Latin America's startup ecosystem is enjoying a phenomenal year. Mega-rounds are being announced at lightning speed and new unicorns being created almost every month. This is largely due to the growing startup scene in Latin America, which has proven success stories like Gympass, Cornershop and Gympass.
Many of the region rounds were led or witnessed participation by investors from other countries. SoftBank, Tiger Global Management and Tencent are all investing in LatAm. Many see more opportunities in Latin America than the U.S., according to some. This is due to the large underbanked and unbanked region, and the unstructured real-estate industry.
My colleagues Alex Wilhelm and Anna Heim discovered that structural factors like strong digital penetration and rapid e-commerce growth were key to Latin America's success in this year's venture capital record. One Mexican-based VC stated that the story is not about capital but talent.
While local VCs love the region's human capital, some global investors see Latin America as appealing beyond its talent for the general population. Shu Nyatta, a managing partnership at SoftBank and co-leads the $5 billion Latin America Fund, noted a dynamic that may seem obvious, but is seldom articulated: Technology is more about inclusion than disruption in LatAm.
Nearly all categories of consumption are underserved by the vast majority of the population. Nyatta also explained that most businesses are not well-served by modern software solutions. There is so much that can be done for both individuals and businesses. The venture ecosystem in San Francisco makes it easier for people and businesses to live in the future. LatAm's tech entrepreneurs are creating the future for everyone.
Ethan Choi, Accel Partner, says that the region's consumer markets are expanding rapidly due to a growing middle class and technology permeating every aspect of people's lives. This has resulted in more startups and therefore, increased investor interest.
Brazil and Mexico ride the gravy train
Anyone can be convinced by the increase in interest just by looking at the amount of dollars flowing into LatAm in this year.
Latin America received $6.2 billion in venture capital in the first six months of 2021. This is more than twice the $2.6 billion in that period last year and beats the $4.1 billion in 2020.
