What’s Coming in 2022 for Latin America’s Startup Ecosystem

For the LatAm startup scene, 2022 has a lot to live up to.

As a quick recap, over $14 billion in VC funding was invested into startups across the region resulting in nine new unicorns for Latin America in 2021. Fintech, e-commerce and proptech sectors attracted the most funding, and the region also saw startup Clara reach unicorn status in record time, meaning it reached a $1 billion valuation.

The world is optimistic about 2022 seeing a change from COVID-19 being a pandemic to becoming endemic, and startups continue to be hopeful of the positive changes these uncertain times will bring.

The Org had the opportunity to speak with Enzo Cavalie, a Peruvian thought leader and expert in everything related to startups, who gave a glimpse into what’s to come in this new year for Latin American startups.

Cavalie’s day job is as an investment associate at Reach Capital, a VC firm that invests in education technology and the future of work. His “rest of the time” job and his passion project is Startupeable, what originally began as a blog and is now an education platform with resources in Spanish to start, scale and raise venture capital for startups in Latin America.

Startupeable

In 2019 Cavalie created Startupeable with the objective of breaking into the VC ecosystem and making a name for himself. He was consuming all sorts of startup related content in the form of podcasts, articles and videos, with the common thread that they were all in English. Seeing an opportunity to provide this content for a regional Spanish speaking audience in LatAm, Startupeable was born.

Cavalie describes the platform as a media and education company whose mission is to democratize access to knowledge, advice, and capital for Latin American entrepreneurs. His mid-term vision is for the company to evolve into a venture capital fund. He currently has more than 55,000 monthly visits from over 20,000 entrepreneurs, investors and startup operators.

Thanks to Cavalie’s efforts to make content widely available for entrepreneurs he has become well known among other VCs and startup founders, and he frequently interviews some of the most disruptive leaders in the LatAm tech scene, resulting in valuable insights of the startup panorama in the region.

VC presence in LatAm

Before VCs like SoftBank entered LatAm, the region had a nascent investment scene. There was plenty of financing to go around for early stage startups, but there was a huge gap in financing for growth stage companies.

In 2019 crossfunds like SoftBank changed the investment scene when they took interest in underserved markets — LatAm, Asia and Africa — and made unprecedented investments, such as pouring a whopping $1 billion into Colombian startup Rappi.

Then COVID-19 accelerated everything, and gigantic funds such as Tiger Global followed suit, shifting their modus operandi and prioritizing identifying high-potential startups in the region. Their aggressive approach, often described as playing an entirely different game, is characterized by moving quickly through diligence and term sheet issuance, paying very high prices relative to historical norms and competitors, little involvement in the companies post investment, and above all deploying huge sums of capital.

Overall Cavalie says this is positive for the region, as it induces a ripple effect and broadens the investment spectrum for everyone. Entrepreneurs who received funding from large VCs now have liquidity to become angel investors themselves and discover or finance startups that VCs focused on growth do not have in their radar, ultimately generating more opportunities for everyone.

What to expect this year

Cavalie believes that part of 2021’s record breaking venture capital investments were a roll over of those that were set to happen in 2020, but were delayed because of the pandemic. Given this, he doesn’t believe the region will see the same outpouring of investments in 2022, but it will still be an exciting year.

Fintech:

Traditional fintech is overcrowded, and Latin America will see more opportunities in B2B fintech with startups such as Treinta, says Cavalie. Treinta is a digital ledger app for Latin American microbusinesses where users can easily record transactions by assigning products from their inventory and see how their business metrics evolve in real time. The app helps owners save time in bookkeeping related tasks and improve efficiency by over 30%. Treinta’s freemium business model is a riskier bet given they need to reach critical mass before being able to introduce adjacent business lines they can charge for, thus requiring more initial capital to get it off the ground.

According to Cavalie, Treinta is the perfect example of a startup that benefits from the abundance of capital in the region.

Crypto:

Still years away from where the U.S. stands, LatAm is slowly getting acquainted with crypto. Argentinian startup Lemon Cash has the mission to make crypto usable in Latin America. It has gained incredible traction, becoming the second largest crypto community in the country and launching the first crypto rewards card in Argentina with thousands of people on the waiting list. Additionally, in June of last year El Salvador became the first country to adopt Bitcoin as a legal tender.

Cavalie says these are great indications of what’s to come in the region. He believes a big shift in crypto adoption will happen in 2022 for practical uses such as payments, savings accounts in USD and international transfers.

Edtech

Multiple Latin American startups that focus on teaching programming and digital skills for the workforce are enjoying a great deal of success. Just last year Coderhouse, Crehana, Descomplica, Digital House and Platzi raised a combined $280 million.

Cavalie believes ”the real opportunity for 2022 lies in disrupting K-12 and whichever player manages to do this successfully will undoubtedly become a billion dollar company.” It’s a difficult product to put together as it involves more stakeholders than other industries, but the reward for those who try can be worth the growing pains. Cavalie thinks 2022 will be the year a Latin American EdTech becomes a unicorn.

Healthcare and wellness:

Startups that deeply challenge the health and wellness industry will be making waves in the region.

Betterfly, a purpose-driven benefits platform that rewards healthy habits with charitable donations and no-cost life insurance coverage, raised $60 million in 2021, and 2022 is looking bright as well. Sofía, a Mexican “full-stack” healthtech company, is offering comprehensive insurance that covers individuals from a doctor’s appointment, to serious illnesses and accidents without all the paperwork hassle. And Osana, an Argentinian organization that raised $26 million is building API-connected healthcare infrastructure in LatAm, changing how people access their healthcare providers by building a patient-centric healthcare experience.

Cavalie is incredibly optimistic and believes "the combination of entrepreneurship and technology is a historic opportunity to solve the most urgent problems in Latin America."