Why global investors are flocking to support Latin American startups – TechCrunch

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SoftBank: Latin America’s Financing Boom Is More About Inclusion Than Disruption

Latin America The startup ecosystem is having a great year, with mega-towers being announced at breakneck speed and new unicorns hit almost every month. This is mainly due to the mature startup scene in the region, with proven successes such as Nubank, Cornershop, Gympass and Loggi helping to boost LatAm’s credibility.

Interestingly, many of the region’s rounds are being led or have seen the participation of investors based elsewhere. Companies such as SoftBank, Tiger Global Management, Tencent, Accel, Ribbit Capital, and QED Investors are investing money in Latin America. Some even see more opportunity than in the United States – Latin America, they say, has always been ripe for disruption, especially in the fintech and proptech industries, due to the large population. the region’s underbanked and unbanked and relatively unstructured real estate sector. .

Last month, my colleagues Anna Heim and Alex Wilhelm discovered that structural factors such as high digital penetration and rapid growth in e-commerce are among the main reasons Latin America is breaking venture capital records this past month. year. A Mexico-based VC even said the story was about “talent, not capital”.

Local venture capitalists rave about the region’s human capital, but for some global investors, Latin America’s appeal extends beyond talent to the general population. Shu Nyatta, a managing partner of SoftBank who co-leads his $ 5 billion fund for Latin America, pointed out a dynamic that may seem obvious but is rarely articulated: Technology in Latin America is often more about inclusion rather than disturbance.

“The vast majority of the population is underserved in almost all consumption categories. Likewise, most businesses are underserved by modern software solutions, ”Nyatta explained. “There is so much to build for so many people and companies. In San Francisco, the venture capital ecosystem is making a bit of a difference in the lives of individuals and businesses that are already living in the future. In Latin America, tech entrepreneurs are building the future for everyone else. “

Ethan Choi, Accel partner, says the region’s consumer markets are growing rapidly thanks to a rapidly growing middle class and “technology permeating every aspect of consumers’ lives.” This has driven the demand for digital offerings, which has led to more startups and, as a result, investor interest.

Brazil and Mexico in the sauce train

One glance at the dollars pouring into Latin America this year is enough to convince anyone of the growing interest.

Latin America recorded a total of $ 6.2 billion in venture capital entering in the first half of 2021, more than double the $ 2.6 billion in the same period last year, and even surpassing 4 , $ 1 billion invested over the whole of 2020, according to preliminary data from LAVCA. (The Association for Private Capital Investment in Latin America – LAVCA used a different methodology than CB Insights, in case you were wondering).

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