Buoyed by
international attention from U.S. and Chinese investors and technology
companies, new financing keeps flowing into the coffers of Latin American
venture capital firms.
One day
after the Brazilian-based pan-Latin American announced the close of its $150
million latest fund comes word from our sources that ALL VP, the Mexico
City-based, early stage technology investor, has held a first close of $73
million for its latest investment vehicle.
The firm
launched its first $6 million investment vehicle in 2012, according to
CrunchBase, just as Mexico’s former President Enrique Peña Nieto was coming to
power with a pro-business platform. One which emphasized technology development
as part of its strategy for encouraging economic growth.
ALL VP
founding partner Fernando Lelo de Larrea said he could not speak about ongoing
fundraising plans.
And while
the broader economy has stumbled somewhat since Nieto took office, high
technology businesses in Mexico are surging. In the first half of 2018, 82
Mexican startup companies raised $154 million in funding, according to data
from the Latin American Venture Capital Association. It makes the nation the
second most active market by number of deals — with a number of those deals
occurring in later stage transactions.
In this,
Mexico is something of a mirror for technology businesses across Latin America.
While Brazilian startup companies have captured 73% of venture investment into
Latin America — raising nearly $1.4 billion in financing — Peru, Chile,
Colombia and Argentina are all showing significant growth. Indeed, some $188
million was invested into 23 startups in Colombia in the first half of the
year.
Overall, the
region pulled in $780 million in financing in the first six months of 2018,
besting the total amount of capital raised in all of 2016.
It’s against
this backdrop of surging startup growth that funds like ALL VP are raising new
cash.
Indeed, at
$73 million the first close for the firm’s latest fund more than doubles the
size of ALL VP’s capital under management.
But limited
partners can also point to a burgeoning track record of success for the Mexican
firm. ALL VP was one of the early investors in Cornershop — a delivery company
acquired by Walmart for $225 million earlier this year. Cornershop had
previously raised just $31.5 million and the bulk of that was a $21 million
round from the Silicon Valley-based venture capital firm, Accel.
International
acquirers are making serious moves in the Latin American market, with Walmart
only one example of the types of companies that are shopping for technology
startups in the region. The starting gun for Latin American startups stellar
year was actually the DiDi acquisition of the ride-hailing company 99 for $1
billion back in January.
That, in
turn, is drawing the attention of early stage investors. In fact, it’s venture
capital firms from the U.S. and international investors like Naspers (from
South Africa) and Chinese technology giants that are fueling the sky-high
valuations of some of the region’s most successful startups.
Loggi, a
logistics company raised $100 million from SoftBank in October, while the
delivery service, Rappi, raked in $200 million in August, in a round led by
Andreessen Horowitz and Sequoia Capital.
In a market
so frothy, it’s no wonder that investment firms are bulking up and raising
increasingly large funds. The risk is that the market could overheat and that,
with a lot of capital going to a few marquee names, should those companies fail
to deliver, the rising tide of capital that’s come in to the region could just
as easily come back out.
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