VC Funding, FinTech Unicorns Break Records in LatAm

Latin America (LatAm) saw record funding of $15.3 billion from venture capitalists (VCs) in 2021, triple what it was in 2020, with FinTech, eCommerce and PropTech capturing nearly 75% of investments, Financial Times reported on Monday (Jan. 24). The previous record of VC funding was $4.9 billion set in 2019.

Across 2021, there were 650 deals in LatAm backed by VCs, according to preliminary data from the Association for Private Capital Investment in Latin America (Lavca).

The FinTech sector took the lead, with 16 new unicorns in 2021, Lavca data showed, which represented 39% of investments into firms that included the cryptocurrency exchange Bitso and Chilean plant-based food producer NotCo. Ecommerce captured 25% of VC funds and PropTech got 9%.

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Carlos Ramos de la Vega, director of venture capital for Lavca, told FT that FinTech is now integrating with other industries, PropTechs are introducing financing divisions, and AgTechs are launching credit facilities for agriculture producers.

Francisco Alvarez-Demalde, co-founder and managing partner at U.S.-based Riverwood Capital, told FT that the firm has been backing LaAm tech firms for a dozen years, and it’s astonished by the recent acceleration in growth.

Brazilian neobank Nubank raised $1.15 billion last year — the biggest fundraising of 2021 in LatAm — and started trading on the New York Stock Exchange in December 2021 at a valuation topping $40 billion.

Read more: Startups in Brazil Attract Capital Topping $9.4B in 2021, Doubling 2020

Marcos Toledo founder and managing partner of São Paulo early-stage investment firm Canary told FT that the region is attracting the attention of more international VC funds than ever before, and some are setting up shop with analysts and investors.

Softbank recently launch a second LatAm fund of $3 billion, bringing its investment commitment to the region to $8 billion.

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