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These Were Latin America’s Most Active Investors In A Record Year

With Latin American startups raising record sums, the region’s largest investors are doing more deals than ever. And they’re seeing stepped-up competition from overseas to boot.

Those are the broad findings from a Crunchbase data dive into most active venture investors in  South America and Central America. We found that while established regional firms remain the most prolific venture dealmakers, big-name global investors are quickly moving up the charts.

This is evidenced in our ranking of the top 14 most active early- and late-stage investors by deal count last year, listed below:

The top two—Kaszek and Monashees—focus on Latin America, with the largest presence in Brazil and a growing portfolio of deals across the region. The third—Valor Capital Group—is a New York-headquartered firm with a high portion of deals in Latin America.

The fourth company—Tiger Global Management—is as global as it gets, known for backing massive funding rounds across every populated continent on Earth. SoftBank, meanwhile, has been exceptionally active on two fronts, backing rounds out of its regional fund, SoftBank Latin America Ventures, as well as out of its main fund.

Among most active lead investors at early stage, Kaszek and Valor topped the list, as shown below:

For late lead rounds, SoftBank had top ranking, as shown below:

Accelerated dealmaking by the most active investors comes amid an unprecedented growth spurt for Latin American venture funding, with 2021 investment more than triple prior year levels. The region now has at least 27 known unicorns, per Crunchbase data, and rounds of $100 million and up are no longer a rarity.

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Regional and global investors form syndicates

With bigger rounds often come bigger syndicates.

In most cases, startups raising sizable rounds are tapping both regional and global investors, observes Carlos Ramos de la Vega, director of venture capital at the Association for Private Capital Investment in Latin America (LAVCA).

Global investor participation in Latin American VC investments has been steadily increasing. An estimated 42 percent of venture transactions included at least one global investor in 2019, per LAVCA’s data. That jumped to 47 percent in the first half of 2021, with 31 percent of deals featuring collaboration between local and global investors.

For both startups and investors, there are advantages to having local and global investors on the term sheet, said Patrick Hruby, CEO of São Paulo-based Movile, which invests in online platforms powering consumer services in the region.

“There’s a joke that Brazil’s not for beginners, so having co-leaders and partners who know the region makes a big difference (for global investors),” Hruby said. That’s been the case for Movile as well, which is investing $200 million in the region on behalf of Dutch investment firm Prosus.

For regional investors and startups, meanwhile, there’s a prestige factor in having a big name like SoftBank or Tiger on the term sheet, plus benefits from the ability to tap their connections to talent, potential acquirers and public market avenues to exit.

Most active seed investors

We see a mix of global and regional powerhouses dominating the seed stage as well. Both rank high among Latin America’s 10 most active seed dealmakers, per Crunchbase data, listed below:

It’s noteworthy how much of a presence Y Combinator has cultivated in Latin America. In its global operations to date, the famed accelerator has spawned at least 25 unicorns in a stable of portfolio companies collectively valued at over $600 billion. It’s also backed several Latin American startups that have gone on to major fundraising, including Colombian delivery unicorn Rappi.

Among regional seed investors, Bossa Nova Investimentos stands out for its prodigious dealmaking. The São Paulo-base firm, which bills itself as a pre-seed technology investor, has backed 893 startups to date, per its website. Crunchbase tracked 35 new portfolio additions for 2021.

Next up among seed dealmakers is another Brazilian firm: DOMO Invest, which focuses on early-stage consumer-focused technology startups. Its portfolio has spawned multiple unicorns, including fast delivery provider Loggi and fitness platform Gympass.

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New investors take bigger, bolder bets

As more players with more money enter the Latin American startup space, the culture around risk-taking is also changing, investors observe. Backers are willing to make larger bets on growth, even if that means postponing profitability.

“A few years ago, you would only get funding with positive EBITDA, cash flow, that kind of thing,” Hruby observed. Now, he said, investors are more open to the Silicon Valley growth mindset.

For Latin America, that translates in part into more willingness to expand internationally. Examples include NotCo, a Chilean producer of plant-based milk that raised $255 million last year, and Merama, a Mexico City-based online brand aggregator that pulled in $345 million in venture funding in 2021. Both are aggressively expanding their footprints outside their domestic countries.

Even domestic markets, however, are sizable. Brazil alone is home to 212 million people. Mexico’s population is nearly 130 million. And South America and Central America together have a combined population of around 600 million.

So, while investors in the region are looking pretty active now, there’s good reason to expect we’re just getting started.

Illustration: Dom Guzman

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