RIO DE JANEIRO, BRAZIL – The investments of venture capital funds reached a historical record of R$33.5 (US$6.3) billion in the first nine months of 2021, according to a quarterly survey conducted by the Brazilian Private Equity and Venture Capital Association (Abvcap) in partnership with KPMG. The volume is three times higher (205%) than the amount invested in these companies in the same period in 2020.
According to the survey, the number of startups that received investments this year is also a record: 226, compared to 147 a year ago.
In the third quarter of 2021, venture capital investments totaled R$11.1 billion, an increase of 109% over the same period in 2020. Between July and September, 85 companies were invested against 66 in the same period of the previous year.
On the other hand, investments from private equity funds fell 27% in the year to September, to R$4.5 billion, compared to the same period in 2020. However, in the third quarter, there was an increase of 29% compared to the same period in 2020, to R$2.2 billion.
In the first nine months of 2021, the number of companies invested in private equity was 13, compared to 48 a year earlier. There were only three companies in the third quarter, compared to 13 in the same period of 2020.
Venture capital focuses on emerging companies with high growth potential, while private equity focuses on consolidated companies. Adding both modalities, the investments reached R$38 billion in the year to September, an increase of 121% compared to the same period in 2020. In the third quarter, these investments were R$13.3 billion, an increase of 90% over a year earlier.
The disinvestments of private equity and venture capital funds reached R$16.9 billion by September 2021, an increase of 42%. In the third quarter, these divestments totaled R$4.3 billion, a 40% drop compared to R$7.2 billion a year earlier.
According to Roberto Haddad, partner leader of private equity and venture capital at KPMG in Brazil, Brazil is already considered one of the leading global hubs of differentiated entrepreneurs with a high potential for success. “Private equity and venture capital funds are the main responsible for making these businesses flourish and take off. Knowing that money is available for venture investments in new companies stimulates entrepreneurship in every corner of the country,” KPMG says in the statement.
“In addition, around the world, the pandemic has required new technological solutions, and the expectation is that these changes are here to stay, which makes digital companies even more attractive.”