Aeromexico, VC Investing, and Fiber Optic Internet

Welcome to Latinometrics. We bring you Latin American insights and trends through concise, thought-provoking data visualizations. It’s great to have you on board.

Today’s charts:

1. Aeromexico’s path to one peso per share

2. Startup VC investment breaks record

3. Chile’s crazy fast internet speed

Also, make sure to check out our favorite comment last week at the bottom of this newsletter.

Airlines ✈️

Aeromexico’s shares lost a historic 50% of value last week and ended up trading at one Mexican peso per share. The reason behind the drop is the airline’s announcement of a restructuring plan: An outside entity will purchase up to 49% of its shares at 1 Mexican cent each (5/100 of a US cent) in exchange for injecting some much-needed capital.

Last year, the company filed for bankruptcy amidst an astronomical $2B loss during the pandemic. First founded in 1934, the company has a long list of dramas: nationalization in the 70s by the Mexican government, re-privatization in the 80s, and an auction won by Citibank’s Banamex amidst debts that it could no longer pay in the 2000s.

Volaris, founded in 2005 by Carlos Mendoza Valencia, has been on a much smoother flight. Under CEO Enrique Beltranena’s leadership, the company has been willing to try ideas and innovate in a very tough industry. From positioning itself as the “ultra-low-cost” airline that competes with Mexico’s bus lines, to being the first in “disaggregating” the cost of tickets —— allowing passengers to choose their price based on added services, to our favorite: serving Krispy Kreme doughnuts aboard their planes in the early days.

This year, they’ve surged from the pandemic as Mexico’s new leader in the skies, beating Aeromexico on any metric imaginable: fleet size, profitability, routes, and revenues.

Startups 🚀

Venture Capital Investment in Latin American Startups is estimated to have totaled $12B during 2021, which was triple the amount of 2020. The average check written to fund startups was $23M.

For more than a decade, VCs have focused their attention on startups from Silicon Valley and other main US cities. However, lately, they have become increasingly interested in outside opportunities. According to A16z’s Angela Strange, interest is rising for two reasons:

1. The market conditions are ripe for new companies, and there’s a lot of consumer demand.

2. There’s great, great talent that is ready to pursue those opportunities.

Top VC firms such as Andreessen Horowitz and SoftBank, led by Bolivian Marcelo Claure, announced their upcoming investments in fintech, e-commerce, logistics, real estate, and the creator economy.

Not only are international VC firms betting on Latin America, but local firms who better know the market’s needs are also emerging. Platanus Ventures, a Chilean startup accelerator, aims to become the Y Combinator of Latin America. Guatemala’s Invariantes Fund is also investing in tech startups in the region from several industries, including enterprise SaaS, fintech, and even hardware players like Luminar.

Connectivity 🌐

VTR is Chile’s largest provider of home internet access. Last year, it set on a mission to democratize fiber optic in the country with some incentives from the government’s Telecom authority, Subtel. Fiber optic is currently the best available technology for high-speed broadband internet and is primarily manufactured in the US, Japan, and China.

According to Subtel, from October 2020 to October 2021, 4,425 km of fiber optic was installed. Today, 45% of broadband connections in Chile use the technology, and the median speed has doubled from last year. At 173 Mbps, Chile’s median speed is the world’s second-fastest, next only to Singapore.

The rest of Latin America has some catching up to do. Only four countries in the region have a median speed above the world’s average. Still, much progress has been made in the connectivity front. More than 66% of Latin Americans used the internet regularly by 2018.

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Until next week. 👋🏽

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