LatAm Tech Weekly: The Importance of who Growth in Venture Capital and Latitud's LatAm Tech Report

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This article is part of the LatAm Tech Weekly Series, written by Julia De Luca and powered by Nasdaq. Through Nasdaq’s global network, we partner with Latin American companies to support their entire business lifecycle to elevate their brand and access the global markets. Learn more about Latin American Listings here.

I read several good reports this week - ranging from the new Venture Growth analyst note released by Pitchbook to Latitud’s LatAm Tech Report. On the latter, I am well aware that there are 384 pages - so I decided to help out all of you by including a TL;DR summary on the section “What did I learn from readers”. Why this section? I recieved the report from 12 different people!!! On the first, the highlights of the different reports will come in my intro. Hope you like it :)

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PitchBook's Emerging Tech Indicator, which tracks seed and early-stage investment at the world's top-15 most successful VC firms, is a good read for those interested on what sectors are catching investors’ eyes. The analysis is also a good proxy for the industry sentiment as a whole. As for segments, Web3 and DeFi topped the rank again, with USD 879 mm invested. Fintech and biotech followed close behind, while segments like insurtech and mobility gained little traction. The total amount invested by these firms fell for the third consecutive quarter, a 52% decrease from Q4 2021's record of USD 9.8 bn across 275 deals. On the bright side (always an optimist), median size for early-stage deals reversed course in Q3, hitting an all-time peak of ~USD28mm.

On to late stage - Pitchbook released its note on Venture Growth. In the past decade, more capital has been invested in venture capital annually than multiple years before combined. Deal count has increased across the board, but a large majority has come from the late stage. As an example, during 2021, USD 237.2 bn was invested in late stage rounds in the US, roughly 110% higher than what was seen one year before. The figure accounts for 2/3 of the total capital invested in the industry for the year. The note shows that VC has outperformed other private investment strategies since the global financial crisis , with 7 of the past 10 fund vintage years leading all other private strategies. As a consequence, allocators have increased their investment in private markets to participate in these returns, thus allowing companies to engage in further growth while remaining private. A significant amount of capital has come from nontraditional investors such as corporate venture capital groups, hedge funds, and SWFs. Globally, ~1,300 private companies currently have a valuation of USD 1 bn or more. Note that just 18 held that valuation at the end of 2008. Finally, the average public listing valuation for global tech companies surpassed USD 3.0 bn in 2021, 14.5x the average valuation in 2008.