It was the second country in the region whose companies achieved the highest capitalization. Japan’s Softbank was the main international investor.
Despite the harsh economic impact of the ongoing Covid-19 pandemic, startups in Latin America recorded more than $ 4 billion in investments, with Brazil, Mexico, Colombia and Argentina leading the way, according to a new report from the Association. of Private Capital Investment in Latin America (LAVCA).
LAVCA, based in New York City, which also has regional offices in Washington DC and Silicon Valley, is a non-profit organization whose goal is to support the growth of private capital in Latin America and the Caribbean. It has more than 170 member firms, including global investment firms, sovereign wealth firms, and corporate investors.
In a recently released analysis of investing in Latin America, LAVCA found that venture investing in the region exceeded $ 4 billion for the second year in a row, with a record 488 deals. As recently as 2016, it had counted just $ 500 million.
“Collaborative investment between local and global fund managers accelerated, building on the pre-pandemic momentum,” he said. The report noted that financial technology (FinTech) was the top money-raising startup category in the region, followed by e-commerce.
Other sectors, such as healthcare technology and education, saw notable growth as a result of the pandemic. A separate LAVCA survey of dozens of companies working in both quarters found that more than half reported a 50% increase in demand as a result of the pandemic and lockdown.
Interest in this sector has continued into 2021. Brazilian firms Alice and Descomplica, for example, have raised funding rounds of USD33 million and USD84 million, respectively. In particular, the increase in investment occurred despite the World Bank estimating broadband Internet access in the region to be less than 50%, excluding much of the population in many countries.
World Bank Vice President for Latin America and the Caribbean, Carlos Felipe Jaramillo, said in October that increasing Internet access is “equivalent to multiplying education, training and employment opportunities” for the region’s population, particularly at a time in which millions of jobs are at risk as a result of the pandemic.
Although most of the financing comes from investors based in Latin America, there are more and more international investors, with the Japanese SoftBank standing out.
At the country level, the report found that more than USD 2.3 billion were invested in 282 agreements in all investment stages in Brazil, followed by Mexico, with USD 831 million spread among 94 agreements, Colombia, with USD 469 million in 35 agreements, and Argentina, where USD 222 million were invested in 26 agreements at each investment stage.
While the vast majority of funding comes from investors based in Latin America, international investors are increasingly active, especially SoftBank, based in Japan.
Earlier this month, two partners at Andreessen Horowitz, a Silicon Valley-based private venture capital firm founded in 2009, wrote that “there are an enormous amount of untapped opportunities in Latin America” for financial services, creating new opportunities for investors.
“Latin America is currently experiencing an explosion of fintech activity, and this is just the beginning,” the publication noted. “In Latin America, financial services have remarkably low adoption rates. Most consumers are still unbanked or unbanked. This extreme demand sets the stage for new fintech players to better serve existing clients. and introduce consumers to the formal financial system for the first time. ”