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Latin America

Startups in Latin America grab record sums of venture capital

VCs have invested $8.8 billion in Latin American startups this year, as investors chase the digital transformation of sectors including fintech, real estate and ecommerce in one of the world’s busiest markets.

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Latin America’s venture capital ecosystem is having a breakout year in 2021.

Investors in this record-setting year are chasing the digital transformation of a market of over 600 million people, and they are paying up for a piece of the action.

Already in 2021 VCs have invested $12 billion across more than 500 deals in Latin America, according to PitchBook data. That’s more than the capital that was invested in the previous three years combined.

 

Out of the 14 total Latin America-based unicorns, five were minted this year, including Brazil’s Nuvemshop, a Shopify-like ecommerce platform that just raised $500 million from Tiger Global and Insight Partners at a $3.1 billion valuation. Investors were so eager to back the startup that the entire deal came together in 72 hours, Matt Gatto, managing director at Insight, told Insider.

The Latin American industry attracting the most capital is fintech, with startup bank Nubank alone collecting $1.15 billion this year at a valuation of $30 billion. Neobanks are fetching high valuations in part because they are creating financial products for a massive and largely underserved population.

Proptech is also piquing investor interest in Latin America. Loft and QuintoAndar are two Brazil-based marketplace and property search platform providers that recently raised mega-rounds at multibillion valuations.

In the US, the real estate industry is relatively fragmented by geography and product offering, such as mortgage lending or brokerage. But in emerging markets, the whole sector is available for disruption.

“Solving a problem in Latin America means you have to solve the entire problem, not just a piece of it, like you do in the US,” said Frank Rotman, co-founder and partner at QED Investors which backed Loft and QuintoAndar. “If you succeed, you can build gigantic companies.”

The data in this article was updated on September 28, 2021.

Featured image by Matthias Kulka/Getty Images
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    Written by Marina Temkin
    Marina Temkin covered the venture capital ecosystem from 2021 to 2024, based in San Francisco. Previously with Venture Capital Journal, Marina wrote about the VC industry, and she was a reporter with Mergermarket in New York and San Francisco. She also has been a financial analyst and is a CFA charterholder. Marina received an economics degree from the University of California, Davis, and she attended the CUNY Graduate School of Journalism.
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