Private sector is catching up in Latam with an unprecedented rise of venture capital investment the region. 2018 was an absolute record year, mainly in Mexico, Colombia, Brazil, Argentina and Chile, and the trend continues in 2019. Unicorns are appearing in the scenario and strongly technology based, disruptive, innovative startups are attracting funds for expanding their operation in the region and globally (1)(2)(3). According to April’s report of the association for private capital investment in Latin America (LAVCA), the rise of investment in regional startups grew from $500M in 2016 to $1.14Bi in 2017, and to $1.98Bi in 2018, which means a 4x growth in 2 years.
One example of this trend is Japan’s Softbank announcement of the launch of a $5Bi fund to invest in technology start-ups across Latin America. Even more, as a projection, Softbank’s CEO, Masayoshi Son, indicated: “Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead”(4).
Another interesting article asks why European startups should consider Latam as a priority market for their expansion. A couple of relevant answers are the development of the startup ecosystem in the last five years; that, although the region is known as complicated and protectionist for business, it can be a “pleasant surprise” to set up operations; and that certainly a 650M people market with a growing middle class is a clear opportunity (5).
The industries leading 2018 investment were logistics and distribution, and Fintech (46 and 25% of the total investment respectively). When looking at Life Sciences, the investment going to Biotech and Healthcare, as categorized by LAVCA, even though a smaller fraction of the total, increased importantly in terms of deals:7 to 21 and in terms of value: $6.5M to $20M(6).
A vibrant startup ecosystem is getting traction and probably is setting the course for the following years.
Author: Tomás Mardones