LatAm 2022: Attracting big investors as tech sector grows

Following a tumultuous year, gripped by the impact of Covid and political instability, Latin America is reaping the rewards of a growing tech ecosystem aimed at addressing the needs of its citizens and businesses.

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Diego Grandi / Shutterstock.com | IDG

Latin America is poised for a boom in venture capital investments, with the region already having secured more than $6.5 billion in VC in the first half of 2021. This has exceeded 2020’s $4.1 billion of venture capital investment into Latin America, which surpassed the more than $3 billion of south-east Asia and represented a sum larger than that of Africa, the Middle East and central and eastern Europe combined, according to the Global Private Capital Association.

The region is challenging established geographies like India, which raked in $8.3 billion in the first half of the year. The top 20 cities for VC investment have been in Asia, North America, and Europe – however, in 2020, FDI Intelligence noted the significant role that São Paulo and Mexico City role played in terms of VC-backed FDI having hosted 16 and 14 projects last year.

Latin America’s 23 unicorns – with more seemingly on the horizon – have made it an attractive region for investment. Start-up exits brought in $11 billion in 2020 and LatAm closed almost 500 deals in the same period, according to a Bloomberg report.

Central America has seen renewed interest with three major LatAm players joining forces to support start-ups in the area. According to the LatAm List, Carïcaco, a Costa Rica-based business accelerator which supports entrepreneurs has teamed up with Argentine VC fund Newtopia VC, and another Costa Rican early-stage VC firm called Carao Ventures, to work collaboratively to “support and promote the growing startup ecosystem erupting in Central America” through mentoring, networking and investment.

One of the biggest success stories of the region is MercadoLibre, which has continued to report growth, building on its 2020 success and seeing revenue increased more than 70% year over year. Its growth strategy has seen it develop Meka, a partnership with VC firm Kaszek, which was founded to invest in leading Latin American technology companies, according to the Motley Fool. Meka will see the two companies jointly investing in smaller companies with an offer built on providing both capital and infrastructure.

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