TLDR:
Latin American startup investment fell in Q1 2024, with a 17% decline from the previous year, reaching $579 million. Fintech companies received the most funding, with Colombia showing significant gains while Brazil and Mexico saw declines. Deal counts also dropped, indicating a cyclical trough. The top deals were in the fintech sector and digital payments are growing in the region.
Full Article:
Funding to Latin American startups hit the lowest level in years last quarter, as investment withered across stages and deal counts declined. Overall, investors put $579 million into seed- through growth-stage rounds in the first quarter of 2024, according to Crunchbase data. This marks a decline of 17% from year-ago levels and a drop of 39% from the prior quarter. The past quarter was a particularly precipitous comedown from the region’s funding peak nearly three years ago. At the high point, investors poured over $7 billion into Latin American companies in a single quarter in 2021.
Even with the pullback, some good-sized deals were still made, with the top four belonging to the fintech space. Fintech-related funding was prominent in the region as digital payments continue to displace cash. Colombia stood out as a Q1 winner, with investment tripling from the prior quarter to $188 million, while Brazil and Mexico experienced declines.
Brazilian startups raised just $223 million in known funding in Q1, a 63% decrease from the prior quarter. Mexico drew only $33 million, dropping 82% quarter over quarter and 57% year over year. Deal counts also fell, with only 111 reported seed- through growth-stage rounds, significantly lower than the prior year.
While calling market tops or bottoms is risky, Q1 appears to be a cyclical trough, especially for Brazil and Mexico. With dynamic economies, these countries are expected to see more investment in the future. The top deals in Q1 were in the fintech sector, indicating growth in digital payments in Latin America.
