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1、Lorem ipsumContentsTHE VIEW FROM GP BULLHOUND0405KEY TAKEAWAYS08THE ECOSYSTEM EVOLUTIONEXPERT VIEW10Allen Taylor,Endeavor Catalyst2022 IN REVIEW24SECTOR DEEP-DIVE3054DISCLAIMER12PERSPECTIVES22MARKET DEEP-DIVEEXPERT VIEW34Angel Sahagun Fernandez,Albo52METHODOLOGY&ABOUTGP BULLHOUND3EXPERT VIEW15Juan C

2、arlos Narvez,TulEXPERT VIEW19Zeev Thepris,General AtlanticEXPERT VIEW20Alex Porto,Riverwood CapitalEXPERT VIEW22Matt Cole,SumaEXPERT VIEW40Arturo Snchez Correa,SofaEXPERT VIEW44Fabio Camara,FCamaraWe are delighted to formally initiate coverage of the technology sector in LatinAmerica;a region we hav

3、e advised clients in the past and see many opportunitiesfor investors in the years to come.In the last decade,the region has benefitedfrom secular shifts in digital transformation and consumer behaviour,which hasbenefited verticals like fintech and digital services.As the tech ecosystemcontinues to

4、evolve and software becomes more ubiquitous,we see many excitingB2B software opportunities and trends,which we highlight in the report.-Claudio Alvarez,Partner,at GP BullhoundPARTNERClaudio AlvarezFROM GP BULLHOUNDMiguel KindelnEXECUTIVE DIRECTORJaime SendagortaDIRECTORHEAD OF INSIGHTSJennifer Eller

5、Gioia CerbelliVICE PRESIDENTStefano CapriroloVICE PRESIDENTMaria LazarevaASSOCIATE,INSIGHTSASSOCIATELuis RosalesANALYSTJaime AlbaThe Latin American tech ecosystem has reached a pivotal moment in itsevolution.Having undergone one of the most rapid accelerations globally inrecent years,it has now reac

6、hed a state of stability,emerging as a region withexceptional talent and opportunities.-Miguel Kindeln,Executive Director,at GP BullhoundThe viewTHE VIEW FROM GP BULLHOUNDFROM GP BULLHOUND4The state of tech is understood as two different ecosystems within one region.Brazil,seenas the largest and mos

7、t mature with its own dynamics,and“the rest of LatAm”.However,Mexico is quickly catching up and Colombia could be considered the next contender.Thesethree countries saw c.40%of the$8bn invested in Latin America in 2022.Key takeawaysONE REGION,TWO ECOSYSTEMS2022 was a year of many changes for the Lat

8、in American technologyecosystem.Fundraising volume slowed as the quarters progressed,and check sizes materially compressed.Many foreign investors pausedor reduced investing in the region,while domestic players becamemore selective in their investment decisions.Founders and operatorshad to pivot thei

9、r business strategies to align with what investors wereseeking-versus growth-while also having to balance theever-changing geopolitics.Has the music stopped,or has it just slowed?From our deep dive,webelieve the answer is neither.Instead,the song has changed.Thepredominant investment thesis has evol

10、ved from growth/pre-IPOinvesting in Fintech and consumer-facing operating models to early-stage Software and B2B operating models.We remain bullish on LatinAmerica and identify the following key takeaways to define the state ofthe technology landscape.profitabilityThe rise of emerging fund managers

11、and alternative capital instruments investing in techsignal increased capital sophistication and maturity.There is still a blue ocean of fundingopportunities given the gap between early-stage funding,led by regional funds,and late-stage growth,led by international capital.CAPITALSOPHISTICATIONThere

12、are network effects inspiring the next generation of entrepreneurs trained andmentored by the successful,recurring players of the tech ecosystem.Globant,Rappi andMercado Libre lead,together having created 450+tech companies that have raised$3.4bnin equity and employed over 22,000 peopleLATAM TECHFAC

