Beyond the conjunctural factors in the global economy and the convulsive political environment in our countries, something that is not new either, there is still an immense potential market, the possibility of obtaining extraordinary returns compared to other investments in more mature markets and a solid entrepreneurial talent base.
As the economic journalist Enrique Quintana commented regarding the good performance of FDI in Mexico in the first quarter of the year, in contrast to the general investment that continues to be on the ground, at levels of 11 years ago. When asked if foreign investors see something that Mexicans fail to notice, he concludes that, finally, they continue betting on the country, not on a government, and that makes all the difference when considering risks and opportunities from a perspective of long term.
Another case that comes to mind is that of Colombia. In a scenario of political polarization, there is a real boom in entrepreneurship, with new unicorns of more than a billion dollars and a growing number of startups that are raising significant investments and expanding to other countries.
For now, according to the record just presented by the Association for Private Capital Investment in Latin America (LAVCA), after the 2021 mark, with more than 15.7 billion dollars invested in the region, more than in the entire previous decade, there are no signs of cooling, at least at the pace that seems to be happening in the rest of the world.
The volume of venture capital channeled to new Latin American companies in the first quarter of this year shows a slight decrease compared to previous quarters, but the capture reached 2,800 million dollars, 67% more than in the same period of 2021 and more than four times the observed amount than in the same quarter of 2021.
In addition, early-stage funding did not decline and there was a significant increase in the average size of investments: 1.6 and 2.6 times more than the same period last year for seed and initial stage tickets, respectively.
It must be considered that these figures are concentrated in investments in which at least one institutional fund participated. venture capital, so they do not include some of the most important financings; for example, debt or corporate venture capital. According to the monitoring of the site specialized in startup Crunchbase, funding in the quarter amounted to 3.4 billion dollars, 30% less than in the last quarter of 2021, but higher by a similar percentage than the first quarter of a year ago.
What do investors from all over the world continue to see in Latin America, apart from the still wide interest rate differentials? The same as many entrepreneurs in the region: markets for products and services that can only grow from the paths opened by the digital revolution. The greater the lag and the greater the access, the more scope for what we know in the venture capital industry as scalability.
The case of the fintech sector is illustrative. Take the example of Mexico. According to the recently published National Survey of Financial Inclusion 2021, out of a universe of 90 million people aged 18 to 70, there are still more than 33 million without any formal financial product, be it a savings account or a pension plan ( Afore).
Less than 18 million have some insurance and those with credit do not reach 33% of the adult population, which could be seen as a virgin market of more than 62 million people. Regarding payments, for purchases of 501 pesos, about 80% used cash, less than 13% debit card, only 3.4% credit and 3.3% other means, such as electronic transfers, checks, prepaid cards and direct debits.