What 22 years of investing in LatAm and the Global South has taught me

I started my VC investing journey in 1999 during the dot-com boom and subsequent bubble burst. Never did I imagine that I would witness the growth and consolidation that is happening today in LatAm. Especially, since 2020, when the whole world entered a global pandemic. Contrary to predictions, VC activity has multiplied – look at this chart from the LatAm regional private capital association below – and the number of unicorns has only increased. LatAm is on the investors’ map, attracting investors looking for resilient businesses with steady returns.

By Susana García-Robles, published in LatamList (check the link at the bottom)

Quoting Marc Andreessen, “What we aspire to do is, invest in the startups that have really, really extreme strength in a long and important dimension,” I have witnessed the truth of these words. Companies operating in sectors where the need is suffered by millions have proven to also be the ones that are most attractive for returns.

For the first time ever, I see that many founders have the privilege of choice. As they choose potential investors, they go deep into analyzing who provides smart capital and not just capital with no value add. The tide is turning and rightly so. This new breed of founders is fighting against being diluted! Empowered entrepreneurs are more energetic and efficient, which adds fuel to a growing economy.

Raising consecutive rounds of funding has become more frequent, and the increase in valuation from one to the next is considerable. Examine this trend and be watchful for this to be grounded on real growth, not hype. Nobody wants to relive the internet bubble again. Some savvy investors are deciding not to invest in subsequent rounds when they see that the huge increase in valuation is not justified. Even if the company is in their portfolio. Others are switching their strategies to enter at earlier stages to avoid overpaying. Sanity in the market is essential.

Even with this hype, the Global South (LatAm, Africa, SE Asia, and India) remains more competitive than Silicon Valley or China. To ignore this is to miss real opportunities. Sequoia is not missing any of these markets, read this.

Some of the latest unicorns – Clip, Mural – took much longer than companies founded in the last 5-7 years: Ualá, Kavak, Bitso. Technology hasn’t only lowered the costs of starting a company, it has also shortened the period for them to grow regionally and globally. Tech fosters scale faster.

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