Semantix dribbles bitter market and is first Latin deep tech on Nasdaq
The company debuted today on the American stock exchange, merging with Spac Alpha Capital
Five years ago, entrepreneur Leonardo Santos shared with the team his goal of taking Semantix, a software company specializing in data and artificial intelligence, to the US Nasdaq stock exchange by 2023 – when he turns 40 years old. He ordered an acrylic piece that joined the company logo, the bag and a rocket. Today, Santos rang the Nasdaq bell at the public company’s debut (the piece stayed in the office, but he took a photo to the ceremony).
The achievement was not having debuted a year earlier than planned, but having made the listing in a market that is hostile to technology companies and newcomers in general. It is the first deep tech in Latin America listed on the American stock exchange, how companies that manufacture technology for other companies are defined.
Semantix listed itself through a merger with Spac (a specific purpose acquisition vehicle) Alpha Capital, a business model that is also taking a hit. The average of investor redemptions when a Spac chooses its merger target has been around 90% – which, in most cases, ends up making the deal unfeasible.
With Alpha, the percentage was not much different. Investors collected 85% of the $230 million that Spac raised in 2021. But the vehicle had a structure for a bailout-proof M&A – which was key to closing the deal. The manager Innova Capital, owned by Veronica Serra, pledged in advance not to redeem, funding US$ 23 million, and a group of investors guaranteed a PIPE of US$ 94 million. Thus, the transaction was closed with US$ 127.5 million, which will result in a net cash position of US$ 115 million.
The initially expected numbers adjusted accordingly. The estimated debut value of $1 billion came home from $650 million, as Spac’s stock went from $10 to $6.50 in the last year.
The injected capital will be used to increase the engineering team and data, improve the products (the company recently opened an innovation lab at MIT), make geographic expansion and potential acquisitions.
“Our challenge in this new journey is to transform Semantix into a global company,” Santos told Pipeline. The company’s platform is used in 20 countries, but four of them have offices – Brazil, Mexico, Colombia and the United States. “Just over 10% of our revenue comes from outside Brazil. We will be a global company when we are on five continents and most of the revenue is international”, says the entrepreneur. The plan is for this to happen in five years.
Two weeks ago, Santos moved with his family to Miami, to set foot in one of the markets where Semantix sees the greatest growth potential. The entrepreneur has been on this technology and data journey since he was 16 years old, when he became a beta tester for Microsoft.
“Semantix is a high-growth company – 70% last year, 37% this year and a projection of 40% next year – and profitable, which is a rare combination today”, says Rafael Steinhauser, an executive who made his career in companies such as Cisco and Qualcomm and is the sponsor of Spac, alongside Alec Oxenford, entrepreneur who founded Letgo and OLX.
The merger of Alpha Capital and Semantix was announced in November last year and was expected to be completed in the first quarter. With the regulatory adjustment made by the SEC to Spacs, the demand for information increased and the process ended up lengthening.
Source: Value Pipeline