Latin America is just getting started.
Evidence suggests that the Latin American (LATAM) ecosystem holds significant promise. After a period of rapid digitalisation, a queue of valuable VC-backed companies is awaiting exit.
Within LATAM, Nodem focuses on Brazil and Mexico, representing nearly 60% of the region’s total GDP of approximately $6tn. While LATAM has performed above its weight on IPOs and M&A, a queue of technology companies is awaiting exit.
Between 2017 and 2023, there were 12 exits of VC-backed LATAM-founded companies, most notably Nubank, PagSeguro, Stone, auth0, and d.local. This compares to 8 +$1bn exits in India and 5 in Southeast Asia over the same period.
Late-stage valuations have adjusted downward, with the average round falling by 45% compared to 2022. Global investors, who have historically provided most of the late-stage financing in the region, have scaled back from participating in mega-rounds globally. In Latin America, global investors participated in 21 late-stage financing rounds in 2023, down from 67 rounds in 2021. Local managers commanded the lion's share of early-stage investment activity in 2023.
Nodem expects a sharp increase in exit activity across the region in the coming years.
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Disclosures