This is a guest post by Richard Armstrong who is an early stage investor in many startups in both SE Asia and globally. Plus Richard has cofounded several companies.
Guest Author: Richard Armstrong
I was reading this LatAm tech report just recently and really enjoyed it. Particularly because I try to visit the region fairly frequently and have a number of portfolio companies in the area.
And I really like what i’m seeing happening… I think the tech sector is really starting to blast off.
A Solid Economic Foundation
With a GDP surpassing US$6 trillion and a population inching closer to 700 million, the region stands as a colossal market ripe for digital innovation.
The essence of Latin America’s tech evolution is captured not just in numbers but in the stories of startup founders who, against all odds, transform seemingly insurmountable challenges into opportunities.
The founders just have a lot of grit. And they dream big.
A decline in capital
In the past couple years VC funding in the region has dropped quite a bit off its peak in 2021. As you see in the graph above the 2023 level of funding is below even the levels it was at in 2019-2020.
But with long-term progress always comes a step or two backwards.
And the feeling in 2024 is that things are going to pick up a lot. As you can see in these numbers below which were taken from a survey done of founders and investors.
Let’s now look at what is happening in some sectors of tech.
Fintech
Fintech is the most mature startup sector in Latam and accounts for about 40% of all VC funding raised in the region. Which is quite a bit different from many other regions… SEA included.
One trend that is clear is how fintechs are focusing more on companies and not end consumers with AI being at the foundation of some of the companies doing this. For example using AI to improve customer service and credit scoring.
Here is a look at some of the more prominent companies in the region.
And it’s important to remember that despite the growth in fintech there is still so much to be done.
For example in countries like Mexico and Peru less than 60% of the population has a bank account still.
e-Commerce
Covid-19 had a very transformational impact on the region for e-commerce. This single event turned online buyers from the minority to the majority in the region.
And now nearly 3 out of 4 people have bought something online in Latam.
But despite this growth there is still tons of opportunity. Particularly among SMB’s which have jumped into live commerce big time.
In many ways it is already reaching levels that can be seen in China with influencers peddling their wares through video and social channels.
Just look at the graph below with the predicted growth rates from now till 2026. This is probably one of the fastest growing ecom regions in the world.
Final
And who are the big players?
Well you have a mix of merchants, marketplaces, aggregators and then the enablers laying the foundation.
This chart below lays out some of the big names in each of these spaces.
FinalThoughts
As The LatAm Tech Report 2023 illustrates, transforming Latin America is not a sprint but a marathon.
But I am really excited about the region. It reminds me of Southeast Asia and the amazing trajectory we have experienced here. Things in Latam are just really starting to blast off.
And so I plan to spend more time in the region and make more investments. There are tons of possibilities ahead and I want to be part of this extraordinary journey!
