Latin America, which was once the world's fastest-growing region for startup investment a couple of years ago, is now experiencing a significant decline in venture capital funding for the second consecutive year. In 2023, the region saw a substantial drop in investment, with companies in South America and Central America securing only an estimated $2.9 billion in seed through growth stage funding. This represents a 63% decrease from 2022 and an 84% decline from the record-setting levels seen in 2021.
When examining the past decade, the annual funding to Latin America, categorized by funding stage, highlights the stark contrast in 2023. Despite this dramatic decline, the downturn does not seem closely linked to specific economic or political factors in individual countries. Latin American GDP growth for 2023 is projected at 2.3%, a moderate figure that does not signal a crisis. Inflation is also expected to remain at suboptimal but manageable levels, except for in Argentina and Venezuela.
The decrease in startup funding in Latin America appears to be more a consequence of a global trend where investment has diminished across various regions. In addition to reduced investments, there has been a scarcity of exits, with few IPOs and notable acquisitions in the past year.
Comments