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Why we should care about the wave of investments underpin e-business in Latin America

In an apparently parallel universe, far from the current tragedy of Venezuela, the recession in Argentina or the controversial new presidents of Brazil and Mexico, electronic business is booming in Latin America. In fact, last week operations were carried out for billions of dollars in which companies from the region were involved.

Mercado Libre, the e-commerce retailer based in Argentina, raised U $ S 1,900 million through a public offering of shares and direct investments from companies such as PayPal. Meanwhile, SoftBank, the rebel conglomerate best known for its US $ 100 billion Vision Fund, said it is creating a $ 5 billion technology fund in Latin America.

For external investors, the region no longer stands out only for its basic products. You just have to ask China: it has invested more than US $ 100 billion in Latin America since 2005, mostly in sectors such as technology, communications, alternative energies and finance.

Why this sudden avalanche towards technology?

Well, to begin with, it’s not that sudden. In its early phase, the Spotify music streaming service gained valuable experience in Latin America; In fact, it is the only emerging market where its model worked significantly. The use of WhatsApp is observed throughout the region. Brazil is the largest Uber market outside of the United States and the third largest Facebook market in the world.

“There is a feeling that Latin America is at a turning point in terms of the growth of electronic commerce,” said Sean Summers, marketing director of Mercado Libre, referring to the placement of shares. “Our priorities are clear and we are strengthening our commitment to them”, he added.

SoftBank feels the same. “There is so much innovation and there is so much disruption in the region, and I think the business opportunities were never more solid”, said Marcelo Claure, the former Sprint executive who will lead the SoftBank fund.

This type of optimistic comments is always accompanied by large operations. This time they may even be true. Technological change is accelerating, as is happening everywhere. The Brazilian cosmetics company Natura, for example, now organizes its sales representatives using Uber-style applications. And more than one Venezuelan refugee has thanked Waze and the private transport applications for the assistance they have given him to help him start a new life in new countries. As this change accelerates, the flow of operations also accelerates.

To cite only three recent examples

Rappi, the home delivery company in Colombia has raised money from investors, including Sequoia Capital; the Brazilian financial technology startup company Nubank raised US $ 180 million from the Chinese multinational Tencent; and Walmart, in its first acquisition in Latin America, recently took over the Mexican startup of Cornershop home delivery supermarket purchases for U.S. $ 225 million.

About the work of SoftBank

However, SoftBank, which is not known to be soft or slow, has larger sums to spend. That potentially makes it less agile. Latin America also has relatively few attractive companies and they operate in multiple countries in which to invest.

Novam Portam, the Asia-Latin America consultant, even asks: “Will SoftBank have the patience to do the necessary diligence? Or will it be that the so announced $ 5 billion will not really be put to work?


Also published on Medium.

Published inStartups

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