Venture capital funds have been playing a crucial role for Latin American entrepreneurs as the COVID-19 pandemic imposed a series of new challenges to businesses. But while some VC firms have their eyes set on the region’s major economy, Brazil; others chose to address markets such as Mexico and Colombia.
That is the case of Santiago-based Alaya Capital Partners. The 10-year firm closed its third fund of $80 million focused on Spanish-speaking Latin America’s startups earlier this year.
“Mexico and Colombia have a huge market with high potential, which meet the conditions to be a great opportunity for startups to present innovative solutions that are already taking in other countries in the region and obtain a greater demand. In the same way, it is emerging as a bridge between the United States and Europe, where entrepreneurs can take their next step,” says Luis Bermejo, managing partner and founder of Alaya Capital.
In this sense, startups from Argentina, Chile and Peru are opening operations and offices in Mexico and Colombia: one of those is Betterfly, set to arrive in 2022. A Chilean life insurance startup, Betterfly raised the largest round ever received by an insurtech in Latin America: a $60 million Series B round from investors such as DST Global and Softbank. Alaya Capital was the first fund that invested in the company, founded in 2018.
“The advantage of being a digital business is that your customers can be anywhere in the world and can buy your services without the need to have operations in the same city. But in the case of these countries, with that huge potential for growth and scale in the internationalization of startups outside the region, it is necessary to settle down to be closer to these opportunities, even for startups that have established themselves in other markets, such as Betterfly,” says Bermejo.
That is also the case of Moova, an intelligent logistics startup born in Argentina, which entered Mexico in 2020 in the midst of a pandemic with a 100% remote expansion plan, driven by the great growth of e-commerce in the country.
Mexico’s fast technology adoption also brought to the country the Chilean proptech firm Houm, a platform for the automation of rental and property management. Fresh out of Y Combinator, Houm raised, in May, $8.1 million in investment to continue its expansion in the continent.
Customer service and omnichannel solutions are also the background for Chattigo, from Chile, an AI platform to manage all communication channels of a company in one place; and for the Colombian Backstartup, which automates the accounting management and legal and administrative issues for SMBs. Backstartup raised a $1.2 million seed funding round led by Alaya Capital in February and has already begun operations in Mexico.
“We see great quality startups with an ecosystem with great territorial distribution; it is not all centralized in the capital, which is also an opportunity for entrepreneurs to take their first steps of validation in a large market. In addition to accompanying our portfolio in its growth in the country, we aim to increase our presence in these countries,” adds Bermejo.