In 2023, venture capital (VC) funding in Latin America saw a significant decline due to global financial uncertainties, totaling approximately $4 billion across 864 deals. This was a 58% decrease from 2022 and 77% from 2021, according to Angel Venture’s research.
Early-stage companies were primarily targeted, with Brazil, Mexico, Colombia, Argentina, and Chile receiving most of the capital.
The region’s VCs raised $2 billion, slightly more than in 2022’s $1.4 billion.
Despite challenges, some startups successfully raised funds, such as Finkargo with a $20 million Series A and others like Clara and Tractian securing significant investments.
Looking into 2024, the VC landscape appears challenging yet ripe with investment opportunities.
Key investors anticipate a rebound in funding, driven by easing interest rates and a focus on emerging markets due to improved inflation indicators. Startups at pre-seed and seed stages are expected to find fundraising as challenging as before the pandemic, with a cautious outlook from investors.
The geopolitical instability and the potential for Latin America, particularly Mexico, to benefit from global supply chain reconfigurations could attract investment.
Fintech, AI, Agtech, and Healthtech are seen as the most promising sectors for investment.
Despite a crowded early-stage fintech landscape, the region is poised for leadership in financial services and blockchain application.
VCs will prioritize startups that demonstrate profitability over rapid growth, innovative solutions with large market potential, and efficient capital management among other qualities.
AI’s growing influence in startups is acknowledged, but its application must solve real customer problems and enhance value propositions to attract VC interest. The coming years are expected to focus on strong teams creating impactful products, reflecting a shift towards fundamentals in tech entrepreneurship.
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With information of Frank Velazquez, from Angel Ventures
