Latam Startups Increase Capital Raising Compared to 2023

Startups in Latin America have experienced a significant recovery in capital raising during the first half of 2024, despite global macroeconomic challenges. According to a recent report by Endeavor Mexico and Glisco Partners, capital raised by startups in the region grew by 30% compared to the same period in 2023.

This growth, largely driven by strategic sectors such as Artificial Intelligence (AI), reflects a concentration of investments in more advanced stages and industries with high technological development potential.

Growth in Capital Raising

In the first six months of 2024, Latin American startups raised $1.1 billion in capital, representing a 30% increase over the same period last year. This rise occurred despite a 63% drop in the number of investments, with only 162 transactions. One key reason behind the increase in capital raised is the concentration of investments in later-stage startups.

The report also highlights an 11% decrease in the number of companies successfully securing funding compared to 2023, with only 76 startups obtaining financing. This points to a trend toward greater selectivity in investments, as funds focus their capital on startups with stronger traction and profitability potential.

The Rise of Artificial Intelligence

Artificial Intelligence has emerged as a key sector in the region, surpassing fintech for the first time in terms of capital raised. 34% of the investment rounds in the first half of 2024 were directed toward AI-related startups. This growth reflects the increasing demand for technological solutions in various industries such as e-commerce, fintech, and financial services.

On the other hand, fintech, while still a relevant sector, accounted for only 17% of investment rounds but captured 37% of total capital. This shows a shift toward diversification in investor preferences, as they explore new areas of technological innovation beyond traditional financial services.

Challenges and Opportunities in the Entrepreneurial Ecosystem

Despite the growth in capital raised, startups in the region still face significant challenges. According to the report, 80% of Venture Capital funds indicated that high interest rates have impacted their investment strategies. This has led to longer timeframes between funding rounds, with the average time between a Seed round and Series A stretching from 9 to 15 months between 2021 and 2023. This has created a more competitive environment, particularly for early-stage startups.

However, these conditions have also opened opportunities in emerging sectors such as AI and information technologies. Brazil remains the leader in the region, concentrating 50% of the capital raised, while Colombia has surpassed Mexico, establishing itself as a new hub of innovation.

The landscape of Venture Capital in Latin America shows signs of recovery, driven by growth in capital raising and a greater focus on strategic sectors like Artificial Intelligence. While the number of investments has decreased, the quality and potential of the startups that manage to raise capital seem to be higher, suggesting that investors are prioritizing more established projects. As global economic conditions continue to stabilize, the startup ecosystem in the region is likely to keep advancing, with emerging sectors like AI leading the way toward greater innovation and development.