Early this year, SoftBank Innovation Fund was announced as “the largest-ever technology fund focused exclusively on the fast-growing Latin American market”.
This SoftBank decision makes total sense once we realize the economic development of Latin America in the last years. The region is now regarded as “the new China” when it comes to venture investing, business startups, and venture funds because of rapid growth taking place in the economy.
In fact, the Association for Private Capital Investment in Latin America stated that in the first half of 2019, venture funds investments in Latin America summed USD 2.6 Bn. across 160 transactions, which is a big improvement to the USD 2 Bn. raised in 463 transactions for 2018.
Just think about this fact:
Do you know that in 2016, all startups in Latin American just raised USD 500 million combined?
In other words, venture funding in Latin America in the first 6 months of 2019 summed more than 5 times the amount raised in the whole of 2016.
This clearly proves that:
- Venture funding is taking over at a fast rate and the stats are there to prove it .
- Rounds are getting bigger which shows how the market is maturing quickly.
- More money was raised over fewer transactions which means that larger amounts of cash are being invested.
We’re now seeing a noticeable improvement in activities in the early stage from seed all the way to growth capital.
Big deals haven’t been left out of this as more and more investments have been rewarded like:
- Colombian on-demand delivery unicorn Rappi raised USD 1 Bn. in April.
- Gympass raised USD 300 million in June in Brazil.
- Brazilian Real estate unicorn QuintoAndar raised USD 250 million in a Series D.
In recent years, Brazil has had the largest share of venture funding in Latin America but this has come to change because in the first 6 months of 2019, Colombia has surpassed Brazil in terms of venture dollars raised thanks to the recent Rappi’s investment round.
According to the Association for Private Capital Investment in Latin America, Colombian startups raised over USD 1.06 Bn. in venture funding in 13 transactions.
Now, compare this figure to the USD 989 million raised by 88 Brazilian startups over 88 deals and you would clearly see that the difference and margin is really large.
Next in the list is Mexico with USD 310 million invested in 34 deals. Collectively, the three markets made up 91.9 percent of the dollars invested and 84.9 percent of the deals during the first half of 2019.
Also, Kaszek Ventures founded in 2011, has recently closed two funds totaling USD 600 million in August as reported by Techcrunch. This made them one of the primary architects of the rapid boom startup financing and growth in Latin America.
In the words of Nicolas Szekasy, the co-founder and managing partner of Kaszek Ventures: “Every year it’s one step ahead. In the last few years, in particular, we have seen the pace accelerating and an increase in quality of the founding teams”.
