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LatAm Calling: Venture Capital’s Journey to the region

LatAm Calling: Venture Capital’s Journey to the region

A new expedition of discovery is underway. In the dynamic landscape of global venture capital, Latin America stands as an emerging frontier ripe with promise and potential. As investors increasingly seek new opportunities beyond traditional hubs, the allure of Latin America -named “New World” by first questers- has become undeniable.

In this article, we cover the driving forces, key players, and transformative potential that define LatAm’s startup ecosystem. A new ‘New World’ for VC’s and a region of special interest for GoHub Ventures, as explained below.

But, before introducing our regional portfolio and getting deeper on our initiatives, let’s learn more about LatAm Startup Scene.

 

LatAm Startup Scene: Particularities & Success Stories

At first sight, why considering ‘region of interest’ a whole continent?

For instance, that doesn’t happen in Europe where you can find subregions such as Nordics, DACH or South Europe that represent single markets with their own unicorns, specialised funds and other entities.

However, that doesn’t really need to happen in LatAm and it may be one of their peculiarities and strongest advantages. A capacity to expand at the speed of light thanks to a less fragmented cultural and linguistic diversity.

This may explain the success of B2C’s such as MercadoLibre and Rappi, two of LatAm startups success stories. On the contrary, the economical, political and geographic fragmentation may slow down expansion of B2B startups, although there are some exceptions like Gympass.

All in all, Latin America is a region where cross-border cooperation is deeply rooted both on social and professional matters, plus their proximity to North America and decades of economical collaboration makes it easier for LatAm startups to expand. Especially now with Miami rivalring Silicon Valley as a reference hub in the United States.

Access to capital remains a significant challenge for startups in the region, but this represents an opportunity for funds like GoHub Ventures since more entrepreneurs need investment to grow and scale.

Ultimately, education and production of tech talent is at the highest levels in the region. National programs to improve education and upskill the workforce in areas such as software development, increase of freelancing and work remote, renowned entities like ITESTM (Instituto Tecnológico de Monterrey) form a tech talent pool that fosters innovation.

Considering these ingredients, here are some of the most famous startups from Latin America:

  • Nubank (Brazil): A fintech startup that offers digital banking services, including credit cards and banking accounts.
  • MercadoLibre (Argentina): One of the largest e-commerce platforms in Latin America, often referred to as “LatAm’s eBay”. Nasdaq admitted.
  • Rappi (Colombia): A delivery startup that offers a wide range of services, including food delivery, groceries, and pharmacy deliveries.
  • Globant (Argentina): A software development and IT consulting company that provides services such as digital transformation, cloud computing, and artificial intelligence solutions. Nasdaq admitted.
  • iFood (Brazil): A food delivery startup that connects consumers with restaurants and offers delivery services in various cities across Brazil.
  • Gympass (Brazil): A startup that offers a corporate wellness platform providing access to a network of gyms and fitness facilities.
  • Cornershop (Chile): An online grocery delivery service operating in various Latin American countries.
  • Ualá (Argentina): A fintech startup that offers a mobile banking app and prepaid Mastercard, providing financial services to individuals.
  • Creditas (Brazil): A fintech startup focused on providing secured loans, using assets such as real estate or vehicles as collateral.
  • VTEX (Brazil): A SaaS company providing an e-commerce platform for businesses to build and manage their online stores.

Some numbers and key facts about the Latin America startup scene include:

  • 9K+ funded startups which raised a combined $3.9B in VC investment in 2023.
  • Home of 64 unicorns.
  • Sao Paulo (Brazil) is LatAm’s Top Performing Ecosystem.
  • +143% increase in Series B+ amount in the period 2018–2022.
  • Fintech is particularly successful in this region, making up on average 37% of Series A deal count over the same period.

For more on LatAm’s startup scene, we recommend the following reports: The Global Startup Ecosystem Report 2023 by Startup Genome, and Latin America by Dealroom.

 

GoHub Ventures in LatAm: Vozy, Fracttal, and Auravant

GoHub Ventures presence in LatAm Startup Scene is quite recent, with our first investments in the region starting at the beginning of this decade. From that first moment we’ve always felt that this is a land full of opportunities, so we aim to increase the number of LatAm startups in our portfolio sooner than later.

As of today, the three LatAm companies present at GoHub Ventures portfolio operate in fields such as Conversational AI, Computerized Maintenance Management Systems (CMMS), and Data Analytics & Business Intelligence. All combined, represent over $30M in raised funding.

