As investor interest in LatAm continues to grow, a recent survey has shown that fintech, energy, and mobility represent the sectors with the most investment potential for startups in the region.
The survey, which was conducted by Copec Wind Ventures, showed that 17% of investors considered Latin America as the largest growth market for startups outside the United States, more than 120% as much as those surveyed last year. On the other hand, sentiment on China and Europe took a hit with both regions experiencing a decrease of more than 31% each when compared with the last survey. Brian Walsh, Head of WIND Ventures, referred to these results by stating:
“What we have seen over the past year is a sharpened awareness within the venture capital ecosystem about Latin America’s tech-enabled transformation. Venture capitalists have become more aware and more bullish about the opportunities in the region, as indicated by our own research, and they are putting a lot more capital to work there as a result. According to Pitchbook, VCs have invested $12 billion across 500+ deals in Latin America so far this year, which is more than what was invested in the previous three years combined.”
When it comes to investing, VCs overwhelmingly agreed on the relevance of Fintech as the biggest sector for investment in LatAm, with 66% of the respondents choosing it over energy (20%) and Mobility (11%), the second and largest sectors. Walsh said about how the region is poised for growth:
“Historically, we have seen underinvestment in technology in Latin America. The region is poised for explosive growth given the digital transformation in a market of 600 million people. We believe there are opportunities for startups from around the globe to expand to the Latin American market; however, given the complexities of the region, making the right decisions about which markets within Latam to target and navigating political elements and partnerships will be key.”
While 78% of all the respondents answered positively when asked about their optimism toward innovation in Latin America, the survey also showed that there are several perceived challenges for building businesses in the region. Concerns around the political challenges in the region continue to be the major challenges for investors, increasing to 95% from 90% back in 2020.
