With almost 700 million population, 20 diverse countries, 15% of the land on earth, 80% of its citizens living in cities (most urbanized continent), and a total GDP reaching USD $6 trillion, it is no news that Latin America is becoming a wealthier region. Venture capital is significantly contributing to this trend by helping scale upcoming businesses.
VC funding into the region nearly doubled in 2018 to a record USD $1.98 billion compared to USD $1.14 billion over 2017. Last year’s investment was 4 times the USD $500 million invested in 2016.
Transaction sizes are growing. The top five investments in 2018 all exceeded USD $100 million per round collectively totalling USD $1.2 billion, more than the total invested for all of 2017.
At the same time, early stage deals drove the record 463 VC transactions in 2018 compared to 249 in 2017. Main markets are Brazil, Mexico and Chile. Main sectors are logistics, fin-tech and transportation (graphs at the end).
Within the factors contributing to this growth are a wealth transfer to a new mindset generation of millennials, a growing support from local DFIs, and the global attention received by the region. In the end:
1. Global mainstream investors:
- Berkshire Hathaway, Goldman Sachs, Sequoia, Ant Financial, Andreessen Horowitz, Naspers and Softbank made multi-million dollar investments in Latin America.
- In the case of Andreessen Horowitz, it’s the only geography outside of the US where the firm has committed significant capital and the pace of its investments is increasing.
- Softbank’s USD $5 billion commitment to the region was the largest ever technology fund focused exclusively on the fast-growing Latin American market.
2. Success cases:
- Rappi, an on-demand delivery startup from Colombia, received a USD $1 billion foreign investment, marking the largest technology financing to date in a Latin America-based company.
- Exits are happening in Latin America. Some of the most relevant exits during 2018:
- “99” from Brazil, USD $1 billion by Didi
- “Linio” from Mexico, USD $138 million by Falabella
- “Solarity” from Chile, USD $75 million by America Energy Fund
- “Student Loan Hero” from Chile, USD $65 million by Lending Tree
- Examples of Latin American Unicorns: Nubank, Pagseguro, TOTVS, Mercado Libre, Ascenty, OLX, Globant, Despegar, B2W, Rappi
3. Eventual US / Global recession:
- Investors seeking resilient companies are looking at Latin America as a hub for an eventual US / Global recession
- Evidence suggests that the vast majority of Emerging Markets, and specially Latin America, shows high resilience to US-initiated economic downturns, driven in part by the stability of private local consumption
- More about this topic in the following article >
Capria Network is integrated by 9 local network funds in Latin America investing in resilient companies in Brazil, Central America, Colombia, Chile, Mexico and Peru. We are very excited about the latest VC industry trends in Latin America and plan to continue investing in the region.
Latin America VC investments 2011-2018 (Source: Crunchbase/LAVCA):
Breakdown by country deal volume (Sources: LAVCA):
Breakdown by sector $ volume (Source: LAVCA):