow their own rules, because the market is big enough to accommodate companies that only operate locally. Brazil also receives a majority of international VC funding and has produced a significant portion of Latin America’s unicorns.

Brazilian (and some Mexican) startups in edtech, healthtech and fintech, including Neon, Sanar, Mosyle, UnoDosTres and Nexoos, raised Series A rounds in 2018. Key investors included Quona Capital, e.Bricks Ventures, Elephant and Peak Ventures. Brazilian startups tend to scale more quickly at all sizes; Creditas and Loggi were able to raise their Series A in 2016 and 2014 respectively. In 2018, they were already raising $55 million at Series C and $100 million+ Series D from investors such as Vostok Emerging Capital, Kaszek Ventures, IFC, Naspers and SoftBank. However, startups in these industries in other Latin American countries might not find it as easy to raise larger rounds.

How much to raise in a Latin American Series A

Latin American valuations are noticeably lower than their Silicon Valley equivalents. A Series A round in a small or medium Latin American market like Chile or Colombia might end up looking a lot like a San Francisco seed round. Valuations and amount are bifurcated: those that have access to Silicon Valley-style capital can get higher valuations and bigger checks (still lower and smaller than the U.S.), while those that don’t have access have lower valuations.

Outside of Brazil or Mexico, startups should not expect to raise more than $5 million in a Series A, even if they are receiving co-investments from the U.S. The average Series A round in the U.S. hit $11.29 million in 2018; however, the top 10% of deals averaged more than $60 million.

In Latin America, a Series A could range from as little as $1 million to around $10 million in most countries. Brazil and Mexico might break the mold, but startups looking for growth capital in Latin America should not expect to raise more than $5 million if they are not in a massive market. For example, Chile’s Destacame raised $3 million in their Series A from Chilean funds in early 2019. By comparison, Brazil’s Neon raised $22 million in their Series A in the same year. While these are different industries and comparing apples to oranges, the orders of magnitude seem right.

If we compare in the same industry but different years, the results are similar. Nubank’s Series A in 2014, led by Sequoia Capital, was $14.3 million. Neobanks in smaller markets, like albo and Uala, raised $7.4 million and $10 million, respectively, in their Series A rounds.

To date, the largest Series A raised in the region went to Yellow, Brazil’s bike-share and e-scooter company, created by the founders of 99, Ariel Lambrecht, Eduardo Musa, and Renato Freitas. Yellow raised a $63 million Series A within a year after launch, then merged with Mexico’s Grin Scooters.

Where to look for investment: Latin America or USA?

There are still very few entirely Latin American funds investing at Series A. Most of the time, Latin American startups must look to Mexico and Brazil, or beyond the region to Asia and the U.S., to fund rounds beyond the seed stage.

Within Latin America, some of the actors in this investment sector include Brazil’s Monashees and Valor Capital, Argentina’s Kaszek Ventures, Peru and Mexico’s Angel Ventures and Mexico’s ALLVP, MITA Ventures and Ignia. Startups might also find Series A-level investment from major regional tech leaders who are scouting acquisition opportunities, like Movile’s investment in Mercadoni. Movile is Brazil’s leader in mobile technology, with a mission to impact one billion people, following in the footsteps of China’s giant conglomerate, Tencent. Movile has invested in and acquired many Latin American startups to increase their mobile offerings for its customers.

While some funds in Latin America participate in investments of this scale, most Latin American startups target at least a part of their Series A rounds from outside the region. Latin American startups have been able to reach U.S. VCs in one of three ways: through top-tier accelerators, by selling to consumers in the U.S. market or by taking on a copycat model. U.S.-based VCs Accel Partners, Sequoia Capital, Andreessen Horowitz, Base10, Liquid2 Ventures, Quona Capital, QED, IFC and Sierra Ventures have all made multiple contributions to Series A rounds in Latin America within the past year.

Raising a Series A round in Latin America today

Raising a Series A round anywhere means checking a lot of boxes. Beyond bringing a great product to market, the startup’s team, story and revenue model should all align to create an unbeatable business. In Latin America, raising a Series A also means knowing where to look for capital, and which models are receiving funding.

Although there is no instruction manual for raising a Series A anywhere, following in the footsteps of companies that have done so successfully can be a wise way to start. Latin America’s Series A success stories outline a list of investors that are interested in this stage, as well as how much they are investing in Latin American companies. Founders can use this information to structure their fundraising efforts and optimize their time to raise a Series A and continue to scale.

In case you missed it, you can listen to the recording of this roundtable here:

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Artificial intelligence has become an increasingly important component of how a lot of technology works; now it’s also being applied to how technologists themselves work. Today, one of the startups building such a tool has raised some capital, Tara.ai, a platform that uses machine learning to help an organization get engineering projects done — from identifying and predicting the work that will need to be tackled, to sourcing talent to execute that, and then monitoring the project of that project — has raised a Series A of $10 million to continue building out its platform.

