{"id":19288,"date":"2016-09-28T16:19:34","date_gmt":"2016-09-28T16:19:34","guid":{"rendered":"https:\/\/www.lavca.org\/why-have-some-of-silicon-valleys-top-investors-started-investing-in-latin-america\/"},"modified":"2016-09-28T16:19:34","modified_gmt":"2016-09-28T16:19:34","slug":"why-have-some-of-silicon-valleys-top-investors-started-investing-in-latin-america","status":"publish","type":"post","link":"https:\/\/www.lavca.org\/why-have-some-of-silicon-valleys-top-investors-started-investing-in-latin-america\/","title":{"rendered":"Why Have Some of Silicon Valley\u2019s Top Investors Started Investing in Latin America?"},"content":{"rendered":"
LAVCA Director of Venture Strategy, Julie Ruvolo<\/a>, lays out the venture capital opportunity for local and international investors in Latin America.<\/em><\/p>\n (TechCrunch<\/a>) Latin America just might be the most overlooked emerging market on the planet.<\/p>\n The venture dollars in Latin America can\u2019t hold a candle to India<\/a> or China (compare China\u2019s US$11.8b in new VC funds for the first half of 2016, down 14 percent according the WSJ, to Latin America\u2019s US$218m)<\/a>, and the region\u2019s 600 million inhabitants get overlooked by investors who think that you need to reach a billion users to be a \u201creal startup.\u201d<\/p>\n But with debut investments from Andreessen Horowitz (Colombia), Founders Fund and Sequoia Capital (Brazil) and QED (Mexico and Brazil), that appears to be changing.<\/p>\n I spent the last couple of years writing<\/a> about Latin American investments for TechCrunch, covering rounds in startups like VivaReal<\/a>,\u00a0PSafe<\/a>, ComparaOnline<\/a> and\u00a0Descomplica<\/a>, and interviewing some of the leading local investors\u00a0in the region, like KaszeK Ventures, founded by the wildly successful MercadoLibre team, and Redpoint e.Ventures, a joint venture between Redpoint and e.Ventures, obviously.<\/p>\n The internet population is set to double from 300 million to 600 million.<\/p>\n<\/li>\n Half the population isn\u2019t part of the banking system (and only 15 percent of Mexicans even have a credit card).<\/p>\n<\/li>\n And pretty much everyone is coming online via inexpensive Androids<\/a>.<\/p>\n<\/li>\n<\/ul>\n Also worth noting is that Brazil, with only half of its 200 million inhabitants online, is already the No. 2 or No. 3<\/a> audience on every major social platform globally. And depending on whose<\/a> data<\/a> you\u2019re looking at, Brazilians spend more time online than any other population. (Bizarre to think it all started<\/a> with Orkut.)<\/p>\n How about the venture data? VC investments have been steadily climbing over the past five years, and 2015 was a banner year, with US$594m<\/a>\u00a0deployed over 182 deals, despite<\/a> back-to-back economic and political crises in Brazil, the region\u2019s leading venture market in terms of both fundraising and investment dollars.<\/p>\n And VC transactions in Latin America are up 46 percent year over year, according to\u00a0mid-year data <\/a>from the Latin American Private Equity and Venture Capital Association (LAVCA<\/a>), a nonprofit supported by Omidyar Network (where I\u2019m working).<\/p>\n So for those of you who think there \u201cisn\u2019t much going on\u201d south of the border, here are a few investment trends I\u2019m tuning into:<\/p>\n <\/p>\n Just in 2016, we\u2019ve seen Andreessen Horowitz make their first LatAm investment inRappi<\/a>, a Colombian grocery delivery service.<\/p>\n Founders Fund also made their LatAm debut with investments in Jusbrasil<\/a>, a legal platform, and fintech startup Nubank<\/a>. Nubank has raised US$80m<\/a>\u00a0over the past year from Founders Fund, Sequoia Capital (in their first Brazilian investment), Tiger Global, KaszeK Ventures and QED Investors, followed by a US$52m<\/a>\u00a0debt investment by Goldman Sachs earlier this year.<\/p>\n Goldman also led a\u00a0US$10m<\/a>\u00a0investment in Brazilian logistics startup CargoX this year, with participation from Valor Capital and Uber co-founder Oscar Salazar.<\/p>\n In Mexico, Accel Partners and QED Investors have made their debut investments: Accel participated in a\u00a0US$6.7m<\/a>\u00a0Series A in Mexican grocery shopping service Cornershop, led by ALLVP, one of the region\u2019s most active VCs, and QED joined KaszeK, Quona Capital, Accion Frontier Inclusion Fund and Mexican firm Jaguar Ventures in an $8 million<\/a>\u00a0Series A in lending platform Konfio.<\/p>\n <\/strong><\/p>\n Mexico also led the region in terms of deal count for the first time in 1H2016, with 47<\/a>\u00a0transactions (up 4.2X from 1H2015), largely stimulated by capital made available by government agencies Fondo de Fondos and the National Institute of the Entrepreneur (INADEM) over the last few years.