Business

Investments in Latin American startups drop 35% in April compared to 2021

Global funding decline has also hit the region; on the other hand, pre-Seed rounds set an all-time record, says Sling Hub's report

Good omen: Latin American startups kick-off 2022 with a 70% jump in funding — Image: Shutterstock

Carolina Pompeo

03.May.2022 19:28 BRT
UPDATED 04.May.2022 15:04 BRT

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Beating up the capital injected into the Latin American startup ecosystem by 2021 will be a hard task – at least that’s what the global investment slowdown suggests. In April, Latin American startups got “only” $821 million in funding – 12% less than the one registered in March and 35% less than in April last year, when $1.2 billion was invested in the region.

The data is from a new report issued by the Brazilian intelligence platform Sling Hub, obtained by LABS firsthand. Last month’s investments were distributed in 86 rounds, of which 62 were raised by Brazilian startups, which got 46% of the total funding, $383 million.

Next came the Mexican startups, which in just 6 rounds grabbed 23% of the region’s investments, $195 million. Most of this money went to Justo‘s Series B, the largest round of the month: a $152 million investment led by General Atlantic.

Third on the podium, Colombian startups secured investments of $115 million, 14% of the funds injected into the region in April. Startups from Chile, Uruguay, Peru and Argentina together received $126.7 million.

Despite the decrease in investments, for one specific sector, the scenario has not changed that much: fintechs continue to lead as the sector that has raised the most funds. There were 16 fundraising rounds that secured $318 million for fintechs. Also, between January and April 2022, the sector raised $1.9 billion, 45% more than the $1.3 billion received in the first four months of 2021.

Top 10 largest rounds for Latin American startups in April:

Justo (Mexico, Retailtech): $152 million Series B
unico (Brazil, Deeptech): $100 million Series D
Migrante (Chile, Fintech): $80 million debt round
Inventa (Brazil, Retailtech): $55 million Series B
Treinta (Colombia, Fintech): Series A of $46 million
Stark Bank (Brazil, Fintech): Series B of $45 million
Hurst Capital (Brazil, Fintech): Round of $42 million
Zubale (Mexico, Retailtech): Series A of $40 million
Migrante (Mexico, Fintech): Series A of $30 million
Minka (Colombia, Fintech): Series A of $24 million

While investors seem to have taken a break from super-rounds, funding for early-stage startups is on a roll – in fact, at its best: in April there were six pre-Seed rounds and $8.6 million invested, the best result ever for this investment stage (and ten times the volume raised in April 2021).

Note also that the checks are getting bigger in the initial rounds as well: from January to April 2022, pre-Seed rounds infused $256 million, $10 million more than in the same period last year, yet the number of rounds at this stage has halved, from 45 between January and April 2021 to just 20 between January and April this year.

More money in fewer rounds means bigger checks. In fact, Sling Hub found that the average size of pre-Seed rounds jumped from $325,000 to $1.2 million. “This shows that startups are proving their business models better before making their first funding round. It is a sign of maturity of the market,” says João Ventura, angel investor and CEO at Sling Hub.

Who got the biggest pre-Seed in April was Colombian fashiontech startup Morado, which secured a $5 million round with major investors such as Tiger Global, H20 Capital, A16z, QED, Village Global, and Latitude. The round was also the largest in the sector ever seen in the country.