Funding to Latin American startups hit the lowest level in years last quarter, as investment withered across stages and deal counts declined.

Overall, investors put $579 million into seed- through growth-stage rounds in the first quarter of 2024, according to Crunchbase data. That’s a decline of 17% from year-ago levels and a drop of 39% from the prior quarter.

The past quarter was a particularly precipitous comedown from the region’s funding peak nearly three years ago. At the high point, investors poured over $7 billion into Latin American companies in a single quarter in 2021.

For a sense of how far things have come down, we charted out investment, color-coded by stage, for the past 13 quarters.

Table of contents

• Fintech is the favorite
• Colombia is up, while Brazil and Mexico are down
• Round counts also fell
• Is this the bottom?
• Methodology
• Glossary of funding terms

Fintech is the favorite

Even with the pullback, we did see some good-sized deals get done. Notably, the top four were all in the fintech space, including:

• Bogotá-based Simetrik, provider of tools to automate financial and accounting tasks, picked up $55 million in a February Series B round led by Goldman Sachs;
• Bold, another Bogotá-based company, secured $50 million in a February Series C round backed by General Atlantic. The company provides a platform for small and medium businesses to accept electronic payments;
• Conta Simples, a São Paulo startup that provides corporate cards and an expense management platform, landed $40 million in Series B financing in January led by Base10 Partners; an
• Buenos Aires-based Pomelo, a provider of payment technology for companies to offer prepaid, debit and credit cards to their customers, raised $40 million in a Series B round led by Kaszek.

The wherewithal of fintech-related funding comes as digital payments continue to displace cash as the way to make purchases in Latin America. Today, more than 90% of small businesses in the region accept some kind of digital payment, per a Mastercard survey. At the same time, reliance on cash payments continues to decline.

Colombia is up, while Brazil and Mexico are down

While overall funding to Latin America was down, there were wide disparities among individual countries.

If we had to pick a Q1 winner in the current climate, it would probably be Colombia. Investment in Colombian startups more than tripled from the prior quarter to hit $188 million, largely due to big rounds for the aforementioned Bogotá-based fintechs Simetrik and Bold.

Meanwhile, the two largest Latin American startup investment markets — Brazil and Mexico — saw steep declines.

Brazilian startups raised just $223 million in known funding in Q1 — down 63% from the prior quarter and 35% from year-ago levels. There were no rounds over $50 million in Q1, compared to a dozen in all of 2023.

Mexican startups drew just $33 million in known financing in Q1, per Crunchbase data. It’s a number so low that we’re assuming there are more deals in the pipeline that just didn’t manage to close before quarter’s end.

Overall, reported funding to Mexican startups fell 82% quarter over quarter and 57% year over year. That number is likely to pick up in coming quarters, particularly as companies funded in flusher times a few years ago seek follow-on investment.

Round counts also fell

In addition to putting less money to work, investors also backed fewer Latin American deals in the first quarter.

Per Crunchbase data, there were just 111 reported seed- through growth-stage rounds reported in the first three months of 2024. We expect that number to rise a bit over time as more Q1 seed rounds are added to the database. However, it’s still likely to come in well below the prior quarter’s 187 rounds, and the year-ago quarter, with 252 rounds.

Is this the bottom?

Reporting on something as cyclical as startup investment, it’s generally unwise to try and call a market top or bottom. Investment has a history of reaching higher highs and touching lower lows than forecasters thought possible.

That said, I’m willing to take that risk and say that Q1 looks quite a bit like a cyclical trough. This is particularly the case for Brazil and Mexico, two growing and dynamic economies that ought to support a whole lot more startup investment than what we saw in the past few months.

Stay tuned for our Q2 report in three months to see if the data bears out this prediction.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of April 3, 2024, and will be updated again before the final report is published.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted.

Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman