80% of Latin American startup investment is concentrated in Brazil and Mexico

RIO DE JANEIRO, BRAZIL – In Latin America’s startup ecosystem, 2021 turned out to be a record year for investment: US$15 billion was invested in the region, a figure comparable to the sum of the previous ten years.

The study Venture Capital and Growth Equity Ecosystem in Latin America by Endeavor and Glisco reported that 80% of this investment belongs to Mexico and Brazil, which is explained by the size of their economies and their maturity within the ecosystem.

In addition, 62% of this investment was made by foreign funds such as SoftBank, Valor Capital Group, Endeavor Catalyst, FJ Labs, and Tiger Global Management.

On the other hand, the study also analyzed that from 2020 to 2021, investment rounds of US$50 million or above increased four times, representing 79% of all capital invested in 2021.

The analysis also revealed that it takes seven years for startups to reach the US$1 billion value to reach unicorn status, and 78% are located in Brazil and Mexico.

The companies that benefited the most are e-commerce and fintech. This sector captured 63% of the investment because the pandemic favored a digital and financial environment.

Sectors that for years experienced a shortage of capital also reversed this trend in 2021:

• EdTech increased its investments 1,739%;
• FoodTech 629%;
• HealthTech 458%;
• PropTech 410%.

As of May 2022, companies founded from 2011 until now have already raised above what was achieved in 2020.

During the first quarter, previous amounts tripled, so the effects of the potential slowdown due to the recession will be seen until the second half of the year.

“Is it a bubble? We undoubtedly see adjustments in valuations due to the expectation of rising rates worldwide; even though this year we expect a drop in valuations, the opportunity in the region is undeniable,” said Juan Franck, managing partner at SoftBank.

With information from Business Insider