According to TechCrunch, 2021 was a highly successful year for venture capital investments, and Latin America was presumably among those countries that saw a particularly dramatic rise in investment activity. The current high level of investment persisted during the first few months of 2022. According to statistics that were provided by LAVCA, which is the Association for Private Capital Investment in Latin America, the total amount of venture capital that was invested in start-ups in Latin America in the first quarter of 2022 was $2.8 billion in U.S. dollars. This represents a 67 percent increase year on year; in the first quarter of 2021, only US $1.7 billion in venture capital was raised in Latin America. The information and communications technology industry takes in the lion's share of venture capital.
The top five technology verticals in Latin America together garnered the majority of investments during the first quarter of 2022. This is true both in terms of the number of transactions that were concluded and the total amount of cash that was invested.
It should not come as a surprise that financial technology companies in Latin America are currently receiving the greatest share of investments in the technology field, both in terms of the number of deals and the total amount of investment money. This is because Latin America is a region that still has a lot of untapped potential in the banking industry. In addition to this, the FinTech sector was able to increase its lead in each of these categories over the course of the previous year. The percentage of investment transactions completed by start-up businesses in the financial technology industry increased from 25% in the first quarter of 2021 to 30% in the first quarter of 2022. During the same time span, the proportion of capital received rose from 16 percent to 43 percent, representing a more than 2.5-fold increase. Other industries, such as the logistics industry, among others, lost market share as a result. However, the eCommerce industry was not one of those that lost market share to the FinTech sector. The eCommerce vertical maintains and strengthens its position as the solid second place it has held for both years, with 14 percent of all transactions and an even more impressive 21 percent of total capital spent in both years. It should come as no surprise that venture investors in Latin America find the e-commerce industry to be an appealing area since it is a promising sector with strong growth: According to the Statista Digital Market Outlook, the year-over-year increase in eCommerce revenue in South America in 2021 was 29 percent, 11 percentage points higher than the global average and six percentage points higher than the growth in North America. Also, the share of the eCommerce market in many Latin American countries is less than 50%, which shows that there is a lot of money to be made that isn't being done yet.
