In 2023, Latin America experienced a significant decline in startup funding, marking the second consecutive year of shrinking venture capital investment in the region. Companies in South America and Central America raised approximately $2.9 billion in seed through growth stage investment, a 63% drop from 2022 and an 84% decline from the record-setting levels of 2021. The decline in funding does not appear to be closely tied to country-specific economic or political factors but rather reflects a drop in investment globally.
The decline in funding was most pronounced in late-stage deals, with a lack of demand for IPOs leading to a decrease in pre-IPO financing activity. However, early-stage and seed dealmaking remained more resilient, with a slight improvement in Q4 2023. Brazil and Mexico saw the largest rounds of funding in the region, with Brazilian companies like QI Tech and Loft securing significant financing. Overall, a pickup in exits or increased investor willingness to allocate more capital will be needed to reverse the funding decline in Latin America.
