Emerging Markets VC & Startups (09.29.21)
Softbank & LATAM: A Love Story
I've spent the last few months trekking around LATAM (currently in Bogotá, Colombia as I write this), continuing a journey I began before Covid-19 and speaking with venture capitalists and startups founders to learn more about the ecosystem. Much has changed since I was here 18 months ago, and one thing is for sure - there is no shortage of outside capital pouring into the region. Depending on what resource you look at, 2021 funding is breaking records for LATAM VC investments. CB Insights claims $9.3B, LAVCA says $6.4B, and Pitchbook is shooting high at $12B!
It's always tough to gauge this number as rounds can take time to close, and some of the smaller, early-stage funding rounds slip under the radar. But the point remains the same; regardless of which number you pick, it far surpasses the whole of any previous year. Much of the activity comes from international investors setting sights on the region and seeing opportunities for yield in a large market ripe for disruption. Investors such as Accel, A16Z, and Sequoia have been investing in Fintech, Proptech, and e-commerce companies - which have been the top-performing sectors in recent years.
We can thank Softbank for being a trailblazer in the region. In 2019, the Japanese bank announced a commitment of $2B in its Innovation Fund, explicitly targeting LATAM. It wasn't long before that number was bumped up to $5B and rebranded to the Latin America Fund. Today, the firm has invested over half of the fund in 48 companies, a third of them being unicorns valued at over $1B. Capitalizing on the success of their first fund and the expanding investment opportunity in LATAM, Softbank recently made two announcements doubling down on venture capital in the region.
First, Softbank announced a new Latin America Fund II starting with $3B of committed capital. The vehicle will target companies from seed to IPO and focus on AI, e-commerce, blockchain projects, and digital commerce technology companies. Bolivian-born Marcelo Claure will continue leading the bank's efforts in the region, as he is already leading the current $5B Latin America Fund. The new endeavor will operate out of Miami, Sao Paulo, and Mexico City, the latter two being the largest markets in the LATAM region.
The second announcement focuses on early-stage investing, as the bank has brought on two additional partners to focus specifically on this area. Rodrigo Baer, previously of Redpoint eVentures, and Marco Camhaji, previously of Yellow Ventures. According to TechCrunch, the two will focus on "identifying and supporting early-stage companies across the Latin American region to better identify high-growth companies and support them at every step of their lifecycle."
As other international investors continue to look into emerging markets for new opportunities, it won't be surprising to see them create specific funds for regions like LATAM. Currently, many of them are either leading rounds or co-investing with local investors in the ecosystem. This influx of capital may change the dynamics of deal-making here in the future (here is an interesting take), but I, for one, think more investment, regardless of whether it's local or international, will be a good thing.
Nigerian crypto exchange Yellow Card raises $15m Series A funding - Link
Uganda’s gnuGrid raises $612k seed round as it pivots into fintech space - Link
African fintech platform Finclusion Group secures $20 million in funding - Link
Forge Ventures closes US$22M debut fund targeting seed-stage startups in Indonesia, Singapore - Link
Vertex Ventures eyes raising $400m in new SEA, India fund - Link
Indonesian ID and data verification startup Verihubs gets $2.8M led by Insignia Venture Partners - Link
Romanian document processing startup SenseTask raises €480K - Link
Lithuanian startup Kernolab lands €855K for its Banking-as-a-Service solution - Link
Last-mile logistics platform Cargamos raises $11M seed round to expand same-day delivery - Link
Angel Ventures acquires Coonector to support corporate-startup relations - Link
Mexican eCommerce Gaia raises $50M from SoftBank - Link
Flat6Labs closes $10M seed fund for Tunisian startups - Link
Maqsad raises $2.1 million pre-seed to make education more accessible for ‘100 million’ Pakistani students - Link
Egyptian retail-tech startup Cartona raises $4.5m pre-Series A funding round - Link
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