13、TORIESWith the intensifying need for digital solutions,the focus has shifted from consumer-internet to increasing specialisation in enterprise software and SME digital solutions.Theamount of B2B companies founded each year has grown from 30%in 2010 to 61%in 2022and B2C has shifted from 70%in 2010 to

14、 39%in 2022.FOCUS ON B2BThe start of a new era,the foundation is set for the fifth wave driven by the development ofsoftware solutions unlocking efficiencies across all verticals.While Fintech had the mostdollar inflow in 2022,Software was second atled in deal volume at 37.9%.34%and alsoSOFTWAREDRIV

15、ING THEFIFTH WAVEThere is a robust tech exit pipeline for continued positive shareholder returns.In the past10 years,14 companies have gone public in the US and 19 in local markets.Of the 280+investments led by selected growth funds,only c.15%have completed the full cycle andachieved exit.SHAREHOLDE

16、RVALUE READYTO BE RETURNEDTHE VIEW FROM GP BULLHOUND5THE UNIQUEOPPORTUNITY:53 TECHNOLOGYUNICORNS WITHMORE THAN$28BNINVESTEDWhats driving tech in Latin AmericaThe four waves ofLatin Americas tech ecosystem.The LatAm technology ecosystem has matured since the foundation of its first companies to the c

17、urrent state:50+Unicorns,30+listed companies,and more than$35bninvested.This evolution is outlined in four waves,influenced by the regions socio-political environment which reflects the social and economic needs of eachperiod.This period provided the foundation for the first innovators,such asMercad

18、o Libre andGlobant,which have been key shapers of the ecosystem.After the Great Recession,early players in the regional VC ecosystem were created,supported by government capital inflow canalised via fund instruments(especially in Mexico)and other LPinitiatives to increase investment in the ecosystem

19、.While deal flow was limited,with the rise of internetpenetration and know-how of the first investors,digital commerce and consumer-led companies were founded.The ecosystem began to flourish,underpinned by local investment and the inception ofthe SoftBank Latin America Fund,putting the region on the

20、 global investment map and attracting otherinternational funds.Deal flow increased with the de-risked perception of the tech scene.Sector-wise,the firstfintech and payment solutions were launched,driven by the needs of digital commerce companies as well asthe vision to bank the unbanked,creating the

21、 first B2C financial offerings.There was acceleration and consolidation of the ecosystem,driven by the confluence oftwo themes:thetech-savvy middle class became mainstream,accelerated by the pandemic due to strictrestrictions in most parts of the region;and the record capital inflow from cross-over

22、funds(funds with no localoffice in the region),which saw a unique opportunity in Latin America.There are 53 unicorns with more than$28bn invested in the region in 2020-2022,with 73%in Ecommerce and Fintech in 2022,reflecting theconsolidation of early investments and provensuccess stories.(1)Wave I(f

23、rom dot-com bubble to 2010):Wave II(2011-2015):Wave III(2016-2019):Wave IV(2020-2022):(2)Sources:GP Bullhound Insights,Capital IQ,Pitchbook,Bloomberg,LAVCA,Mergermarket,and press releases(as of April 2023)Note:Data of Unicorn and listed companies originally founded in LatAm;companies could have re-h

24、eadquartered later to other regions;1)Accumulated investment in tech companies from 2015 to 2022;2)Aggregate valuation of both private and public Unicorn companies as of thelast year of the described wave;3)Number of public technology companies listed at the end of the described wave in both local a

25、nd internationalmarkets6THE ECOSYSTEM EVOLUTION.have led to the birthand growth of 50+Unicorns to date“We continue to see a strong and resilient ecosystem,and webelieve this can remain.There is still a lot of dry powderfrom local VCs who closed funds during H2 2022.In terms ofsectors,we believe we h

