Bloomberg Línea — Venture capital-backed companies in Latin America and the Caribbean region received $1.1 billion in the third quarter of this year, through 226 deals, according to the new State of Venture report by data provider CB Insights. This was a 52% drop in funding compared to the second quarter, when Latin American startups raised $2.3 billion, and is the fifth consecutive quarterly decline in funding.
Latin America still represents a small share of funding worldwide. CB Insights points out that in the US, venture capital-backed companies secured $36.7 billion in third quarter, while globally, venture capital funding totaled $74.5 billion in third quarter, hitting a nine-quarter low.
It is also a 34% drop quarter-over-quarter, the largest quarterly percentage drop in a decade.
Pitchbook provides a slightly different amount for deals in the US. The latest PitchBook-NVCA Venture Monitor, sponsored by Insperity and JPMorgan, shows that US-based startups received nearly $43 billion during the third quarter of 2022, but which is below the heights of 2021 and early 2022, but above historical averages.
According to CB Insights, Latin America and the Caribbean didn’t see any mega-round deals this quarter, and the early-stage deal share rose to 75%, from 72% in 2021.
The report points to FTX Ventures, GEM Digital, and BossaNova Investimentos as the top investors by company count for the third quarter.
By country, in Mexico, CB Insights shows that the funding amount fell by 51%. Nevertheless, deals nearly doubled from the 22 transactions the country saw in the second quarter. One reason might be that early-stage deal share surged to 82% in Mexico year-to-date from 76% a year ago.
In Latin America’s largest economy, Brazil, funding and deals maintained a downward trend in third quarter, with 105 deals, from 118 in the second quarter. Yet, Brazil saw early and late-stage deal shares rise compared to a year ago, according to CB Insights.
In Colombia, funding dropped 75% in third quarter compared to the second quarter.
Argentina, however, shows a different picture, with funding increasing 28% from second quarter.
In Chile, CB Insights shows that funding fell 94% compared to second quarter.
Swimming against the tide, these were the startups that managed to raise funds this week in Latin America:
Vozy
Colombian startup Vozy integrates voice, artificial intelligence and natural language processing (NLP) technologies. This week, it closed a $5 million pre-Series A investment round led by venture capital fund GoHub Ventures, a Spanish fund experienced in deep tech.
The round also involved US-based funds Starling Ventures and angel investors such as Arash Ferdowsi, founder of Dropbox, and Alan Rutlegde, besides previous investors such as Globant and Enlaces.
Founded in 2017 by Ricardo Marin, Helmuth Corzo, Humberto Pertuz and Alejandro Lopez, Vozy’s goal is to evolve conversations at scale for enterprises. Alejandro López, another of the co-founders, disclosed that the capital raised in this round will be used to continue investment in research and development, as well as in the refinement of its current technology, besides growing toward the Spanish-speaking market in the United States, and in Spain.
Fidu
Argentine school management platform Fidu raised $5 million in a seed round led by US fund Lightspeed Venture Partners. The startup founded in early 2022 has a business model that mixes fintech and edtech models. It claims to work with 1,000 schools in Latin America.
San Francisco-based NFX, Imaginable Futures and Broom Ventures also participated in the seed round. The startup founded by Nicolás Giménez (CEO), Caterina Carreño (CFO) and Ariel Manduca (CTO), automates the main operational processes of institutions, such as invoicing, cost management and communication with the family.
Zulu
Colombia-based digital-dollar platform Zulu raised a $5 million round with Cadenza Ventures, Nexo, CMT Digital, Simplex, Coin CDX and Gaingels, besides angel investors and startup founders. Co-founded by Esteban Villegas, Jaime Varela and Julián Delgado. Zulu plans to expand its operations to Mexico and Peru until the end of the year and reach 500,000 users.
Arch
Arch, a crypto asset management platform, raised a $5 million seed funding round led by Digital Currency Group and Upload Ventures. The venture arm of Ripio, TechStars and GBV also joined the funding.
Arch is a decentralized finance asset manager that facilitates exposure to cryptocurrencies and digital assets. Headquartered in the United States, the startup was created by a team from Chile, the US and Argentina. Christopher Storaker is the CEO.
The platform created by Arch allows anyone to buy a package of crypto assets through a single token, similar to how investors buy an ETF to gain broad exposure in the traditional financial market.