The funding for the company cofounded by Iba Masood (she is now CEO) and Syed Ahmed comes from an interesting group of investors that point to Tara’s origins, as well as how it sees its product developing over time.

The round was led by Aspect Ventures (the female-led firm that puts a notable but not exclusive emphasis on female-founded startups) with participation also from Slack, by way of its Slack Fund. Previous investors Y Combinator and Moment Ventures also participated in the round. (Y Combinator provides an avenue to companies from its cohorts to help them source their Series A rounds, and Tara.ai went through this process.)

Tara.ai was originally founded as Gradberry out of Y Combinator, with its initial focus on using an AI platform for organizations to evaluate and help source engineering talent: Tara.ai was originally that name of its AI engine.

(The origin of how Masood and Ahmed identified this problem was through their own direct experience: both were engineering grads from the American University of Sharjah in the U.A.E. that had problems getting hired because no one had ever heard of their university. Even so, they had won an MIT-affiliated startup competition in Morocco and relocated to Boston. The idea with Gradberry was to cut through the big names and focus just on what people could do.)

Masood and Syed (who eventually got married) eventually realised that using that engine to evaluate the wider challenges of executing engineering projects came as a natural progression once the team started digging into the challenges and identifying what actually needed to be solved.

A study that Tara conducted across some 5,000 projects found that $66 billion dollars were identified as “lost” due to projects running past the expected completion time, lack of adequate talent and just overall poor planning.

“We realised that recruiting was actually the final decision you make, not the first, and we wanted to be involved earlier in the decision-making process,” Masood said in an interview. “We saw a much bigger opportunity looking not at the people, but the whole project.”

In action, that means that Tara.ai is used not just to scope out the nature of the problem that needed to be solved, or the goal that an organization wanted to achieve; it is also used to suggest which frameworks will need to be used to execute on that goal, and then suggest a timeline to follow.

Then, it starts to evaluate a company’s own staff expertise, along with that from other recruiting platforms, to figure out which people to source from within the company. Eventually, that will also be complemented with sourcing information from outside the organization — either contractors or new hires.

Masood noted that a large proportion of users in the tech world today use Jira and platforms like it to manage projects. While there are some tools in Jira to help plan out projects better, Tara is proposing its platform as a kind of virtual project manager, or an assistant to an existing project manager, to conceive of the whole project, not just help with the admin of getting it done.

Notably, right now she says that some 75% of Tara.ai’s users — customers include Cisco, Orange Silicon Valley and Mower Digital — are “not technical,” meaning they themselves do not ship or use code. “This helps them understand what could be considered and the dependencies that can be expected out of a project,” she notes.

Lauren Kolodny, the partner at Aspect who led the investment, said that one of the things that stood out for her, in fact, with Tara.ai, was precisely how it could be applied exactly in those kinds of scenarios.

Today, tech is such a fundamental part of how a lot of businesses operate, but that doesn’t mean that every business is natively a technology one (think here of food and beverage companies as an example, or government agencies). In those cases, these companies would have traditionally had to turn to outside consultants to identify opportunities, and then build and potentially long-term operate whatever the solutions become. Now there is an opportunity to rethink how technology is used in these kinds of organizations.

“Projects have been hacked together from multiple systems, not really built in combination,” Kolodny said of how much development happens at these traditional businesses. “We are really excited about the machine learning scoping and mapping of internal and external talent, which is looking to be particularly important as traditional enterprises are required to get level with newer businesses, and the amount of talent they need to execute on these projects becomes challenging.”

Tara.ai’s next steps will involve essentially taking the building blocks of what you can think of as a very power talent and engineering project search engine, and making it more powerful. That will include integrating databases of external consultants and figuring out how best to have these in tandem with internal teams while keeping them working well together. And soon to come also will be bug prediction: how to identify these before they arise in a project.

The Slack investment is also a notable nod to what direction Tara.ai will take. Masood said that Slack was one of three “big tech” companies interested in investing in this round, and she and Syed chose Slack because from what they could see of its existing and target customers, many were already using it and some have already started requesting closer collaboration so that events in one could come up as updates in the other.

“Our largest customers are heavy Slack users and they are already having conversations in Slack related to projects in Tara.ai,” she said. “W are tackling the scoping element and now seeing how to link up even command line interfaces between the two.”

She noted that this does not rule out closer integrations with communications and other platforms that people use on a daily basis to get their work done: the idea is to become a tool to work better overall.

Flux, the London fintech that offers a platform for banks and merchants to power digital receipts and rewards, has unveiled its first partnership with an online-only merchant. The London-based company has managed to sign up Just Eat, the online marketplace for takeout food and delivery.