26、ave reached the fourth generation offounders,which are developing more B2B Software projects asthey are more focused on launching products that easily expandinternationally from inception.”Sources:GP Bullhound Insights,Capital IQ,Pitchbook,Bloomberg,LAVCA,Mergermarket,and press releases(as of April

27、2023)Note:Non-exhaustive list,includes private and public technology companies that have achieved Unicorn status at some point since inception,although not necessarily maintain the Unicorn status as of April 2023,and companies originally founded in LatAm or with a strong presence in thelocal ecosyst

28、em that have re-headquartered later to other regions an early-stage investor in technologycompanies for the Spanish-speaking worldRafa de Haro,ManagingPartner,CometaTHE ECOSYSTEM EVOLUTION7Select success storiesFounded in 2013,Nubank is a Brazil-based fintech.Aiming tochallenge traditional banks and

29、 provide financial services with abetter customer experience,it started as a credit card provider,offering no-fee credit cards with easy-to-use mobile apps andpersonalised services.Since its inception,Nubank has expandedits product portfolio and now offers personal loans,insurance,savings accounts,a

30、nd investment options,among others.Itscurrent offering covers B2C and B2B solutions,which hasexponentially increased its customer base.The company became one of the most valuable banks in LatinAmerica after its IPO in December 2021,reaching a market valueof c.$40bn.Nubanks funding history is unique

31、in the region,withsome of the largest rounds historically,attracting majorinternational funds such as Berkshire Hathaway,GIC,DST Global,and TCV.It has over 40 million customers in Brazil,Mexico,andColombia,making it one of the largest neobanks in the world.FOUNDERS EDWARDWIBLE,DAVID VLEZ&CRISTINAJUN

32、QUEIRAFounded in 2016,dLocal is an Uruguayan fintech company.Itsplatform simplifies cross-border payments for businessesoperating in emerging markets,with a focus on Latin America,Asia and Africa,enabling payments from customers worldwide ina seamless,fast,and secure way.dLocals platform operates in

33、more than 40 countries and supports over 900 payment methods,including credit and debit cards,bank transfers,and localpayment methods.It employs over 700 people and transacts over$10bn per year through its platform.It is building a unique,scalable API payment infrastructure whilegrowing rapidly and

34、being profitable with strong cash generation.The company completed its IPO in June 2021,reaching a c.$6bnvaluation after raising$600m of capital.It is one of the mostsolid fintech histories in Latin America,with a promising futuregiven its growth track record and international expansion acrossemergi

35、ng markets.FOUNDERS SERGIO FOGEL&ANDRS BZUROVSKI8THE ECOSYSTEM EVOLUTIONSource:Company websites,Capital IQ,Crunchbase,Pitchbook,andpress releases(as of April 2023)Founded in 2015,Rappi began as a solution to connect smallbusinesses or neighbourhood stores with users within a few cityblocks.The app w

36、as seen as a digital pantry store and a smallgroup of people promoted it by giving away doughnuts inexchange for downloads.Later,its major differentiator,the RappiAntojo button,gave birth to the first SupperApp in Latin Americaby offering users access to restaurants,food chains,ATMservices,pharmacie

37、s,and supermarkets.Rappi operates in nine countries in Latin America and is presentin more than 220 cities.With over 100 million downloads since2015,the platforms major verticals offer a wide variety ofoptions,from ordering products in under 10 minutes to opening adigital bank account with a card on

38、 your doorstep in minutes.Rappi has raised over$2bn since its inception from leadinginternational funds and is a candidate for a potential IPO,according to its investors.FOUNDERS JUAN PABLOORTEGA,SEBASTIAN MEJIA&FELIPE VILLAMARNFounded in 2016,Kavak is a Mexican e-commerce platform forbuying and sel

39、ling used cars,simplifying the process and offeringa seamless user experience.Its main product is its onlinemarketplace,which offers a wide selection of certified used carsthat have been inspected,serviced,and refurbished by Kavaksteam of experts.Kavaks platform uses advanced technology anddata anal

