Latin America Report: Over 100% Increase in Quarterly Funding Secured by Private Market Venture Firms in LatAm

CBInsights has released the State of Venture in LatAm Report for Q3 2023.

The comprehensive report from CBInsights includes data and analysis on dealmaking, funding, and exits by private market venture companies in Latin America. According to the update, there has been a 101% jump in quarterly LatAm funding “to hit $1.2B after 2 depressed quarters.”

Despite the surge, deals to Latin America-based startups have reportedly “continued to decline, falling 27% quarter-over-quarter (QoQ) to 145.” While the biggest share of funding ($251M) this quarter went to fintech companies, retail tech was “the only sector to see an increase QoQ, up 44% to $69M.”

And $709M was raised in Brazil. In 2nd place, Mexico is gaining share.

Funding in Brazil, which increased by 114% QoQ, fueled the strong quarter in LatAm.

Startups in Brazil raised 60% of the region’s funding, “despite deals in the country falling 25% QoQ. Meanwhile, after several quarters with <15% funding share, Mexico received 30% ($354M) of all LatAm funding in Q3’23.”

The State of Venture Q3’23 report has also revealed that LatAm Funding surges in Q3, led by Brazil. But other indicators remain negative.

82% Share of deals YTD that are early-stage.

On track for a 5- year high.

Not only do early-stage rounds make up the vast majority of deals, but they have also seen the smallest decline when it comes to deal size.

Compared to full-year 2022,early-stage deal sizes have fallen 10% this year to an average of $2.7M per deal, vs. 56% and 11% declines in the mid- and late-stage deal
averages, respectively.

29 Months from seed to Series A.

It’s taking a lot longer to fundraise in LatAm. Despite the region’s positive funding momentum, it’s taking more time for startups “to get to the next fundraising stage: 2+ years in the early stages and nearly 2 years (21 months) for mid-stage. It’s also less appealing for companies to exit now, given potentially reduced prices.”

The median equity deal valuation “has slid 56% this year vs. 2022.”

IPOs or SPACs this year.

The public markets are basically frozen. For the third quarter in a row, LatAm saw no public filings, whether “via IPO or SPAC. M&A activity in the region was flat in Q3’23, with 79 deals vs. 81 in Q2.”

However, it remains elevated compared “to pre-Covid.” Among Q3’s biggest M&A deals were 3 acquisitions of Brazil-based companies, “spanning fraud protection, business management software, and telecom.”

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