<\/p>\n (Brazil\u2019s VC ecosystem had a similar jump-start with government funding from BNDES<\/a>\u00a0and FINEP<\/a>; also worth noting is that Susana Garcia-Robles at FOMIN<\/a>, the Multilateral Investment Fund, has personally led anchor investments in more than 70 funds in the region.)<\/p>\n <\/p>\n Fintech represents\u00a029 percent<\/a>\u00a0of IT investments (in terms of total dollars invested) in 2015, and 40 percent<\/a>\u00a0of IT investments in 1H2016. In Mexico, in addition to Konfio, lending platform Kueski raised\u00a0US$10m<\/a>\u00a0from CrunchFund, Rise Capital, Variv Capital and others (plus another US$25m<\/a>\u00a0in debt). In Brazil, the IFC led a\u00a0US$15m<\/a>\u00a0Series C in GuiaBolso with KaszeK Ventures, Ribbit Capital and QED Investors. Interesting to note is that since half the region\u2019s population is unbanked, pretty much every fintech startup is having a direct or inadvertent impact on financial inclusion.<\/p>\n <\/p>\n Brazil is the No. 2<\/a> agribusiness market globally behind the U.S., but agtech is a massively underserved sector in LatAm, accounting for less than 1 percent<\/a>\u00a0of venture investment in Latin America since 2011. That appears to be changing: Monsanto is investing up to US$92m<\/a>\u00a0in BR Startups, a Brazilian agtech fund managed by Microsoft in collaboration with Qualcomm Ventures.<\/p>\n Qualcomm Ventures also launched a program<\/a> to get a drone on every farm in Brazil (there are over 2 million). And German pesticide giant BASF just launched agtech accelerator Agrostart<\/a>.<\/p>\n <\/p>\n There isn\u2019t much in the way of publicly available data on digital M&A transactions in LatAm (we\u2019re working on it), but Movile appears to be the most active acquirer in the region right now.<\/p>\n Fresh off a US$30m<\/a>\u00a0Series F, Movile subsidiary iFood, the region\u2019s leading on-demand food delivery startup, acquired<\/a> SpoonRocket \u2014 their 15th acquisition in less than two years.<\/p>\n And Rappido, Movile\u2019s on-demand delivery and distribution service, is gaining traction in Mexico on the heels of a merger<\/a> with 99Motos, their Brazilian competitor.<\/p>\n <\/p>\n With newly elected President Mauricio Macri in office, Argentina is organizing a series of structural changes to facilitate new company creation.<\/p>\n Macri and National Secretary of Entrepreneurship Mariano Mayer just announced<\/a> a package of laws to foster entrepreneurship and new company creation: Ley del Emprendedor would allow entrepreneurs to register and open a company onlinewithin 24 hours<\/span><\/span>; Ley de Sociedades de Beneficio de Inter\u00e9s Colectivo would be the region\u2019s first legislation to define and recognize businesses with sustainable environmental or social impacts.<\/p>\n There are also plans for the creation of 10 new funds to provide entrepreneurs access to capital (three will receive US$30m each by year\u2019s end), and legislation to allow crowdfunding. Similar legislative projects to encourage new company creation are also underway in Mexico City and Brazil.<\/p>\n Read up on Latin America\u2019s venture fundraising and investment data, most active local and international investors and biggest deals, in LAVCA\u2019s Five Year Trends<\/a> report. To follow VC deals as they happen, subscribe to LAVCA\u2019s bi-weekly LatAm Venture Bulletin<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" LAVCA Director of Venture Strategy, Julie Ruvolo, lays out the venture capital opportunity for local and international investors in Latin America. (TechCrunch) Latin America just might be the most overlooked emerging market on the planet. The venture dollars in Latin America can\u2019t hold a candle to India or China (compare China\u2019s US$11.8b in new VCContinue reading “Why Have Some of Silicon Valley\u2019s Top Investors Started Investing in Latin America?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":2965,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[26],"tags":[],"acf":[],"yoast_head":"\nLet me lay out the opportunity as local investors see it:<\/h2>\n
\n
Top Silicon Valley firms are making their first investments in the region<\/h2>\n
Mexico out-fundraised<\/a> Brazil for the first time in 2015<\/h2>\n
For now, fintech dominates as the leading sector of venture investment in Latin America<\/h2>\n
Agtech is starting to heat up, with big investments from Monsanto, Qualcomm and BASF<\/h2>\n
Brazilian mobile conglomerate Movile is on an acquisition tear<\/h2>\n
All eyes are on Argentina<\/h2>\n