According to the Inside Venture Capital survey by business platform Distrito, venture capital investments in Brazilian startups declined by 51.4% in the first semester compared to the same period of the previous year.

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Additionally, the number of transactions also experienced a 63.2% decrease in the same comparison. During this period, a total of $778.1 million was invested in 199 rounds of funding. The last time the number of investment rounds was below 200 was in the second semester of 2017, when there were 167 rounds totaling $386.6 million, as reported by Startups.

Distrito explained that these results were impacted, among other factors, by the crisis of the Silicon Valley Bank (SVB) in March, as this American bank is widely used by startups and venture capital funds.

In terms of quarterly comparison, the second quarter ended with a total of $384.7 million invested in 97 rounds of funding, indicating a level practically similar to the previous quarter when $393.4 million was invested in 102 rounds.

Despite the decrease in the first semester, the report shows a positive trend in investments. For example, June was the fourth consecutive month with an increase in the invested volume.

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Why is it relevant for venture capital in LatAm?

  • Impact on the startup ecosystem: Brazil is one of the leading countries in the region in terms of startups and entrepreneurship. A significant decrease in investments in this market can have a negative impact on the ecosystem, affecting innovation, growth, and job creation in the region.
  • Reflection on the investment climate: The decline in venture capital investments in Brazil may indicate a shift in the investment climate in the Latin American region as a whole.
  • Risks and opportunities: This decrease in investments can represent both risks and opportunities for venture capital in the region. The decline in investments may indicate economic and regulatory challenges that could create uncertainty and difficulties for the growth of startups and return on investment.

Why is it relevant for startups in LatAm?

  • Limited access to financing: A decrease in investments in Brazil can hinder access to financing for startups in the region, as Brazil is one of the main markets for startup investments in Latin America. This could limit the growth and development of startups in the region.
  • Influence on market sentiment: The decrease in investments in Brazil can create a sense of caution and reduce investor confidence in startups in Latin America as a whole. This could impact financing opportunities and the interest of venture capital in the region.
  • Implications for regional competition: The decline in investments in Brazil can impact regional competitiveness, as Brazil is one of the main drivers of innovation and entrepreneurship in Latin America. Fewer investments in Brazil could create an imbalance in the competitive landscape and affect the visibility and attractiveness of startups in the region overall.

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