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Contxto – Now more than ever bad news seems to be the bread and butter for everyone. So how about a nice change of pace?
In Chile, it looks like venture capital (VC) funding backed by the Corfo—a government agency for economic growth—was higher in February and March of this year compared to this same term in 2019.
Specifically, data from the Chilean Association of Investment Fund Managers (Acafi, for its Spanish acronym) revealed that VC funding grew 3.6 times in 2020, compared to last year. A larger part of these contributions were early-stage investments.
VC funding on the rise
The increase in VC funding is rather odd for two reasons. First, there were nationwide protests that kicked off in October last year, sending shockwaves throughout the country. And second, there’s the coronavirus (Covid-19) outbreak.
So what convinced investors to move forward with funding despite these extraordinary circumstances? The possible explanations for this are very interesting.
Ironically, the Acafi states that the protests actually grabbed investors’ attention towards Chile. Given the complexity of the problem, they were drawn towards wanting to learn more about how others were investing. Likewise, for investors that had already contributed with funds to Chilean startups, they wanted to see how their portfolio companies were coping.
As for Covid-19, many startups and products have popped up with solutions for the problem. Whether it’s in telemedicine, logistics, etc.—investors are intrigued.
- Related article: Chile to speed-draft its fintech law by mid-2020
So… I guess every cloud has a silver lining?
In any case, it’d be interesting to see Acafi’s report on VC funding in April and May. As these are the months in which Covid-19 will make a more profound impact.
And let’s not forget that the government of Santiago is currently drafting the country’s own fintech law. To that end, authorities hope to bring it to congress for discussion by mid-2020.
So this is one country that’s worth watching.
Related articles: Tech and startups from Chile!