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But in countries like Brazil, these types of spaces are not common for a number of reasons. (Historically, most people have lived at home with their parents until they marry, for example.) However, as the Latin American country鈥檚 society evolves, the real estate scene is attempting to keep up. One proptech startup is hoping to help bring the country up to date in terms of its apartment offerings.

As part of that goal, S茫o Paulo-based has raised a $4.7 million pre-seed round led by Brazil鈥檚 . , a cross-border firm with offices in S茫o Paulo and San Francisco, also participated in the round in addition to , Founder , Managing Partner and Partner . (It鈥檚 important to note that $4.7 million is an unusually large amount for a pre-seed round anywhere, but especially in Brazil, despite having seen a surge in venture funding in recent years.)

I talked with co-founder and CEO , who told me more about what the startup is doing exactly. He also helped shed some light on how Yuca fits into an evolving narrative of how S茫o Paulo鈥檚 core is being impacted by the growth of its startup scene.

Background

Campos was born in the Northeastern Brazil city of Recife, Pernambuco, before moving to the U.S. when he was 14 years old. His first experience with the venture world was when he helped set up a small VC practice with a family office in S茫o Paulo in 2012.

鈥淭oday鈥檚 unicorns were just getting started then,鈥� he recalls. In fact, Campos鈥檚 first deal was investing in fitness discovery platform , which last February. He also invested in fintech startup and QuintoAndar, another Brazilian real estate-related startup (that happened to become a unicorn with a $250 million Series D raise last September).

It was that experience that led Campos to 鈥渇all in love with tech as a whole.鈥�

So last year, he started Yuca after realizing how big a problem finding affordable housing was becoming in tech hubs around the world.

鈥淢ost of those cities have an affordability problem where people can鈥檛 find decent housing at a decent cost,鈥� Campos told me. 鈥淪o we put those two things together to come up with this business model.鈥�

Knocking down walls

While the funding round was actually raised last summer, Yuca did not disclose it publicly until recently. Last week, the company launched its first 鈥渦nit.鈥�

What does that mean? Well, it started off by looking at the real estate supply in S茫o Paulo, and noticed that tech companies as a whole were starting to congregate in two specific central neighborhoods that were well-served by public transportation.

But when the Yuca team looked at the real estate supply in those areas, it realized the apartments were not only decades old, but 鈥減retty rundown and super expensive still because of their location.鈥�

鈥淭hey offered no amenities or parking spaces even,鈥� Campos said.

So Yuca set about buying some of those units, completely tearing them down, and rebuilding them as shared apartments. Its target demographic is tech workers who want to live close to where they work.

Yuca has bundled the apartments with services such as cleaning and concierge, and takes care of all the backend issues like water and electricity. It鈥檚 also made sure its terms are 鈥渟uper convenient and flexible, not the standard Brazilian 30-month contract, which we think is absurd,鈥� Campos said.

鈥淲e鈥檙e not looking to make a quick buck like an rental,鈥� he added. 鈥淲e want to solve the problem of how people live.鈥�

Rent starts out at about $500 a month, including condo fees, utilities, cleaning services and support.

鈥淓ven for Brazil, this is very affordable for a new apartment,鈥� Campos said.

All units, each about 200-220 square feet, are fully renovated with four units fitting in one apartment. There鈥檚 about 600 square feet of common area, including a centralized living room and kitchen.

The buildings that were torn down were typically approximately 1,800-square-foot, three-bedroom apartments that included a separate maid鈥檚 quarters.

鈥淚n Brazil, it鈥檚 common for the middle and upper class to have a live-in maid, but these days younger folks are not wanting to have that relationship with help inside the house, so those floor plans don鈥檛 work anymore,鈥� Campos told me. 鈥淪o we turned those maid鈥檚 quarters into a fourth bedroom and, for us, tearing down that wall is a figurative thing.鈥�

The renovation process takes anywhere from one to three months, and Yuca currently has 30 units under renovation in the pipeline. It plans to launch one apartment per week over the next two months with the goal of 鈥渞amping up and scaling faster in the future.鈥�

Investor POV

For , founder of ONEVC, Yuca represented an attractive investment opportunity for a number of reasons.

For one, he said, the opportunity for full-stack proptech companies 鈥渋s extremely attractive at the moment, given how low real interest rates are.鈥�

鈥淚nvestors are looking for yield, and Yuca is a perfect example of top- and bottom-level efficiencies that are brought to this market,鈥� Sorrentino said. 鈥淲hen better utilization per square feet meets a technology-enabled apartment, you have a different, promising IRR (internal rate of return) profile than a regular REIT (real estate investment trust).鈥�

He also points to the global 鈥渆pidemic鈥� of loneliness with the rising use of smartphones ironically being a big contributor.

鈥淥nce you think through the implications of co-living spaces, they are a massive indirect solution for a mental health problem that is increasing in our society, since community building is essential for the co-living model to thrive,鈥� Sorrentino added.

Also, millennials and Gen Z are less worried about a large apartment than they are about being close to work and surrounded by a good community.

鈥淏randing and a human approach to this solution is vital,鈥� he said.

Last August, I wrote about another co-living startup that raised venture money. Specifically, , a Los Angeles-based real estate startup providing co-living space for students and聽 young professionals, raised a $10 million Series B at a $100 million valuation.

The trend of rising rental costs in hot job markets has brought all sorts of new ideas regarding living to the market. And so long as jobs continue to cluster in large urban environments, the market may keep generating demand for new housing arrangements like what Yuca, Tripalink and others can provide.

