This article will explore the role that Coatue played in dramatically increasing the value of CloudWalk, a Brazilian facial recognition software company.
In November 2020, the facial recognition software company raised $150 million from Coatue, a venture capital firm specializing in technology investments, valuing them at over $2 billion—more than double its July valuation of $900 million. The fundraising round was led by Coatue Management LLC, with participation from existing investors such as Valor Capital Group LLC and General Atlantic.
This article will discuss how this investment achieved such a dramatic increase in CloudWalk’s valuation and what this success may mean for future investments of similar companies with Coatue’s involvement.
Overview of CloudWalk
CloudWalk is a Brazilian technology company specializing in facial recognition, payments and risk management solutions. The company was founded in 2015 and has since grown to become one of the leading providers of facial recognition solutions for businesses in Brazil and beyond. Recently, an investment from Coatue Management has substantially increased the company’s value, bringing it to an estimated $2.15 billion.
In this article, we will go over the role Coatue played in this increase in value.
Company Background
CloudWalk is a high-tech enterprise founded in China in 2015, intending to become the global leader of secure and integrated technologies. The company works to enable multiple digital transformation scenarios such as financial services, government business, transportation and retail to provide their services seamlessly and effectively over their CloudWalk OS platform.
The company has offices worldwide with its headquarters in Guangzhou, China. Its secure and integrated technology platform allows CloudWalk to provide cloud infrastructure protection for users worldwide, including storing data locally for better performance.
Aside from providing cloud-based security solutions, CloudWalk is also increasingly focusing on developing facial recognition technology such as face scanning payment systems. The company’s face scan payment system has now been implemented in over 500 countries across the globe.
In June 2020, Coatue Management LLC led a consortium of investors to pump $2.15 billion into Brazil’s largest software developer – CloudWalk Technology Company Ltd., Therefore increasing its value to 11 billion yuan (US$1.54 billion) after raising more than 10 billion yuan in 2019 after completing four rounds of various investments from Chinese investors including Innovation Works Capital, Baidu Capital, GSR Ventures and Shangjin Capital led by Tencent Holdings LTD’s chairman Pony Ma Huateng.
Overview of CloudWalk’s Business
CloudWalk is a leading artificial intelligence (AI) company registered in China with a research and development center in Brazil. Its core business focuses on providing AI-based integrated solutions to financial technology companies worldwide, or FinTech. The company’s brand stands for technology innovation, application research and professional services in the financial field.
CloudWalk uses cloud-based technologies to make it easier for traditional financial institutions to quickly leverage new technologies such as blockchain, Internet of Things (IoT), mobile payments, facial recognition and virtual banking transactions. The company partners with major outsource platforms like IBM Cloud and Alibaba Cloud for its cloud computing needs.
Led by an experienced team of AI leaders from Silicon Valley, CloudWalk works with more than 50 clients across Brazil, USA and China including major banks such as Bank of America Merrill Lynch and Brazilian-based BTG Pactual – the largest bank in Latin America by market capitalization.
In 2020, U.S.-based investment firm Coatue expanded its global tech investments by leading a $180 million round in CloudWalk that pushed its valuation up to $2.15 billion – making it one of the highest-valued Brazilian startups ever backed by an American investor. Coatue had previously been looking at investing in financial tech startups globally – but when they discovered CloudWalk they immediately saw them as a potential game changer due to their cutting edge technology focus. By making this initial investment into CloudWalk’s Series B they not only lowered risk but increased their potential returns exponentially – something that will undoubtedly benefit them into the future when Financial Technologies become even more ubiquitous globally.
Brazil’s CloudWalk valued at $2.15 bln after Coatue-led investment
Coatue’s role in CloudWalk’s development cannot be overlooked. Coatue, a global investment firm, moved to invest in CloudWalk, a Brazilian cloud-based payments company. This investment of approximately $190 million helped increase the company’s valuation to $2.15 billion, making it one of Brazil’s most successful tech startups.
Here, let’s look at how Coatue made this possible.
Overview of Coatue’s Investment
Coatue Management LLC is a technology-focused investment firm. The company, founded in 1999 by Philippe Laffont, has offices in San Francisco and New York City. It is known for investing early in some of the world’s most successful tech companies, such as Uber, Airbnb, Spotify, Snapchat, and Lyft.
In 2020, Coatue Management invested in Cloudwalk Technology SA (CloudWalk), a Brazilian identity-as-a-service (IDaaS) provider with over 6 million active users across Latin America. The investment totaled over $400 million and valued CloudWalk at an estimated $2.15 billion — a massive increase from its pre-investment valuation of just $400 million.
The funding allowed CloudWalk to expand into international markets such as Mexico, Argentina and Colombia while serving larger corporate customers with its facial biometric recognition solution. Furthermore, Coatue’s experience and resources helped significantly increase CloudWalk’s branding efforts among large cloud service providers throughout Brazil and worldwide.
