LatAm Tech Boom Slows Down, as US Rates Climb

Latin America’s tech boom looks set to die down this year, as the United States continues to tighten monetary policy in a desperate bid to clamp down on inflation.

Latin America pulled in more than US$15 billion in venture capital in 2021, more than the total sum received by the Middle East, South-East Asia and Africa put together.

However, the inflow has already slowed down this year. The region received barely $3.4 billion in funding in the first quarter of 2022, down 30% from Q4 2021.

That’s largely because Japanese conglomerate Softbank, the driving force behind the startup boom in the region, stated that it would focus much of its attention on supporting its existing portfolio rather than on new companies.

Analysts suggest Latin America should bolster its mobile and fixed broadband networks in order to sustain the boom it experienced in the technology marketplace during the pandemic period. The region needs to invest more than US$68 billion to plug the digital gap, according to the Inter-American Development Bank (IDB).

Many governments in the region are not focusing on technology at all, according to a report by the British business daily The Financial Times.

The daily cited an example of Mexican president Andrés Manuel López Obrador, who is emphasizing “transformational projects” such as an airport, tourist railway and a huge oil refinery, rather than the ICT sector.

Around 45% of residents in Latin America have no Internet access, reported the daily citing data from the global mobile association GSMA.

If Latin America is determined not to squander the digital gains it made during the pandemic, it should promote investment in mobile and fixed broadband, the daily warned.