But at least one region didn’t have a bad quarter.
Latin America experienced a surge in global investor interest in recent years but just as other regions globally, it has experienced a dip in venture funding.
VC investors deployed $7.8 billion across a record 1,114 deals in Latin America in 2022, down from $15.9 billion in 2021, according to The Association for Private Capital Investment in Latin America (LAVCA). The fintech sector by far was the biggest recipient of venture dollars in 2022, making up 29% of investments last year.
It appears that investors in the region are continuing to bet on the space. In fact, according to CB Insights’ State of Fintech Q2 report, fintechs in LatAm & the Caribbean drew $500 million, up 150% QoQ, while deal count (69) remained roughly the same QoQ. Early-stage deal share is pacing at 81% for 2023, a 5-year high, the report found. The region’s top deal in the quarter went to Cayman Islands-based DeFi platform Kross Wallet, which raised a $100 million seed round. (Blockchain and crypto companies are counted as fintech in CB Insights’ data). Other deals taking place during the quarter include Mexico-based spend management startup Clara’s $60 million raise and Brazilian payments infrastructure company Liquido bringing in $26 million. (It should be noted that those rounds were actually raised in 2021 but since it was operating in stealth, Liquido only recently announced the financings).
But overall, the second quarter was not kind to payments startups, even though the sector started the year off strong. Funding to these kinds of companies plunged 75% during the quarter to $2 billion from $8 billion in the first quarter and $4.9 billion for the second quarter in 2022. CB Insights noted this was a “six-year funding low for the sector.” And there were no new unicorns.
Deal volume didn’t hurt as bad, though second quarter investments fell 14% to 148 from 172 deals made in the first quarter. One bright spot was that early-stage funding to payments companies reached a five-year high.
Tipalti, which automates accounts payables for mid-market companies, had the top equity deal for the quarter, raising $150 million in a growth round, and adding to its impressive list of gigantic investments, like its $270 million Series F and $150 million Series E. Others on the list include Nymbus, Clara, Volt, Spiff and Episode Six.
Lastly, all 5 of the quarter’s IPO exits come from fintechs based outside of the United States, with four of them coming from Asia. Also, fntech saw a 20% drop in M&A activity to 142 exits, according to CB Insights.
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