Digitization – of businesses and services hitherto with little technology embedded – was the watchword driving private capital investment in Latin American companies in 2021, according to consolidated data issued by LAVCA (Latin American Private Equity Investment Association), taking private capital investment to a new record of $29.4 billion.
Out of this amount, the infusion of venture capital reached $15.7 billion, more than Latin America raised in the entire previous decade. Venture capital as a share of total private capital investment also rose to 54%, compared to 25% in 2020, which only confirms 2021 as an unprecedented year when it comes to investments.
The report also showed that sixteen startups surpassed the $1 billion valuation last year:
- Mercado Bitcoin
The average and median VC round sizes increased significantly across all investment stages, driven by “strong global and local investor interest, increased capital and robust exit activity.” Seed rounds averaged $1.5 million; rounds for early-stage startups averaged $17.2 million, and the average checks for late-stage rounds reached $133.5 million.
Latin America also saw a rise in the number of venture capital mega-rounds, over $250 million, adding 12 in total (compared to just one in 2020, Rappi’s $300 million from T. Rowe Price):
- Nubank – $750 million
- Kavak – $700 million
- Rappi – $500 million
- Nuvemshop – $500 million
- Kavak – $485 million
- Loft – $425 million
- Nubank – $400 million
- Ualá – $350 million
- QuintoAndar – $300 million
- Bitso – $250 million
- Facily – $250 million
- Clip – $250 million
Other interesting data posted by LAVCA: venture investment in startups with a woman CEO or co-founder has risen since 2019, reaching 26% of capital raised in disclosed rounds over $1 million in 2021.
Some highlights of the report by country:
- Mexico: the country saw a notable shift in investment stage by total capital invested – in 2020, early-stage startups grabbed 49% of investments; in 2021, 64% of rounds were raised by late-stage startups.
- Colombia: this is where the biggest B Series happened so far: proptech Habi raised $100 million.
- Chile: Chile held the all-time record for debt financing with fintech Xepelin’s $200 million venture debt round.
When looking at the sectors that received the most investment, there is no surprise: fintech held its place as the leading sector, having grabbed 39% of the volume invested, followed by e-commerce solutions, which took 25% of investments.
However, investors are starting to back an increasingly specialized range of technologies within these areas, including DeFi, Buy Now Pay Later, brand aggregators, direct-to-consumer platforms (D2C), and digital storefront solutions for SMEs.