Latin America has become the hottest region in the world for startups. Who is behind the investments?

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Survey shows which region was the one that most accelerated growth in volume of venture capital. It was US$ 19.5 billion in 2021, triple the amount seen in 2020

Latin America had an extraordinary year in terms of attracting investors to its startups. The region was the one that most accelerated its growth in volume of venture capital, shows a survey by data company Crunchbase.

US$ 19.5 billion was invested in scalable, innovative and technological businesses in the region in 2021. It was triple the amount seen in the previous year.

But who is behind so much capital? Crunchbase put together a list of the most active venture capital investors in Latin America, on the venture capital and private equity fronts.

Check out:

Initial stage (early stage)

Angel and seed investment brought in around $900 million for early-stage startups, while series A and B rounds brought in around $5.5 billion. Brazil was the most attractive country in the region, followed by Mexico, Colombia, Chile and Argentina.

Crunchbase claims that so much capital volume is due to both a greater number of rounds and the increase in the amount invested per round. Some notable rounds were made at startups Daki, Ebanx, Merama and Mercado Bitcoin.

On the investor side, regional managers (such as Bossa Nova Investimentos, DOMO Invest and Kaszek) share space with international managers (Y Combinator, Valor Capital Group, Tiger Global Management) among the top positions.

Check out the ranking of the most active venture capital investors in Latin America (early stage):

Advanced stage (late stage)

Investment in more mature startups was responsible for a large part of the capital volume seen in Latin America in 2021. Around US$ 13.3 billion was allocated to the so-called late stage, or more than two-thirds of the total invested in Latin American startups .

This value was boosted by mega rounds, or investments of US$ 100 million or more, in businesses such as Nuvemshop, Rappi and Loft. E-commerce and financial services were prominent sectors in the last year. Among investors, international managers lead bets on mature startups.

Check out the ranking of the most active venture capital investors in Latin America (advanced stage):

The most active investors in total

Regional venture capital managers remain the most active when adding up the early-stage and late-stage rounds. Even so, international managers are conquering their space in the rankings. The Private Investment Association in Latin America (LAVCA) shows that 42% of venture capital rounds in the region had at least one global investor in 2019. In the first half of 2021, participation increased to 47%.

In the table of the 14 most active venture capital investors in Latin America compiled by Crunchbase, the top three positions are occupied by Kaszek, Monashees and Valor Capital Group. Kaszek and Monashees are managers in Latin America. Valor Capital Group is headquartered in New York, but is focused on connecting Latin American startups to the United States. Then there are global managers, such as Tiger Global Management and SoftBank.

Check out the ranking of the most active venture capital investors in Latin America (total):

Will investments continue in 2022?

Crunchbase claims that this year started off hot in terms of investments for Latin American startups. In the first two weeks of 2022 alone, US$ 450 million were invested in scalable, innovative and technological businesses in the region.

For them, the Brazilian startup ecosystem has grown in the last year as a way to fill a gap in relation to other startup-creating nations. Then, low interest rates drove investors to variable income. Also, the new coronavirus pandemic has highlighted the potential of solutions created by startups.

The scenario for this year is more challenging for venture capital and private equity, starting with the macroeconomic environment. Interest rates have risen or promise to rise in some countries, such as the United States and Brazil itself. In addition to the macro economy, investors are also reflecting on how far technology companies’ market valuation goes compared to their revenues. There is already a correction for multiples in public markets.

Conditions will be less favorable in 2022, according to investors and entrepreneurs. Brazilian startups should receive, in total, more money than in 2021. But some pointed out that the percentage growth should not be as strong and that we will have fewer unicorns, or startups valued at at least US$ 1 billion. Some entrepreneurs are already preparing cash for a more difficult funding scenario. And they warn: when that time comes, companies that are overvalued and without fundamentals will not survive.

Full story at InfoMoney

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