The entrance of major global investors into a string of recent early and expansion stage rounds in Latin America is contributing to record venture capital investment dollars in Latin American startups.
NOTABLE ROUNDS & INVESTORS (Dec. 2016 – Sept. 2017):
In the last 8-12 months, we’ve noticed a number of significant global and corporate investors making commitments to startups in major markets like Brazil and Mexico, indicating both a good opportunity for long-term capital investors and a maturity in the overall investment ecosystem.
- A few months after Chinese transportation giant Didi Chuxing announced a US$100m investment in Brazilian rideshare app 99, Japan’s SoftBank and existing investor Riverwood Capital announced a separate US$100m investment in 99. (99 also has funding from monashees+, Qualcomm Ventures, and Tiger Global.). READ MORE about recent rideshare activity from 99, Cabify, Easy, and Uber.
- In late 2016, Sequoia Capital quietly made a US$52.8m investment in Colombian grocery delivery service Rappi. Earlier that year, Andreessen Horowitz made an undisclosed investment in Rappi, its first in Latin America. Redpoint e.Ventures also invested previously. READ our interview with Rappi Co-founder and CEO Simón Borrero.
- General Atlantic made an undisclosed investment in Mexico’s PayClip (formerly Clip). Luis Cervantes, General Atlantic’s head of Mexico, joined the board. PayClip raised an US$8m Series A in 2015 led by Alta Ventures, with participation from AMEX Ventures, Sierra Ventures, Endeavor Catalyst, and Angel Ventures Mexico. General Atlantic’s current portfolio in the region includes Argentina’s Despegar.com and Brazil’s SAS Sistema de Ensino.
- General Atlantic made an undisclosed investment in Gympass, a Brazilian B2B gym membership platform operating in ten countries.
- Accel led a US$21m Series B in Mexican delivery startup Cornershop, with participation from previous investors ALLVP, Jackson Square Ventures, and Creandum. READ our interview with CEO Oskar Hjertonsson.
- QMS Capital, monashees+, Accel Partners, Endeavor Catalyst, Pointbreak LLC, and Pollux made a Series C investment in Brazilian enterprise software platform Neoway. Temasek Holdings later joined this round in September.
- IFC, Naspers Fintech, Redpoint eVentures, KaszeK Ventures, Quona Capital, and QED made a Series B investment in Brazil’s Creditas (formerly BankFacil).
Last year, Latin American startups raised inaugural rounds from Sequoia Capital, Founders Fund, Andreessen Horowitz, Goldman Sachs, and TPG Growth. In 2017, the major later stage rounds are coming from SoftBank, Didi Chuxing, General Atlantic, and Temasek.
BY THE NUMBERS:
The growing maturity of startups in the region is also evident by an increase in individual ticket sizes. Expansion stage deals (Series C and beyond) reached US$314m from January – June 2017, compared to the US$208m invested at that stage from January – December 2016.
99’s back-to-back rounds in 2017 represent two of the top three venture rounds ever (by amount invested) for Latin America.
According to LAVCA data, startups in Latin America received US$477m in venture capital funding in the first half of 2017, almost as much as was invested in all of 2016 (US$500m), and more than double the amount invested in 1H2016 (US$218m).
- US$443m (93%) of venture capital dollars invested in LatAm startups went to the IT sector, a significant increase from the US$148m invested in the IT sector when comparing year-on-year to 1H2016. The number of deals remained consistent, pointing to the fact that a handful of large expansion rounds are responsible for moving the needle.
- A little over half of all VC deals in 1H2017 went to Brazilian startups (51%), followed by Mexico (21%), and Argentina (9%).
- Brazilian startups captured an overwhelming 76% of the dollars, followed by Colombia (14%), and Mexico (7.5%).
Meanwhile, the global share of early-stage capital going to startups in emerging markets is increasing, according to Crunchbase News.
And appetite for venture capital funds targeting Latin America continues a positive trajectory. LAVCA and Cambridge Associates recently published a Limited Partner opinion survey, which indicated growing investor interest in Brazil & LatAm early-stage tech:
“Appetite for venture capital funds targeting Latin America continues its positive trajectory, with 43% of all LPs [surveyed] expected to include this strategy in their PE portfolios in three years’ time, an increase from 2016.”