40、ytics to provide customers with an accurate valuation oftheir cars and offer competitive prices.Kavak has raised over$1.5bn in equity funding,becoming one ofthe most valuable startups in Latin America with an$8bn+valuation,allowing it to quickly expand its product offering withancillary services suc

41、h as financing and warranties,and itsgeographical footprint to Argentina,Brazil,Colombia,Peru,Chile,Europe(Turkey),and the Middle East(UAE and Oman),with over2,500 employees.FOUNDERS LOOREANNE GARCA,CARLOS GARCA,&ROGER LAUGHLINSource:Company websites,Capital IQ,Crunchbase,Pitchbook,andpress releases

42、(as of April 2023)THE ECOSYSTEM EVOLUTION9Endeavors mission was to build a thriving entrepreneurial ecosystem in emerging and underservedmarkets around the world.In 1997,when we first launched in Latin America,emerging markets wereoverlooked and unlikely to produce a single startup worth$1bn.Today,t

43、here are 2,400+Endeavorentrepreneurs from about 1,500 companies in 42 markets globally,with over 65 of them reachingunicorn status.Once Endeavor entrepreneurs scale their businesses with the support of our global network,theyhave a built-in platform to pay it forward.The compound effect these entrep

44、reneurs have in theirlocal communities is called“the multiplier effect”.Our research shows that it only takes a fewsuccessful founders to jumpstart an entrepreneurial ecosystem,based on their readiness to mentor,inspire,and invest in the next generation of entrepreneurs.Take Mercado Libre:it became

45、the largestonline commerce in Latin America and the first tech company to be listed on the Nasdaq,with amarket cap of$65bn.But this is just half the story.After several years,Hernan Kazah,the companysco-founder,and Nicolas Szekasy,former CFO,went on to found Kaszek Ventures in 2011,one of LatinAmeri

46、cas first venture firms.Since then,theyve backed over 100 startups-enabling the regionsgrowth through founder-friendly smart capital.To sustain our long-term operations,we have created Endeavor Catalyst a rules-based,co-investment fund,set up to invest in the very same entrepreneurs it supports.With

47、 a third of thefunds LPs consisting of high-growth Endeavor entrepreneurs themselves,a full circle phenomenon iscreated.When founders fund other founders,local ecosystems are given the opportunity to thrive.CAN YOU GIVE A BRIEF OVERVIEW OF ENDEAVORS STRATEGY AND ITS MAINCONTRIBUTIONS/MILESTONES TO T

48、HE LATAM TECH ECOSYSTEM?Expert viewMANAGING PARTNER|ENDEAVOR CATALYST10EXPERT VIEW:ENDEAVOR CATALYSTALLEN TAYLORBrazil is our largest market with Mexico and Colombia following closely behind,and we havewitnessed first-hand how the ecosystem has matured recently.Brazil harbours second and thirdgenera

49、tions of founders,and this will be replicated across other Latin American regions.We areseeing a true generational effect.While its still an emerging market,there are dynamic trendsaccelerating the regions growth.The maturity of the market can also be observed in the evolution of different sectors s

50、een in newly-formed startups.Initially,companies in the region were mainly digital commerce and consumer-ledbusinesses.Between 2000-2015,funding was focused on commerce companies,like Mercado Libre.The arrival of fintechs pushed ecommerce to focus more on consumer-led finance.Following this,weare se

51、eing technologys power in disrupting traditional sectors,such as edtech,healthtech,andsmart cities like never before.The region is also evolving from B2C to B2B structures as there is astrong digitalisation happening in the SMB economy,particularly in Brazil.Weve witnessed the last wave of investors

52、 focusing more on vertical SaaS,like Colombian adminand billing systems platform,Alegra,and B2B ecommerce system,Chiper.Latin America has beenvery underinvested for a long time,but appetite increased when international players like GeneralAtlantic,Riverwood,and Coatue started investing heavily.We be