Blog Roll Illustration:

Local and foreign investors injected levels of venture capital into Latin America last year, far exceeding the invested in 2018. With capital more readily available, the latest generation of startups in Latin America no longer face the same difficulties as their predecessors when it comes to expanding across the region and beyond. And while many Latin American startups still jump at the chance to enter the U.S. market, there鈥檚 a growing trend of looking beyond the U.S. for new opportunities to tap into technical talent and scale.

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For Latin American startups looking toward Europe, Spain is playing an increasingly critical role. Just as Miami has long been a key gateway for Latin American startups to launch their U.S. operations–attributable to its bilingual community and close ties to the region–Spain also provides those startups unique advantages to launch and grow their ventures in Europe.

Beyond the language and cultural similarities, support from the Spanish government, an increase in capital and several new startup initiatives are helping Latin American entrepreneurs build relationships with local investors, partners and tech talent. We take a look at some of those initiatives and address why more Latin American startups are choosing Spain as their European base.

Spanish investment in Latin America

Spain invests heavily in Latin America and has always been essential for building relations between Latin America and Europe. Over the past few years, Spain led talks for the EU-Mercosur, EU-M茅xico and EU-Chile agreements. Argentina, Brazil, Chile, Mexico, Colombia and Peru have the most significant commercial ties to Spain, with trade between Spain and the latter two countries rising rapidly. in Latin America鈥檚 tech sector seem to follow a similar pattern, and Spanish VCs have begun to increase their activity in the region.

厂辫补颈苍鈥檚 and (InnoCells), for example, have invested in startups such as , a platform that helps beauty and wellness businesses streamline their operations; financial platform (formerly CompraGuru.com); and consumer payments platform . Spanish telecommunications giant operates two programs that invest in startups: the 罢别濒别蹿贸苍颈肠补 and , a global accelerator program with a presence in 12 countries across Europe and Latin America.

Between 2011 and 2017, 罢别濒别蹿贸苍颈肠补 invested nearly in Latin American startups; approximately $18 million in 350 startups through Wayra accelerators, and approximately $60 million in 22 startups by 罢别濒别蹿贸苍颈肠补 Open Innovation.

鈥淲ayra has supported us since 2014, helping us understand and enter the Spanish market,鈥� said , CEO of , a platform that provides cleaning services and facility management to small and medium-sized businesses in Colombia. The company also has plans to expand into three cities in Spain.

Attracting startups

In 2016, the Spanish government program, , launched , an initiative designed to attract international talent and innovative business models to Spain, and position the country as a European hub for technology and innovation. The program offers foreign entrepreneurs an expedited visa, free workspace in Madrid or Barcelona, mentoring and a 鈧�10,000 ($11,053) grant. Many Latin American startups have been selected for the program.

鈥淭he Rising Startup Spain program provides a soft landing for startups, and there is a lot of support for Latin American startups to enter the Spanish market,鈥� Cera said.

The Spanish government also passed a law to attract foreign talent and investment, which includes a requiring little more than a business plan and enough money to support themselves in order to stay in the country.

鈥淲e received entrepreneur visas to operate our company in Spain,鈥� said , co-founder of , a company developing smart wearable devices for football players. Oliver has offices in Cordoba, Argentina and Barcelona.

鈥淭he government provided a landing program for us and introduced us to investors and potential partners from local organizations and universities,鈥� Gonzalez Ruzo added.

Some entrepreneurs are taking it into their own hands to strengthen the bonds between the Latin American and Spanish startup ecosystems. For example, the was formed in 2018 to provide Spanish and Argentine talent with advisory services and to identify opportunities for collaboration between the countries.

Another Argentine program, , helps companies expand to Spain and Europe. For , developers of the application which helps retailers increase their margins, establishing a presence in Spain was the logical next step. According to , CEO of Inatech, Acelerar Espa帽a helped the company uncover business opportunities in Madrid and other regions of Spain faster, introduced them to potential investors and partners, and ultimately helped it be closer to its clients.

Why choose Spain?

Latin American startups are attracted to the strong tech talent in Spain. According to data from 2018, Spain is the country in Europe with the number of digital profiles. Barcelona is home to more than developers, ranking it No. 2 in the top 30 European cities with the greatest number of developers. Hiring tech talent in Spain is not much more expensive than it is in Latin America鈥檚 startup hubs, and it is still one of the cheapest options among European tech hubs. Living expenses are a fraction of what entrepreneurs would pay to live and operate in cities like London or Paris.

Barcelona is arguably the most active startup hub in Spain and has been ranked as the European startup hub for the past four years. The city also ranks on the list of cities where founders would most prefer to launch their companies. All of these qualities create a unique hiring advantage for Latin American startups. For instance, it鈥檚 far easier to find native English, French or German sales and customer support teams in Spain than it is in Latin America.

鈥淲hen we were researching locations to set up offices in Europe, we realized that Spain had two important cities [Madrid and Barcelona] in terms of investment, entrepreneurial activity and government initiatives,鈥� said Ruzo. 鈥淲e felt there was a stronger startup ecosystem and more resources in these two cities combined than in other European countries where startup activity is centralized in one city, such as in Paris or Berlin.鈥�

A maturing alliance

For many Latin American startups that have struggled to launch in the U.S., or have already saturated the Americas and wish to continue scaling, Europe is the next logical step. An increasing number of Latin American startups are selecting Spanish cities as their European headquarters, including Argentina鈥檚 , and , Colombia鈥檚 , Brazil鈥檚 and Mexico鈥檚 . And with startup support and access to growth-stage capital improving in Latin America, it鈥檚 likely that Spain will increasingly be on the receiving end of the next wave of entrepreneurs from the region who aspire to expand into new markets.

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