Home Venture Capital Venture Capital Dries Up in LatAm As Inflation Rises

Venture Capital Dries Up in LatAm As Inflation Rises

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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.

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

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