Published On: Tue, Aug 11th, 2015

Top VCs Are Chasing Digital Companies In Latin America


It has been formidable to attract investors to a digital startup space in Latin America. This is given of a accumulation of reasons, including a miss of a lane record of determined VC firms in Latin America, a adolescence of a new era of entrepreneurs and a nonesuch of exit strategies in a region.

Not anymore.

Much has altered in this segment in a past 15 years in terms of a digital ecosystem origination and a use of new technologies. Today, with some-more than 6 countries honourable investment-grade debt by SP (Brazil, Chile, Colombia, Mexico, Panama and Peru, among others), Latin America is radically different. Successful record companies and try entrepreneur that have accompanied these countries have reaped inexhaustible benefits.

Successful digital entrepreneurs have channeled a entire invasion of amicable and mobile technologies to expostulate expansion for their companies. It should pronounce volumes that São Paulo, Rio de Janeiro, Buenos Aires and Bogotá away transcend New York City in terms of Facebook, Skype or WhatsApp subscribes and usage. It’s not a warn that The Wall Street Journal called Brazil, “The Social Media Capital of a Universe.”

As mentioned in an progressing article, “Producing Unicorns in a Land of Samba, Fútbol and El Dorado,” Latin America can explain 17 pristine Internet/software companies with valuations north of $250 million. Half of these companies were founded after a new millennium, and tighten to 40 percent over a past 10 years. Clearly, we’re saying an uptick in a origination and acceleration of these companies.

“Smart Venture Capital” has always been intrigued by a intensity of a vast center category that, increasingly, was a initial to adopt new technologies. Amazed by a adoption and use in Latin America of two companies, Kazaa and Skype, Niklas Zennstrom fast accepted there was a vast opportunity. In 2008 his company, Atomico, non-stop an bureau in Sao Paulo, that is now headed by Carlos Pires. Many followed thereafter.

According to the Latin America Private Equity and Venture Capital Association (LAVCA), collateral committed to Latin America, dedicated private equity and try collateral supports reached US$10.39 billion in 2014. More surprising, though, is a expansion of VC investments deployed. Specifically in 2014, try collateral investors deployed US$525.6 million by 186 exchange in Latin America, an 8.3X expansion given 2010.

Early theatre investments have been flourishing consistently given 2010, when usually US$63 million was deployed in try deals. Activity in 2014 reflected an boost of 24 percent in collateral invested and 56 percent in series of deals compared to 2013.

Today we can count during slightest 11 companies that are active in Latin America and go to a vast leagues of try collateral and private equity. They come in several flavors (Note: usually supports with resources underneath government incomparable than $250 million were covered):

  • Silicon Valley VCs: By distant a many prestigious VCs in California like Accel and Sequoia have been increasingly active in Latin America. Accel, around a partner Kevin Efrusy, is maybe a many active American VC in a region, with some-more than 11 investments. Accel’s many new investment in a segment is Eduk, a personality in a educational record space.
  • American Private Equity: Private equity heavyweights such as General Atlantic, Tiger Global, Insight Venture Partners and Riverwood Capital have done a largest expansion investments in a region. Recently, Tiger Global invested some-more than $500 million in B2W, Brazil’s largest etailer. Insight has taken a really active role, as well, with investments in Zumba, Hotel Urbano and elo7.
  • European and South African Internet Leaders: Rocket Internet, formed in Berlin, and Naspers, formed in South Africa, have invested heavily in Latin America, and both have teams on a ground. Unlike normal VCs, these two companies typically buy internal startup companies and align/evolve them into their opposite height plays (i.e., eCommerce, Marketplaces, ePayment, etc.).
  • Local and Uprising: Recently, we’ve started to see internal and nimble VCs like Kaszkek or Monashees with smaller supports (i.e., underling $250 million underneath management) turn a lead originators (i.e., upfront complicated lifting) of a pivotal deals in Latin America.

LATAM VC_PEv5-page-001

The days when it was formidable to attract heading PE/VC firms to a digital startup space in Latin America are behind us. Over a past 10 years, vast exits like Mercado Libre (NASDAQ), B2W Digital (BOVESPA), TOTVS (BOVESPA), Globant (NYSE) and Linx (BOVESPA) have given investors substantial certainty and proven that Latin America is adult to a charge of competing in this new 2.0 world.

Similarly, entrepreneurs have matured, a ecosystem has developed and a many prestigious firms are on a belligerent formulating value for them and for a startup environment.

Featured Image: Policas/Shutterstock

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