“Hello, I am interested in accelerating your company”. That is what many entrepreneurs would like to hear from an investor who has faith in his venture, wants to invest money and give advice so he can grow faster.
That is basically the acceleration of companies that are usually in their early stages of development.
The most active accelerators based in Latin America include companies such as NXTP Labs, Wayra and ACE.
Collectively, these firms study thousands of startups and write hundreds of checks”, Julie Ruvolo, director of Venture Capital of the Association for Private Equity Investments in Latin America (LAVCA).
But when it comes to global accelerators that put resources into regional ventures, the most active in recent years have been 500 Startups (with 14 regional investments between 2013 and 2017) and Y Combinator (with 12 investments in the same period), according to the LAVCA data.
“Global accelerators can help local startups achieve greater visibility”, says Ruvolo, especially in front of large international investors.
Who are these great players?
Argentina’s NXTP Labs has invested heavily in the region in recent years, with a portfolio of 200 startups, according to its own data.
“In the future, venture capital invested in the region will continue to grow”, says Sebastian Aldasoro, marketing manager of NXTP Labs.
“In 2017 it doubled and we believe that in 2018 (the result) will be much higher”, he adds, explaining that much of that growth is explained by investments in Brazil.
“There are great risks in this, but the returns can be extraordinary”, he says.
Wayra is the accelerator of the Telefónica company, which has invested in more than 350 startups globally since 2011. In Latin America, it operates in countries such as Mexico, Peru, Chile, Colombia, Brazil and Argentina. And the ACE firm has made its big bets in Brazil. According to corporate reports, it has made 94 investments since 2012. To these accelerators you can add large entrepreneurial capital funds such as Alta Ventures, Angel Ventures, ALLVP, Kaszek or Cygnus.
Country Ranking
Only in the first half of 2018 three Latin American countries took most of the cake: Brazil, Colombia and Mexico.
Argentina, Chile and Peru complete the list with lower investment amounts.
Brazil, the largest economy in the region and an icon of techno-Latin companies, received about US $ 1.4 billion in private investment for startups between 2017 and the first months of 2018, according to LAVCA data.
In the same period, Colombia was the scene of a capital flow of US $ 188 million, while Mexico reached US $ 154 million. Argentina obtained US $ 110 million and Chile US $ 35 million.
Laila Choe, IDB Lab specialist, the IDB Group’s innovation laboratory, says: “We are seeing the emergence of a new generation of funds in more emerging ecosystems such as Carao Ventures and Pomona in Central America, which is very auspicious”.
The great explosion of technology-based startups in the region began less than a decade ago. “It started with the emergence of accelerators, company builders, entrepreneurial capital funds and government support programs,” says Choe.
Megainversions
Venture capital investments in Latin American startups marked a record of US $ 780 million in the first half of 2018, compared to the first half of the previous year (US $ 476 million).
In fact, last year Latin America saw the birth of seven technological unicorns, that is, startups that reach a market value of over US $ 1,000.
The feat was accomplished by Rappi (known as the “Amazon of Colombia”, 99 (the “Uber of Brazil”, Nubank (the Brazilian giant of digital banking), PagSeguro, ArcoEducação, Ascenty and Stone Pagamentos.
And towards the end of 2018, there was the largest known investment in a Latin American startup, when Brazil’s iFood received US $ 500 million at one time, from Innova Capital, Naspers, and Movile.
This single investment is equivalent to all the venture capital that reached the startups in the region in 2016.
“We have seen the entry of great players in the Latin American market”, explains Ruvolo de LAVCA.
Examples include firms such as Ant Financial, Tencent, Softbank, DST Global, Goldman Sachs and Visa.
In addition, large acquisitions were registered, such as Didi Chuxing buying the Brazilian 99 and Walmart, the Mexican Cornershop.
For the first time in history, Latin America is generating technology-based companies in scale and everything indicates that this is only the beginning of a transformation of great relevance for the future of the region.
A tsunami that is transforming the business world in the big regional economies.
Also published on Medium.