Latin America's Startup Funding Continued To Fall Sharply In First Half Of 2023

Funding to Latin America startups continued to slow this year, as a peak-era investment surge looks increasingly short-lived.

In the first half of 2023, investors put $1.1 billion to work in reported seed- through late-stage financings in Central and South America, according to Crunchbase data. That’s down a staggering 83% from the same period last year.

Investors also participated in fewer rounds. Per Crunchbase data, investors backed 333 reported financings in the first half of this year, down 56% from a year ago. For perspective, we chart out round count totals for the past 10 quarters below:

Late stage falters, early stage holds up better

A massive drop in late-stage financing explains most of the decline in investment totals.

While mega-sized rounds proliferated in 2021 and into 2022, those deals aren’t happening now. Per Crunchbase data, the largest later-stage financing in the first half of 2023 was a $25 million Series C for The Green Coffee Company, a coffee farming company with operations based in Colombia.

Early- and seed-stage dealmaking has held up a bit better, with several good-sized rounds getting done this year. Top funding recipients include Brazil-based digital integration platform Digibee ($62 million Series B), business credit and expense-tracking provider Clara ($60 million Series B), and Chilean mining technology startup Ceibo ($30 million Series B).

The most active peak-era investors in the region, meanwhile, are considerably less visible. Back in 2021, the five most active investors in Latin America collectively backed 149 rounds. In the first half of this year, those same firms have invested in just 11 financings.

Down from a high peak

The latest tallies represent a particularly sharp contraction, considering that Latin America ranked as the fastest-growing region in the world for venture funding in 2021. During that year, investors poured more than $19 billion into the region, scaling a new generation of Latin American unicorns.

The flush funding environment included mega-sized rounds that dwarfed prior fundraisings. In 2021 alone, three top fundraisers — online business tools provider Nuvemshop, fast-delivery service Rappi, and real estate marketplace Loft — collectively pulled in more than $1.6 billion in later-stage financing.

The exit environment was also looking good. Nubank, the Brazil-based online challenger bank, carried out its public offering in December 2021, with a valuation over $40 billion. (It was recently valued around $38 billion.)

Will that kind of enthusiasm return again? Probably not for a while. Nonetheless, there’s certainly room for growth from recent investment levels, especially as the exit environment starts to thaw. We’ll get a better sense of whether that comes to pass in our next quarterly data crunch.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of July 3, 2023.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted.

Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)