99 Startups Monthly Newsletter - July 2024
In 2023, the Venture Capital landscape in Latin America saw its lowest investment volume in the last 5 years.
Data Source: 2024 LAVCA Trends in Tech
Many factors are attributed to this, such as Global Economic Uncertainty, Market Saturation, Regulatory Challenges, Exit Opportunities, Competition, and Shift in Investment Focus.
We know that these factors have caused the decline in investment to some extent. Based on what we have seen when talking to startup founders over the past two years, we have realized that one of the main contributors to this slowdown has been the effect that the COVID-19 pandemic bubble caused after it ended in 2022.
Probably most of you remember the market we encountered in 2021 (very high valuations with lots of deals closing). Most of these deals were done at overpriced investment rounds, and we know they were overpriced because now we, as investors, are facing the consequences and effects of having invested at such valuations.
A few months after this happened, some companies started to struggle to raise more capital, because it was evident that their numbers weren’t supported by their previous high valuations. This resulted in many down rounds and led to a huge decline in investors’ confidence. Many startups shut down causing many VC funds to underperform.
This confidence has not been restated yet, and we are not even close. It has been translated into the decline in investment volume, combined with the time founders take to close a round, versus prior years:
Data Source: 2024 LAVCA Trends in Tech
And also the decline in valuations, mainly due to down rounds:
Data Source: 2024 LAVCA Trends in Tech
2024 kicked off slowly, and we don’t think this will be the year when we return to 2021 levels. We think we are far away from those levels, but we are confident that we have already bottomed up and the years ahead are promising.
News about our portfolio companies:
Cemex, Femsa, and Banco Base have joined La Red por la Salud Mental, an initiative driven by the Mexican startup Cuéntame.
Mexican Fintech Ximple Raises $2.7M to Launch Credit Platform.
Great companies we have recently reviewed:
Wayak: An end-to-end solution that empowers businesses and organizations to seamlessly integrate, customize, and implement AI solutions.
Uvicuo: Helps companies increase their efficiency with a platform that enhances communication with their drivers and simplifies their financial management.
Recommendations of the month:
The Venture Mindset: How to Make Smarter Bets and Achieve Extraordinary Growth - Ilya Strebulaev & Alex Dang: the authors teach us how Venture Capital Funds make their effective decisions, and how this way of thinking can help us change the way we act in almost any aspect in life.
Roman Yampolskiy: Dangers of Superintelligent AI - Lex Fridman Podcast: Roman shares his views on where the world could be in a few years with AI. He talks about ethical implications and about the possible end of our civilization.