Global tech firms and investors are reshaping Latin America’s startup environment

Latin America is emerging as the new battleground for the global tech giants, and some of Silicon Valley and Asia’s biggest investors—from Sequoia Capital to SoftBank—are taking notice.

International investment in Latin American startups has more than doubled since 2013, with 25 new investors entering the region in 2017 alone, including SoftBank, Didi Chuxing and TPG’s US$1B global impact fund, The Rise Fund.

Some of Silicon Valley’s biggest names are now active in Latin America, including Andreessen Horowitz, Accel Partners, Founders Fund, Sequoia Capital, and Y Combinator, choosing deals opportunistically across financing stages and sectors:

A separate group of US-based investors dominates the list of most active investors in Latin American startups, and includes a diverse set of investors across all stages, from Y Combinator and 500 Startups to private equity firm Riverwood Capital, hedge fund Tiger Global, and impact investor Omidyar Network.

Global corporate investors are making some of the biggest investments into LatAm startups, including Naspers, American Express Ventures, FEMSA Comercio, and Qualcomm Ventures, which is the most active corporate VC in the region.

Appetite from Asian investors is also growing, with landmark investments from SoftBank and Didi Chuxing into Brazilian rideshare company 99, and significant deals from Tencent (Satellogic), Singaporean sovereign wealth funds GIC and Temasek (Netshoes), and blockchain investors Digital Finance Group and FGB Capital (Ripio).

Of note, SoftBank and Didi Chuxing’s US$200m investment in 99 with Riverwood Capital in 2017 represents the largest public round of venture capital into a startup in Latin America. 99 became the first Brazilian unicorn (with a valuation of over US$1B) later that year when Didi acquired a majority stake in the company.

The transactions speak to the larger significance of Latin America’s rideshare market on a global scale. Uber’s top three cities globally by volume are all in Latin America. Didi Chuxing just chose Mexico as its first expansion market outside of China.

It’s not just rideshare — tech giants across the board are turning towards LatAm as a key growth market:

Despite growing investor interest in Latin American startups, the region remains very much undercapitalized compared to other global emerging markets, with a total of US$500m venture investment in 2016, and almost that much invested in the first half of 2017, driven by investments from Didi and SoftBank (99), Sequoia Capital (Rappi), General Atlantic (Clip & Gympass), Accel Partners (Cornershop) and Naspers (Movile, Creditas, Avenida!).