Latin America (LATAM) has never been known as having a tech scene, but they are starting to prove how radically different they are. Although still in its inception, LATAM has potential to develop new tech hubs, with venture capital (VC) investments slowly gaining momentum in select countries such as Brazil, Mexico, Chile, and Colombia. Much has changed in the past 15 years in terms of its digital tech landscape and the emergence of new tech startups. Primary factors include a fast emerging middle-class, more stable political and regulatory climates, and increasing interest and comfort levels about investing in the region by VCs from the outside.
As indicated from the chart above, VCs have started to invest heavily into LATAM in the past five years. As of 2015, investments totaled up to an estimated $4.27bn with investments up 39 percent with $3.58bn being deployed, and exits generated $1.74 billion, an 8 percent increase compared to 2014.
Brazil, Chile, and Mexico prove to be some of the most successful LATAM countries in terms to scoring VC deals. According to McGraw Hill’s “Deal Trends in Latin America” June 2014-15 data, 48 percent of the deal value is represented by Brazil, followed 22 percent from Mexico, and 19 percent from Chile.
Some LATAM countries are pushing for aggressive efforts to increase internet penetration, and they are doing so through experimentation with government-led support programs. With Mexico’s program “México Conectado,” efforts have brought the internet to nearly half of the country at 46 percent. In Brazil, fibre optic deployments in the country significantly increased internet usage, with over over 40 percent of the country’s households have broadband connectivity with an average of 2.6Mbps and the largest 4G penetration in the region. In Colombia, the Colombian government has Live Digital, a $2.5 billion campaign which aims to have 27 million people connected to the Internet by 2018, a figure representing 63 percent of the population. And Chile leads the LATAM region in terms of internet penetration at 65 percent with plans to increase to 80 percent through 2020.
There are even government partnering up with local accelerators such as Start-Up Peru in Lima, Incubar of Argentina, Brazil’s SAMPAdigital, and Colombia’s iNNpulsa. With initiatives in place and the region’s internet usage increasing, these serves as the catalyst for creating local startup environments.
The biggest advantage for a developing tech scene in LATAM is the younger demographic and their constant mobile consumption. With the availability of affordable smartphones manufactured in China and Korea at a sub price of $100, more Latin Americans are connecting to the internet and using a variety of mobile app services. According to a study by IMS and Comscore, LATAM has some of the highest social media and mobile usage rates in the world. More than 9 out of 10 Latin Americans own a cell phone and 60 percent of the mobile users consider social media apps such as Twitter, WhatsApp, Spotify and Waze as an important part in their day-to-day life. Bogotá, Sao Paulo, México City, Santiago and Buenos Aires have more users than New York or L.A. With mobile penetration expected to increase in LATAM to approximately 50 percent by 2018, the impact that this region will have on social, mobile and local startups will be tremendous.
|City||Founded||# of Employees||VC Raised (M)||Market|
|Easy Taxi||São Paulo||2011||1k – 5k||$77.00||Mobile|
|Dafiti||São Paulo||2010||1k – 5k||$249.30||eCommerce|
|Nubank||São Paulo||2013||151 – 250||$98.30||FinTech|
|Avenida||Buenos Aires||2013||251 – 500||$50.50||eCommerce|
|Properati||Buenos Aires||2012||$2.23||Real Estate|
|iFood||São Paulo||2011||101 – 250||$61.86||Mobile|
|PSafe||Copacabana||2010||101 – 250||$90.00||Software, Cloud|
|Mobly||Jundiaí Do Sul||2011||$20.00||eCommerce|
|Resultados Digitais||Florianópolis||2011||101 – 250||$7.02||Cloud|