Latin VC market reaches new high in H1 2022

Despite a slower pace in global venture capital investments, the Latin market is experiencing its second strongest year on record. The data emerged from the Latin American Startup Directory 2022 survey by the Latin American Association of Private Equity & Venture Capital (LAVCA), released on Tuesday (16). Some US$ 5.4 billion of investments were injected into 541 businesses in the first half of 2022.

The volume is lower than the US$ 6.7 billion moved last year, but it is well above the result for 2020, of just US$ 1.5 billion. The number of rounds also increased: LAVCA had registered only 377 transactions in 2021 and 230 in the previous year.

According to the survey, VCs saw a significant adjustment in the more advanced stages, from Series C onwards. However, seed and early-stage investment remained strong in the year, with increases of 113% and 48%, respectively, compared to the first half of 2021. Despite the advance, the average size of early stage checks declines to $7.5 million in the second quarter of 2022 from an all-time high of $12.7 million in the fourth quarter of 2021 .

The study reveals that in turbulent times, VC funds are choosing to invest more capital in more experienced founders. In the 1st half of 2022, repeat founders raised 43% of the amount invested in Latin America, a new record for the region. More records were broken in the period: for the first time, a third of contributions from the continent went towards startups led by women.

Private equity

LAVCA also analyzed the scenario for private equity investors in the first half of the year. “Private capital activity in Latin America shows signs of resilience amid rising risks from inflation, rising volatility and global geopolitical turmoil,” the report reads.

Private equity investments totaled US$ 15.9 million in the region from January to June, distributed in 636 transactions. The volume is enough to surpass all investments in the same category made in the first half of 2015 to 2021. However, the projection is that the second half of 2022 will not exceed that of 2021, when the ecosystem reached US$ 18.7 million in investments.

Despite the slowdown, LAVCA says 2022 is on track to be the second largest year of private equity investment in Latin America, driven by increased business in digital infrastructure, renewable energy, distressed assets and early-stage startups.

Private equity investors have invested more than $3.2 billion since 2020 to expand the region’s renewable energy capacity beyond traditional hydropower assets, with $1.3 billion invested in renewable energy in the first half of 2022, including new projects of solar photovoltaic and wind farms (up $616 million for the whole of 2021).