After a record year in 2021, with $15.7 billion invested in Latin American startups, according to LAVCA data (more than what was raised in the entire previous decade), the region shows no signs of cooling off. The venture capital volume calculated by the Association for Private Capital Investment in Latin America in the first quarter of 2022 shows a slight decrease compared to previous quarters – which is expected given the historically lower position of the first quarter of the year before others. Even so, the volume of investments attracted by 190 transactions in the region between January and March this year reached $2.8 billion, which is 67% greater than a year earlier and more than four times the amount registered in the same period of 2020.
During 2022’s first quarter, LAVCA also said that it has seen a significant increase in the average ticket size invested by institutional VCs in Latin American startups. The entity recorded a 1.6x and 2.6x increase in seed and early-stage average ticket sizes when looking at Q1 2021 v. Q1 2022, respectively.
“2022 will be a year for mindful investing and sustainable growth, per our conversations with investors. Path to profitability, select opportunities for M&A, and talent retention are all themes that will play a significant role in reconfiguring the market landscape in the coming months,” said Carlos Ramos de la Vega, director of venture capital at LAVCA. It’s a heedful but more optimistic view than that of other analysts and entrepreneurs.
In the last few weeks, Creditas‘ CEO Sergio Furio said venture capitalists and funds have been cutting LatAm startups’ valuation. At the same time, Ualá‘s CEO Pierpaolo Barbieri was very emphatic in telling iupana that LatAm needs much more capital to tackle its challenges and, therefore, seize opportunities.
Ramos de la Vega agrees with the need for more capital. “Latin America remains relatively undercapitalized compared to other global markets, even after the all-time VC investment record in 2021.”
While the Latin American tech ecosystem is not exempt from exposure to adjustments in global markets, we have seen the resiliency of local investors and operators in weathering macro and micro risks throughout the past decades. Talent concentration, maturity of local established managers, the proliferation of emerging GPs and the significant liquidity events we recorded in the past two years will all be key topics strengthening the secular upwards trend we have witnessed take place since Latin America began doubling its figure of VC investment, in 2016, going from $500 million to $4.8 billion in 2019
Carlos Ramos de la Vega, director of venture capital at LAVCA.
LAVCA numbers are only representative of VC investment — the association methodology includes all transactions in which at least one institutional VC fund participated –but among the most significant transactions in the region in the first quarter, some transactions are not included in LAVCA’s stats. The first and second-largest tickets of the quarter, for example, went to venture debt and CVC-led deals, respectively.
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Among the $100mln+ rounds that happened in 2022’s Q1 are:
- Keo World, a Miami-based BNPL platform operating exclusively in Latin America raised a $500 million venture debt round led by Hayfin Capital;
- Brazilian neobank Neon snagged a $300 million Series D funding led by Spanish bank BBVA, reaching unicorn status;
- Brazilian lending fintech Creditas raised a $260 million Series F led by Fidelity Management at a $4.8 billion valuation;
- Colombian Tul, an e-commerce platform that sells construction materials to small-sized retailers, gained a $181 million 8VC-led Series B round, which it led the startup to Brazil;
- Chilean insurtech Betterfly raised a $125 million Series C with Glade Brook Capital and other investors, becoming LatAm’s first social impact and B Corp unicorn.
- Brazilian HRtech Solides raised $100 million from Warburg Pincus, tying with Flash in the largest round ever raised by a startup in the segment in the region.
