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They Found El Dorado

Latin America had the fastest growing venture capital investment of any region of the world in 2021, up 385% year-over-year. Startup portal Crunchbase reports venture capital firms invested $19.5 billion in the region in 2021. Look closer and you’ll notice investors talk about serving Latin America very large, very online middle class.

The region’s middle class gives new meaning to the word “underserved.” Where else could you find 600 million people spending 9 or 10 hours online a day for whom having a credit card is still a dream? Nubank was the top funding deal of 2021 by making that dream real for 48 million customers and counting. The Brazilian neobank got almost $750 million for it’s pre–IPO funding round in June and went public in November.

Financial services are a big area of need for Latin America, but not the only one. Nubank and the following top three funding deals of 2021 add up to $2.4 billion or 12% of the region’s year total. These startups offer another key service: ecommerce. As more business go online, they need websites, delivery, and marketplaces that make it easier to have a presence where their customers spend so many hours a day.

These large deals are a novelty for Latin America: investors funded over 1,100 smaller regional startups in 2021. Another portal covering the region, Startupeable, analyzed the investments at every stage of a company’s life and found that early on founders traded 5-10% of their businesses for $30,000 to $200,000, with later funding going up to $16 million on average.

Of those 1,100 startups funded in 2021, regional VC Kaszek backed the most with 42, many of them on their early stages. In another connection with ecommerce, Kaszek was founded by two alumni of regional ecommerce giant Mercado Libre, the top Latin-American publicly traded company by market cap. In a region famous for its natural resources, today its most valuable company is in ecommerce.

Record year and all, Latin America represented about 3% of massive worldwide VC investments in 2021. There’s still plenty of room for riches in the magic land of online plenty.