Nearshore Americas
venture capital

Venture Capital Dries Up in LatAm As Inflation Rises

Venture capital investments are declining in Latin America, as interest rates rise in the United States following a steep climb in inflation.

The region received barely US$3.4 billion in venture capital during the first quarter of this year, down 30% from the previous quarter.

This is the third consecutive quarter of decline in venture capital investment in Latin America, which a few months ago was declared the world’s “fastest-growing” venture capital investment destination.

Venture capitalists poured as much as US$19 billion into the region’s startups in 2021, creating nearly 30 unicorns. Brazil and Mexico alone counted 25 unicorns between them, according to crunchbase data.

In recent months, there has been a steady decline in both volumes of investment as well as the number of funding rounds.

Political uncertainty, tightening of monetary policy in the United States and a weak IPO environment are among the factors damping investors’ sentiment.

However, seed and angel investments are roughly in power with the previous two quarters, reported  Crunchbase.

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Some unicorns, such as Mexico’s used-car seller Kavak and cryptocurrency exchange Bitso, are likely to postpone their IPOs.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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