Bogotá — As startups in Latin America have had to face a significant reduction in access to venture capital, they have had to accelerate their path to profitability, which remains one of the main pending tasks in the region’s startup ecosystem, even for unicorns.
After a year to forget marked by a drop in funding and an unprecedented wave of layoffs in the ecosystem, startups in the region are once again facing a challenging landscape in 2023.
Figures from TTR Data indicate that 420 venture capital-related transactions were completed in Latin America in the first half of the year, a 37% decrease compared to the same period of 2022.
Of those, 333 had an aggregate non-confidential amount of $1.96 billion, a 67% plunge in the amount of capital mobilized compared to the same period of last year.
According to figures compiled by market research firm Sectorial, in 2022 the market value of startups in Latin America fell by 30%, and 33% of those companies saw frustrated negotiations in their capital raising and a 51% drop in funding.
Sectorial points out that breaking even remains challenging for startups in Latin America, so it is key to focus on the monetization strategy for revenue generation and how it combines with costs and expenses.
“Many startups have forgotten about this second element,” explained Sectorial, who has taken the Latam Digital Report Startup Study 2023 as a source.
Sectorial points out that breaking even remains challenging for startups in Latin America, and it is therefore key to focus on the monetization strategy for revenue generation, and how it combines with costs and expenses.
“Many startups have forgotten about this second element,” explained Sectorial, which takes the LatAm Digital Report Startup Study 2023 as a source.
It identified that 83% of the startups mapped in the region did not break even in less than two years, and that 33% did not achieve that goal in nine years.
This puts startups in a vulnerable situation due to the high dependence that some of them may have on financing via venture capital rounds, which have been scarcer in a scenario of high inflation and interest rates.
Even so, and despite this change in the cycle, Sectorial points out that “startups in the region continued to have good growth rates”.
Among the companies mapped, 47% grew by more than 90% in terms of revenue.
“Many of them based on testing and learning, pivoting their consumer segment, sales channel, product and geography,” according to the study.
In 2022, 87% tested in customer segments, 80% in channels, 74% in product and 62% in geography.
