Endeavor and Glisco Partners, a firm specializing in Growth Equity; presented the Report “Ecosystem of Venture Capital and Growth Equity in Latin America” for the first half of 2024.
This highlights the gradual recovery of the investment ecosystem in the region, which includes a 30% increase in the capital raised; it also highlights that proposals focused on Artificial Intelligence (AI) are consolidating as investment leaders by displacing the industry. FinTech.
According to data collected in the first half of 2024, 76 companies managed to raise capital, which is 11% less than in 2023, in addition to the fact that there were 63% fewer investments. However, the capital raised increased 30% compared to the same period in 2023, for a total raised of $1.1 billion dollars.
The report shares two main investment trends on the ecosystem of venture capitalOne of them refers to the adaptation and resilience of companies in the face of a challenging economic environment, and the other to a shift through rounds of greater maturity and towards new solutions.
The second addresses displacement towards stages Growth and Late Stage, where it was reported that 67% of the capital in the first quarter of 2024 was focused on more mature stages; that is, series C and above.
As for investment in new emerging sectors, in the first quarter of 2024 there was a shift in the number of investments in AI over FinTech projects, although the latter lead in the amount of capital received, thanks to the size of the rounds, which allows them to maintain their attractiveness as an industry.
Another notable trend is the faster evolution and maturation of startups. Of the 503 companies that raised venture capital in 2021, 165 received subsequent investments, which is related to greater efficiency in the use of resources and an improved ability to scale. Particularly noteworthy are the companies that went from the seed stage to Series A in less than two years.
Leading investment funds in the region for Growth Equity include Bicycle, Kaszek, and Glisco Partners. Early Stage investors include Ignia and Dila Capital.
In the regional area, Brazil continues to lead, Mexico was displaced to third place with an investment of 225 million dollars and the new second place is Colombia..
“The key to attracting investment in this competitive environment lies primarily in the background and expertise of the founders and their team, which shows an outstanding ability to scale. Companies that manage to balance these factors will be better positioned to take advantage of opportunities and ensure their long-term success.”says Carol Martínez, Head of Data at Endeavor Mexico.
70% of the funds changed their valuation criteria compared to 2021, which are listed in 9 points and are essential in making investment decisions:
- Evaluating the founding team
- Business growth and scalability potential
- Risk assessment and expected return
- Financial analysis
- Process of due diligence
- Competitor analysis and market positioning
- Product validation and market traction
- ESG Strategy
- Market size
