SA国际传媒

Funding to Latin American startups hit the lowest level in years last quarter, as investment withered across stages and deal counts declined.

Overall, investors put $579 million into seed- through growth-stage rounds in the first quarter of 2024, according to data. That鈥檚 a decline of 17% from year-ago levels and a drop of 39% from the prior quarter.

The past quarter was a particularly precipitous comedown from the region鈥檚 funding peak nearly three years ago. At the high point, investors poured over $7 billion into Latin American companies in a single quarter in 2021.

For a sense of how far things have come down, we charted out investment, color-coded by stage, for the past 13 quarters.

Table of contents

• Fintech is the favorite
• Colombia is up, while Brazil and Mexico are down
• Round counts also fell
• Is this the bottom?
• Methodology
• Glossary of funding terms

Fintech is the favorite

Even with the pullback, we did see some good-sized deals get done. Notably, the top four were all in the fintech space, including:

• 叠辞驳辞迟谩-产补蝉别诲 , provider of tools to automate financial and accounting tasks, picked up $55 million in a February Series B round led by ;
• , another 叠辞驳辞迟谩-产补蝉别诲 company, secured $50 million in a February Series C round backed by. The company provides a platform for small and medium businesses to accept electronic payments;
• , a S茫o Paulo startup that provides corporate cards and an expense management platform, landed $40 million in Series B financing in January led by ; an
• Buenos Aires-based , a provider of payment technology for companies to offer prepaid, debit and credit cards to their customers, raised $40 million in a Series B round led by .

The wherewithal of fintech-related funding comes as digital payments continue to displace cash as the way to make purchases in Latin America. Today, more than 90% of small businesses in the region accept some kind of digital payment, per a . At the same time, reliance on cash payments continues to decline.

Colombia is up, while Brazil and Mexico are down

While overall funding to Latin America was down, there were wide disparities among individual countries.

If we had to pick a Q1 winner in the current climate, it would probably be Colombia. Investment in Colombian startups more than tripled from the prior quarter to hit $188 million, largely due to big rounds for the aforementioned 叠辞驳辞迟谩-产补蝉别诲 fintechs Simetrik and Bold.

Meanwhile, the two largest Latin American startup investment markets 鈥� Brazil and Mexico 鈥� saw steep declines.

Brazilian startups raised just $223 million in known funding in Q1 鈥� down 63% from the prior quarter and 35% from year-ago levels. There were no rounds over $50 million in Q1, compared to a dozen in all of 2023.

Mexican startups drew just $33 million in known financing in Q1, per SA国际传媒 data. It鈥檚 a number so low that we鈥檙e assuming there are more deals in the pipeline that just didn鈥檛 manage to close before quarter鈥檚 end.

Overall, reported funding to Mexican startups fell 82% quarter over quarter and 57% year over year. That number is likely to pick up in coming quarters, particularly as companies funded in flusher times a few years ago seek follow-on investment.

Round counts also fell

In addition to putting less money to work, investors also backed fewer Latin American deals in the first quarter.

Per SA国际传媒 data, there were just 111 reported seed- through growth-stage rounds reported in the first three months of 2024. We expect that number to rise a bit over time as more Q1 seed rounds are added to the database. However, it鈥檚 still likely to come in well below the prior quarter鈥檚 187 rounds, and the year-ago quarter, with 252 rounds.

Is this the bottom?

Reporting on something as cyclical as startup investment, it鈥檚 generally unwise to try and call a market top or bottom. Investment has a history of reaching higher highs and touching lower lows than forecasters thought possible.

That said, I鈥檓 willing to take that risk and say that Q1 looks quite a bit like a cyclical trough. This is particularly the case for Brazil and Mexico, two growing and dynamic economies that ought to support a whole lot more startup investment than what we saw in the past few months.

Stay tuned for our Q2 report in three months to see if the data bears out this prediction.

Methodology

The data contained in this report comes directly from SA国际传媒, and is based on reported data. Data reported is as of April 3, 2024, and will be updated again before the final report is published.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted.

SA国际传媒 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to SA国际传媒 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. SA国际传媒 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. SA国际传媒 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

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