You may have be aware that global venture capital slowed in Q1 2022. However, global statistics can mask divergent realities throughout the world, as a deeper examination of regional data reveals. According to the current State of Venture report from CB Insights, the amount of money going into U.S. and Asian companies has decreased, in accordance with the worldwide trend. Their European, Canadian, and African rivals, on the other hand, drew more funds in the first quarter of 2022 than in the previous quarter. We’ll spend the rest of the week trying to figure out why, but today we’ll concentrate on Latin America.
Latin America is a fascinating region to investigate what the future holds for businesses. Why? Because VC investment in the region hasn’t started to slow down in the last few weeks: dollar financing in the region has now dropped for three quarters in a row. In other words, this attitude shift occurs many months before the conflict in Ukraine, the selloff in technology stocks, and indicators of a worldwide downturn.
Some of the issues identified by Latin America’s VC slowdown are similar to those expressed elsewhere: When interest rates are rising and public values are plummeting, how can private investment in startups keep up? Other interrogations, on the other hand, are more regional in nature: Did values rise too much in comparison to other regions? Is it true that FOMO peaked early in Latin America? Is it still prudent to be long-term bullish? We crunched some figures to get a sense of what’s going on south of the border, since this wouldn’t be The Exchange otherwise.
We also reached out to two investors that have unique insights on the region: Costanoa partner Amy Cheetham and Investo co-founder and managing partner Jonathan Lewy, a Belgian VC operating in Mexico. If you’re interested in how sausage is created, you should know that our first interpretation was greeted with some resistance from our specialists, which always makes things more interesting. Let’s get to the data and analysis! The report’s Latin American part begins with a summary of regional trends, followed by country-by-country analysis. Perhaps excessively, this drew our attention. Compare Q1 2022 to Q4 2021 to see the dollar volume evolution for yourself.
