Among emerging markets, Latin America is one of the most promising in the world, especially in terms of innovation and entrepreneurship. The region offers great opportunities. Startups have evolved into an ever-growing technology ecosystem, and 2022 will see them on the rise.
Big numbers in fundraising and venture capital investments
Despite being an emerging market – with its own difficulties and complexities –, in the second quarter of 2021, Latin American startups raised investments of around USD 7.2 billion.
This growth has been made possible by many factors. Among them is undoubtedly the fact that the region is home to nearly 650 million inhabitants. In other words, on the one hand there is an enormous number of potential consumers, making Latin America a huge market for e-commerce. On the other hand, high rates of cell phone usage and hours spent on the Internet have made consumers increasingly demanding. This forces companies to constantly transform themselves, which creates a world of business opportunities in the region. Areas with great potential for doing business include sectors such as ICT, tourism, mobility, energy, healthcare and agriculture.
Agreements between countries have contributed positively to the solid and rapid growth of the startup ecosystem. This may be demonstrated by the Pacific Alliance that unites Mexico, Chile, Colombia, and Peru in an initiative that emphasizes economy and development. Through different actions, the Alliance seeks to boost the entrepreneurial ecosystem of these countries. It launched specific programs to support start-ups that play a fundamental role in the further creation and commercial rise of other companies.
Concerning government support, the public sector in LATAM has also played an active role: some governments have tried to make life easier for these types of start-ups. Countries such as Colombia, Chile and Argentina are enacting new laws to stimulate the creation of startups. In Peru, there is the initiative “Startup Peru”, which offers programs for innovative ventures that contribute to the country’s development. The Central Bank of Brazil launched PIX, an instant payment system that favors the speed and efficiency of these businesses. The Colombian government has also made it easier for Fintech startups to begin operating without complying with all the bureaucratic requirements that a financial services license would imply.
During 2021, investment activity in regional startups remained high, and for 2022 the outlook is still promising. Last year, 47 unicorns emerged in Latin America, almost all in the e-commerce sector. Countries such as Brazil, Argentina, Mexico, and Colombia stand out in the creation of them. This trend is expected to continue in 2022, making this year an excellent time for merchants around the world to invest in Latin America.
PayRetailers uses technological innovation to enable entrepreneurs from around the world to invest in the promising Latin American market. They can thus benefit and see their revenues grow in an ecosystem that is thriving and will continue to do so. The region offers great opportunities, and startups have tackled the challenges by adapting their technologies and creating new financial solutions. This will allow them to increase last year’s figures during 2022 and, consequently, for the coming years.
Challenges and opportunities for the startup ecosystem in LATAM
Among the difficulties of investing in the region, factors such as bureaucracy, political uncertainty and inflation are often cited. At PayRetailers, we can help overcome these obstacles by using technological innovation and our local expertise to enable entrepreneurs from all over the world to operate in the promising Latin American market. With a team of experts and our local knowledge, we provide easy and secure solutions to the challenges of the Latin American ecosystem. Entrepreneurs from all over the world are already benefiting from it.
One of the biggest difficulties faced by startups in Latin America is the lack of funding. Despite this, startups in the region lately have continued to make progress in the capital markets, particularly in venture capital investments. The emerging investment culture has been a decisive factor in the development of startups. Latin America has established itself as a market that attracts venture capital investment, and more and more investors are willing to bet on emerging companies. During 2021 in Latin America, CB Insights recorded USD 20.2 billion in venture capital investments. This figure corresponds to 952 completed financing rounds, 72% of which occurred in the early stages of start-ups.
The region offers great opportunities, and startups have risen to the occasion, thanks to platforms like PayRetailers that offer local payment methods with expertise in each of the region’s markets. Latin America’s startup ecosystem has experienced profound growth and start-ups are having a real impact on digitalization, innovation, and economic development in the region. Enter this promising market now. Get in touch with us.