Get to know more about our champions from LatAm startup scene.

 

Fracttal

Fracttal is a predictive maintenance and asset management software (CMMS/GMAO/EAM), 100% mobile, IoT enabled and fully cloud-based. The Chilean platform helps organizations streamline maintenance operations, track assets, schedule preventive maintenance tasks, and manage work orders efficiently.

Fracttal’s software is designed to be user-friendly and scalable, catering to a wide range of industries, including manufacturing, utilities, healthcare, and facilities management. They focus on leveraging technology to improve asset performance, reduce downtime, and optimize maintenance processes for their clients.

Fracttal has raised around $20M in several rounds.

 

Vozy

Vozy provides a voice AI platform that helps evolve conversations at SCALE for the Enterprise. ​​The Colombian startup specializes in conversational AI solutions for businesses such as AI-powered virtual assistants and chatbots that enable companies to automate customer service, sales, and support interactions through natural language processing technology.

Vozy has raised a total of $8.1M in funding, being the latest one ($5M in 2022) our entry to the company. The goal is to expand into the US market and Europe, with Spain as primary access, thanks to the applications across multiple industries that Vozy’s solutions have, including telecommunications, banking, retail, healthcare and more.

 

Auravant

Auravant helps improve the efficiency of the agricultural sector through the use of aerial monitoring platforms. The Argentinian company has raised a total of $5.8M in funding and GoHub Ventures was a lead investor at the most recent round.

Auravant targets one of the major markets in the area. Agriculture plays a significant role in Latin America’s economy and contributes significantly to the region’s GDP (Gross Domestic Product).

 

GoHub Ventures presence in LatAm is bigger than just a portfolio of investments. Our commitment to support the region goes beyond pure investment, this is why we’ve recently launched an initiative targeting B2B SaaS Solutions for Utilities in this region.

The project is led by BID Lab, the innovation laboratory of the BID Group, in collaboration with GoHub Ventures and Idrica. Thanks to this, we’ll be on tour across LatAm on a ‘Pitch Roadshow’ to explain the project and meet founders to promote the development and adoption of innovative solutions in the water, sanitation, and solid waste sectors to achieve intelligent, inclusive, and sustainable services, with special attention to service providers in Latin America and the Caribbean.

Selected candidates will be able to run a pilot together with LatAm’s Utility leaders in order to validate problem-solution and test business models. A potential €4M funding awaits the most successful startups on this program.

This project is made possible thanks to the contribution of Fuente de Innovación, a partnership between the BID Group and external partners. Fuente de Innovación is funded by the Government of Switzerland, the FEMSA Foundation, the Government of Israel, the Republic of Korea, the Coca-Cola Foundation, and the Government of Spain.

Also, GoHub Ventures is partner with some of key players in the region such as AMEXCAP, ARCAP and LAVCA.

 

Expert’s Vision: Rafael Martín (VC Investor) Insights

Rafael Martín is a VC Investor at GoHub Ventures with focus on the Latin America region and the Digital Health sector. He’s been recently in LatAm to attend AMEXCAP Summit (CDMX, México) and VC LatAm Summit 2024 (Miami, USA) as well as the kickoff events of the above mentioned initiative ‘B2B SaaS Solutions for Utilities’ and was highly impressed. “We are meeting a lot of promising LatAm startups with innovative solutions for utilities and we hope that together with our support they can scale faster.

 

He has shared with us his vision and insights about the potential of the region for venture capitalists. “There’re not so many European VC’s actively investing in LatAm so we think there’s a big opportunity for funds like GoHub Ventures to support local startups seeking to expand to Europe and using Spain as an entry door”, speaks Martín about why GoHub Ventures has interest in LatAm market.

As mentioned above, Martín also spots ‘language’ as one of the particularities for this region. “In Europe we may have the EU, but at the end of the day countries have their languages, cultures, regulations… the speed of expansion is much faster in LatAm thanks to a common tongue. You may find interesting companies in smaller hubs and they could ‘easily’ jump into new countries, open markets and become regional leaders quite fast. However, since public infrastructure and support to startups is less developed, investors play a significant role to foster these movements.

Our expert highlights Fintech and Marketplaces as main verticals in the region but spots AI trend as a market changer.

Sara Sanjuan, Head of Marketing & Communicarions at GoHub Ventures
Apr 22 · 2024 Sara Sanjuan Head of Marketing & Comms