Driven by low global interest rates and the effervescence of the Latin American ecosystem, investors are likely to pour $18.6 billion into the region this year. That’s the estimate of the venture capital fund Atlantico. Data gathered from different sources by the fund, including interviews with executives from more than 20 of the most prominent startups in the region, indicate that technology-based companies in the region attracted $9.3 billion in the first half of the year and that this amount should be easily surpassed in the second half.
At the same time, the market cap of technology companies in the region is likely to close 2021 accounting for 3.4% of Latin America’s GDP, estimates the fund, based on projections made in this third quarter.
Fintechs have attracted most of the investments so far (40% of the total), especially neobanks such as Nubank, C6, and Neon. According to Atlantico, the number of startups invested should also be a record, reaching around 800, compared to 526 last year and 614 in 2019.
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The fund also believes that Latin America may end 2021 with 26 unicorns (startups valued at $ 1 billion or more), compared to only four in 2018.
According to Atlantico partner Julio Vasconcellos, the general perception is that there are still several opportunities, especially in sectors that are still far from their full potentials, such as insurance, digital currencies, mortgages, and e-commerce, and that this should keep the appetite of investors keen for a long time.
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Last week, SoftBank launched a new $3 billion Latin American-focused fund intending to repeat the success of the first. Established in 2019 by the vice president and head of operations of the Japanese group, Marcelo Claure, at a time when no large investor had signed such large checks for startups in the region, SoftBank’s Latin America Fund has already invested $3.5 billion (of the $5 billion initially announced) in 48 companies in sectors ranging from education to finance and logistics.
This flow of resources has fueled billion-dollar expansion plans by e-commerce giants who predict that the Latin American market could quadruple in the coming years to levels where online sales relative to the total reach levels similar to those in China, where they are already close to 50%.
(Translated and co-written by LABS)