Week 17, 2024 - Latin America

“You will never know the feeling of a driver when winning a race. The helmet hides feelings that cannot be understood” - Ayrton Senna (Brazilian Formula One Driver)

MARKETS

April 25, End Of Day

• Argentina S&P MERVAL Index = 1,245,143.74 (YTD = 33.93%)
• Brazil BOVESPA Index = 124,645.58 (YTD = -7.11%)
• Chile S&P IPSA Chile = 3,467.56 (YTD = 0.00%)
• Colombia MSCI COLCAP = 1,349.93 (YTD = 12.95%)
• Mexico IPC Mexico BMV = 57,085.84 (YTD = -0.52%)
• Peru S&P/BVL Peru = 28,122.71 (YTD = 8.33%)

TECH

The state of the venture in Latin America

Based on CB Insights report on the global state of the venture, here are five key takeaways regarding the state of venture capital in Latin America as of Q1 2024:

1. Significant Downtrend in Funding and Deals: There has been a notable decrease in both venture capital funding and the number of deals since the peak in Q2 2021. By Q1 2024, funding had reduced to $0.5 billion with only 112 deals recorded, which is the lowest point.
2. Early-Stage Deals Dominate: A consistent trend across the years is the predominance of early-stage deals in the region, which indicates a focus on nurturing new businesses, comparatively.
3. Top Deals in Digital and Financial Services: Significant deals in Q1 2024 are concentrated in the internet services sector, specifically in financial management, payments, and accounting & finance, reflecting a strong fintech ecosystem in the region.
4. Brazil as a Central Hub: Brazil remains a focal point for venture capital activity in Latin America, with a high number of deals and prominent investors actively investing in the market.
5. Median Deal Size Increase: There has been an increase in the median deal size over the years, suggesting that while there may be fewer deals, the investment in each is larger, possibly indicating a focus on more established startups or a higher quality of startup maturity.

These takeaways paint a picture of a venture capital market that, while experiencing a cooling period in terms of the number of deals and total funding, still maintains a solid base for early-stage investments, particularly in the technology sector. The concentration of investments in fintech also suggests that digital transformation and financial inclusion remain high on the agenda for venture capitalists investing in Latin America.

Fundraising picks of the week

Limay Biosciences: Limay Biosciences develops rapid molecular testing solutions, achieving bacteria detection up to 70x faster (1-2hs vs 48-72hs today). Their micro portable devices enable critical, point-of-need diagnostics, significantly reducing risks associated with treatment delays. Dive deeper into the case here.

GetGloby: GetGloby is connecting businesses with global audiences. Their AI-powered platform enables companies to instantly translate ad campaigns into over 100 languages, opening new markets rapidly and increasing exposure while reducing costs. Dive deeper into the case here.

illow: illow ensures websites meet global privacy regulations and new Google requirements efficiently, making compliance achievable in less than 5 minutes. With over 4,500 clients ranging from startups to enterprises like WeWork, and a presence in more than 40 countries, Illow is recognized as the highest-ranked Privacy Platform worldwide by G2. Dive deeper into the case here.

Interested in Latin American startups? Subscribe here to get startups’ monthly progress updates in the verticals that interest you the most.

Dive deeper into other fundraising firms in LatAm here.

CURRENT AFFAIRS

Ecuador: Ecuador is actively exploring new debt-for-nature swaps focusing on the Amazon rainforest and a large ocean protection zone, aiming to replicate the success of a previous $1.6 billion swap for the Galapagos Islands. These potential swaps would direct funds toward conserving critical ecosystems and are expected to refinance about $1 billion of Ecuador's debt each. The country is working with international development banks and conservation groups to structure these deals, which could significantly fund conservation efforts while managing national debt.

Brazil: Honda plans to invest approximately $808 million in its Itirapina plant in Brazil by 2030, focusing on new technologies and the development of a hybrid vehicle that can run entirely on ethanol. This investment is part of a broader influx of automotive investments in Brazil, with total commitments nearing $25 billion. Honda aims to increase its production at the Itirapina facility from 100,000 vehicles this year to 150,000 by 2030, targeting both domestic sales and exports.

Chile: Chilean President Gabriel Boric, at a major copper industry conference, projected Codelco's output to increase to 1.7 million metric tons by 2030 and committed to streamlining the lengthy approval processes for mining projects. He emphasized improving Chile's investment climate by enhancing the efficiency of permitting processes and expanding lithium production through public-private partnerships. Boric's initiatives aim to bolster economic stability and attract more investment to Chile's mining sector.

FURTHER READING

Check our recently published insights here. Recent posts:

?? What are the key future trends in Proptech in Latin America?

?? Sustainable Construction: The push towards green buildings is gaining momentum, with projects aimed at reducing environmental impacts and operational costs.

?? Smart City Integration: IoT technologies are expected to revolutionize urban real estate by optimizing energy use and traffic management.

?? Addressing the Housing Deficit: With a housing deficit of over 43 million flats, there's a significant demand for innovative housing solutions.

?? Read more here.

?? What is the market potential of DeepTech in LatinAmerica?

According to the IDB, Deep tech is bringing a new wave of innovation to Latin America. The market potential of deeptech in Latin America is influenced by various factors that shape the ecosystem and determine the growth and adoption of advanced technologies.

?? Read more here.