The latest venture investment data from LAVCA reveals that the venture capital scene in Latin America saw a considerable adjustment in 2023. Total investments fell to $4 billion, a sharp decline from $7.9 billion in 2022 and a significant drop from the unsustainable $16 billion peak in 2021. The deal count also took a dip, with transactions decreasing to 770 from 1,158.
Investors have shown a preference for early-stage funding, seemingly in anticipation of a market upswing in the next 18-24 months, which is when these companies are expected to seek their next round of funding. Late-stage investments, however, have felt the brunt of market unease, with public equity valuation uncertainties and a sluggish IPO market contributing to the cautious approach. Venture debt, on the other hand, has held steady, though it remains a relatively untapped resource in the region.
Looking ahead to 2024, the signs suggest that we may have reached the bottom of this cycle. If history is any guide, we’re on the cusp of a rebound, which could spell a more welcoming environment for startup financing.
The market’s recalibration may very well lead to more active capital deployment, especially in sectors with secular growth trends, like climate and health tech.
To sum up, 2023 was characterized by a more measured approach to venture investing and a period of reflection. With the cycle seemingly at its bottom, we should anticipate a resurgence of investment activity in Latin America for 2024.
Latin American VC 