As of today, Just Eat’s U.K. customers will be able to receive digital itemised receipts directly in their Flux-supported banking app immediately after placing an order. At launch, this will include challenger banks Starling and Monzo, with the service rolled out across Flux’s other existing bank partner, Barclays launchpad, later this year.

“We’re always looking for ways to harness innovative technology to give our customers more ease, choice and convenience,” says Fernando Fanton, Chief Product & Technology Officer at Just Eat UK, in a statement. “We’re delighted to be the first in our sector to roll out Flux digital receipts ensuring customers can see exactly what they’ve ordered from the 30,000+ restaurants we work with across the U.K., directly within their banking apps”.

Although Just Eat is the first online marketplace to partner with Flux, the online takeout marketplace joins a number of other Flux-supported food and drink brands. They include household names such as KFC, schuh, EAT.,and Costa Coffee.

“The truth is online merchants have never been the focus for us because we thought the value gap was smaller than it is,” Flux co-founder Veronique Barbosa tells me. “When we reflected on how to break into the market, the clear win was with offline merchants who are constantly seeking ways to build a digital link to their customers and provide them with better experiences. Meeting Just Eat at the end of April opened our eyes to the different value that we can bring to online merchants starting with more convenient experiences for customers trying to remember what they bought”.

With that said, Barbosa cautions me not to expect a flood of online marketplaces signing up to Flux just yet. “Our current focus is to offer customers a diverse set of retail partnerships,” she says. “That’s also why after Costa or KFC we didn’t stop everything to focus on coffee shops or fast food chains. Having said that, we learnt a lot with Just Eat on how to provide value for online merchants and are really excited to on-board other pure online players before year end”.

Eventually Flux wants to work with all U.K. merchants but in the short term the company maintains it needs to continue proving to the market that a solution like Flux can add value to “all verticals and businesses”.

“The conversation has moved on a lot from the early days,” says Barbosa. “Just 6 months ago, Tier 1 merchants thought Flux was a vision, valuable for smaller players but hard to execute at scale. The progress we’ve been making with the biggest banks and merchants moved the conversation from ‘are you sure this is possible’ to ‘tell me what you did for KFC and how it applies to me’.

“Sales cycles can be challenging but we’re proud to be constantly improving our metrics from first conversation to live, but it’s no small feat. Now that we’ve grown the team more, we’ve had the time to focus on an exciting interface we’re calling Marvin that will help merchants of all sizes on-board faster which we’ll be beta testing soon”.

Meanwhile, although the current focus remains building receipt infrastructure and on-boarding merchants, Flux’s long term vision is much broader. By bridging the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up in your bank statement or mobile banking app, the startup can offer new types of experiences for consumers that go beyond loyalty schemes, and card-linked offers.

In the future this might include letting you easily track your eating out habits, right down to item-level rather than just merchant category, as part of your general health goals. It is in this context that on-boarding Just Eat starts to look a little more interesting.

Thirty-three-year-old founder of personalized medicine company DotLab, Heather Bowerman, wants to shake up the women’s health industry with what she believes to be a better, cheaper, less painful test for endometriosis.

Her company has just completed a Yale University -led validation study and raised $10 million in Series A funding from CooperSurgical, TigerGlobal Management, Luxor Capital Group and the law firm Wilson Sonsini Goodrich & Rosati to bring a new, non-invasive diagnostic test to market.

Endometriosis is an often painful disorder in which tissue begins to grow outside of the uterus and into a woman’s ovaries, fallopian tubes and pelvis. The disease may affect up to one in 10 women of childbearing years and about half of all women who experience infertility, according to the U.S. Department of Health and Human Services.

However, even with clear symptoms of the disease, doctors often try to test for endometriosis as a last resort. The only way currently to test for it is through an invasive laparoscopic procedure, which comes with risks like internal bleeding, infections and hernia.

Called DotEndo the new DotLab test eliminates that risk with a simple diagnostic test. “The rationale for using our test is to test as early as possible and also to use it non-invasively,” Bowerman told TechCrunch.

The CEO was also quick to point out DotEndo is not a genetic test, as there are plenty of tests out on the market helping women discover possible genetic markers around fertility. Rather, it’s a physician-ordered diagnostic test you would take through a lab to find out if you have this specific disease.

“The revolutionary technology behind DotLab’s endometriosis test could improve the lives of the hundreds of millions of women affected by this debilitating disease which has been under-researched and deprioritized for too long,” Bowerman said in a statement.

While there has been some innovation in the space lately — U.S. regulators just approved a new pill to treat endometriosis pain — Bowerman is right in that we definitely still have a long way to go in diagnosing and curing the disease and that will take a lot more capital from investors in the future.

Meanwhile, the next step for DotLab will be to get its test into the hands of physicians, with the hope they recommend DotEndo right off the bat to patients exhibiting symptoms.

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