Fintech
Latin American Startup Funding Rebounds After Deep Slump
Funding for Latin American startups increased in the second quarter, driven by a resurgence in late-stage deals.
Overall, companies in South and Central America reportedly raised $791 million in growth-stage seed-through funding in the second quarter of 2024, according to Crunchbase data. That’s up 25% from the previous quarter and 17% from the year before.
The recent gains follow an unusually weak Q1, when funding to the region hit a multi-year low. And while the latest numbers look stronger, they’re still well below the heights reached during a record-breaking 2021 run, as illustrated below:
Meanwhile, reported deal counts have declined for the quarter, although we have seen an encouraging increase in early-stage volume. We also expect early-round counts to increase somewhat over time and for more previously unreported deals to be added to the database.
All about financial technology
As overall investment increased in Q2, financial technology led the recovery. The top four recipients of funding in the quarter were all fintechs, including:
- CelcoinBrazilian provider of corporate banking tools, closed a $120 million Series C financing in June.
- ClipA Mexico City-based technology provider that enables merchants to accept digital payments, secured $100 million in funding in June, its first round of capital since 2021.
- CRM Bonusa Brazilian provider of loyalty and promotion tools for retailers, raised $74 million in a May funding round led by Link.
- I’m leavinga Mexico City-based provider of tools for merchants to offer installment plans to customers, raised $70 million in equity financing in May, led by QED Investors.
Fintech’s strength is not entirely surprising. The sector has long been a leading area for regional investment. It was the leading area for investment even the last quarter.
However, we have seen companies in other spaces raise good-sized rounds in Q2. For example, Engravinga Brazilian data and AI consultancy, has raised $40 million in funding backed by Capital of Colombia. AND Akad Segurosan insurance platform, has raised a Series A round of $22.5 million.
Advanced stage, stable initial stage
The late stage saw the largest improvement in overall funding. Reported Series C investment was over $291 million, nearly double Q1 levels and nearly 6x year-over-year.
While these may seem like staggering gains, they are not all that surprising in the broader context. Both Q1 2024 and Q2 2023 were anomalous, weak quarters for late-stage deal closings.
Early-stage investment levels have been more stable. Investments totaled $386 million in Q2, up slightly from Q1 and down slightly from prior-year levels. Overall, we’ve seen less fluctuation in early-stage investment than late-stage, where one or two large deals can have a significant impact on totals.
Improve
Overall, the data points to an improving venture investment climate in Latin America’s top startup hubs. Funding at all stages increased in Q2 compared to the previous quarter.
The recovery was particularly pronounced in Mexico, with about $230 million invested in known rounds, up from less than $40 million in the previous quarter.
However, funding to Latin America remains more than 80% below its Q2 2021 peak. Unicorn creation is still slow. And we haven’t seen many large exits for venture-backed companies. While we don’t expect to revisit those previous highs, it looks like there’s still plenty of room to recover.
Illustration: Dom Guzman
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