Overall, Coatue Management’s strategic investment has helped advance CloudWalk’s international effort while increasing its overall value as one of Latin America’s fastest growing GDPR compliant authentication solutions company.
Benefits of the Investment
Coatue’s investment in Brazil’s leading provider of contactless payment and customer identification solutions, CloudWalk, yielded substantial results for both parties. CloudWalk’s valuation almost tripled from $800 million to $2.15 billion after Coatue-led investment. This fundamentally changed the outlook on the company, its prospects and most importantly, attracted additional investors with deep pockets.
For Coatue, the significant returns provided by the investment promoted a robust return profile which was sustainable in the long run. Amongst its many other benefits, it assisted in enabling further expansion into new sectors and businesses with solid potential. Additionally, it allowed Coatue to generate even better returns as it becomes increasingly more attractive to potential acquisitions as a single solution provider with a solid core of profitable investments already in place.
Moreover, Coatue was able to leverage its wealth of experience in venture capital investing and subsequently broaden its expertise while maintaining a steady income stream based on the powerful returns associated with the investments. With Coatuie’s success came an array of newly established relationships with other investors and companies alike, revealing previously untapped opportunities in many sectors and industries across Brazil that could potentially serve as lucrative investments for years to come.
Cloudwalk also benefited greatly from this move, receiving financial support from some of Brazil’s most influential business figures for future development initiatives like data engineering workshops, team building training exercises and recruitment incentives. In addition, it also opened access to resources from global emerging market companies that provided guidance and insight into new payment technologies like biometrics for customer identification which enhanced CloudWalk’s overall competency within their industry significantly and continues deliver truly innovative payment solutions today.
Impact of Coatue’s Investment
Coatue, a leading global venture investor, recently invested around $700 million into Brazil’s CloudWalk Technology, which valued the company at $2.15 billion. This round of funding marks the largest venture capital investment ever in the Latin American country’s tech industry.
Let’s look at how this investment impacted CloudWalk’s valuation and what role Coatue played in this success.
Increased Valuation
In April 2021, Brazilian tech company CloudWalk was valued at $2.15 billion after receiving a major investment round led by international venture capital firm Coatue Management LLC. The estimated $172 million that Coatue invested enabled the deep-tech and payment solutions provider to become one of Brazil’s most valuable startups.
Before the investment, CloudWalk had already garnered significant backing from 5 different investors leading up to the Series C funding round, with BMG Bank its primary shareholder. In addition, with its accelerated growth due to continued adoption of the national digital payments system PV UPI, which forms part of a wider initiative driven by the Central Bank of Brazil, investments from companies like Coatue were essential for CloudWalk’s scaling up process.
As an expert in quantitative trading, venture capital and technology investments, Coatue’s financial resources and industry knowledge particularly added value as CloudWalk worked towards advancing its digital banking solutions business to meet consumers’ needs nationally and globally. Consequently, this injection of capital was paramount in lifting CloudWalk’s valuation and boosting its reputation among Brazilian businesses on an international scale.
Improved Cash Flow
The investment from Coatue in CloudWalk Technology, a Brazilian start-up specializing in facial recognition, improved the start-up’s cash flow. However, the most immediate result of this capital injection was getting the business to move away from unsustainable losses to creating and sustaining revenue growth.
This had a roll-on effect in allowing the business to attract additional partners and investors who otherwise may have hesitated due to financial constraints. In addition, the additional revenue generated allowed CloudWalk Technology to reinvest and focus on continued development and expansion into other territories, leading to increased value for the company.
Expansion into Other Markets
The investment made by Coatue, one of the leading global venture capital firms, has allowed CloudWalk to expand into other important markets. This process began soon after the initial investment in Brazil, with CloudWalk moving into major countries such as India and South Africa. The numerous partnerships supported this process it created with large corporate entities in those regions. Additionally, because of its flexibility to enter new markets quickly and efficiently, CloudWalk has expanded into a variety of other countries worldwide.
Thanks to this expansion and its ability to reach larger markets more effectively, CloudWalk’s valuation has soared from around $700 million before Coatue’s involvement to more than $2.15 billion today. Not only have Coatue’s investments helped increase CloudWalk’s value but their expert guidance and knowledge has helped shape strategic decisions that have further pushed their growth and propelled them towards becoming a truly global company.
Conclusion
In conclusion, the remarkable $2.15 billion valuation of Brazil’s CloudWalk Technology is achieved by Coatue’s sophisticated and successful investments in the company. Coatue, a venture capital firm focused on technology investments and growth-stage companies, was able to accurately identify the potential of CloudWalk Technology and decided to invest in this innovative artificial intelligence company at an early stage. Furthermore, through its efficient capital management system, Coatue made strategic investments focused on areas with higher potential to bring maximum returns for itself and other investors.
Crested with such spectacular success stories as CloudWalk, it can be said that Coatue knows exactly how to successfully identify a disruptive technology business, take on the risk of investment at an early stage and partner with up-and-coming entrepreneurs to move a company towards reaching its full potential and enlarging its portfolio.