53、lieve that focus will shift moretowards enterprise,SaaS,and vertically-focused businesses.There still needs to be a replication ofwhat happened in the United States,where general SaaS dominated before starting to branch out tocustom solutions for each case.The key is understanding that large enterpr

54、ise sale is not the sameas SMB sale,but were seeing more investors in the region focus on B2B rather than SMB.We willalso see many companies being built in accelerators and potential growth in the health-and bio-tech sectors.WHICH SECTORS DO YOU THINK HAVE RECEIVED MOST INTEREST?HOWWILL THIS EVOLVE

55、IN THE COMING YEARS?HOW HAS THE LATAM TECH ECOSYSTEM MATURED IN RECENT YEARS?DO YOU THINK ITS STILL EMERGING?The ecosystem still has enough capital for development,especially in early-stage companies,andthere are players with a lot of dry powder focused solely on the Latin American region,like Kasze

56、k,Monashees,and Valor.The remaining funding gap can be perceived as an opportunity.Late-stagecompanies are underserved in LatAm,where there is a gap from Series B and onwards.Foundersfrom emerging markets have strong survival instincts and tremendous resilience,which serves themwell in times like th

57、ese.WHAT DO YOU THINK ABOUT THE FUNDING/INVESTMENT SENTIMENTAND WHAT DO YOU EXPECT IN THE FUTURE?EXPERT VIEW:ENDEAVOR CATALYST11Latin America has traditionally been defined as a group of 21 countries with a population of over 650million.When looking at certain parameters such as the number of Unicor

58、ns,the sophistication ofactive investors,and the amount of institutions and other industry stakeholders operating in theecosystem,Brazil has reached a level of maturity that sets it apart from the rest of Latin America.We expect the catalyst for this divergence to have been its population size relat

59、ive to other LatAmcountries and its unique language,enabling a significant serviceable domestic market forentrepreneurs.It began with consumer-focused/internet companies and then evolved into more B2Bfintech and software solutions.Its tech-friendly regulation as well as a push from local corporatesh

60、as also helped to attract international tech investors.Today,in our view,its tech ecosystem is morecomparable to the likes of the US or Europe.Source:GP Bullhound Insights,Capital IQ,CEPAL,CB Insights,Pitchbook,Bloomberg,LAVCA,Mergermarket,World Bank,and press releases(asof April 2023).Note:Data of

61、Unicorn and listed companies originally founded in LatAm;companies could have re-headquartered later to otherregions.Aggregate valuation of both private and public unicorn companies as of 2022.Number of public technology companies listed at the endof the described wave in both local and internationa

62、l marketsOne region,two ecosystemsState-of-tech perspective:Driven by differences in maturity,LatAm is perceived as two markets Brazil and the restHowever,the“rest of LatAm”continues to follow Brazils path,influenced by the success storiesthey have seen as well as anincreasing contagion effect,withc

63、ertain contenders like Mexico orColombia catching-up andultimately battling Brazil for techfunding and talent.INVESTMENT ACTIVITY ACROSS LATIN AMERICA(%OF TOTAL DEALS)12PERSPECTIVESBridging the funding gapVenture capital remained the second-largest asset class in Latin America as a proportion of tot

64、al privatecapital invested,representing 82%of all private capital transactions in 2022.There is a growing number ofemerging fund managers and an increased exposure to venture from different multi-stage funds,with early-stage funding the most prominent,capturing$4.9bn of total investment.Late-stage f

65、unding was notable in2022,with$2.2bn,dominatedby cross-over and international funds.The rise in invested capital,number of funds,and number of deals are strong drivers signalling a maturingecosystem,but late-stage growth rounds are still dominated by international funds versus regional playersgiven

66、the“early stages”of capital instruments available.Another factor indicating matureness in marketdynamics is the increase in alternative funding instruments,such as non-dilutive capital in the form ofventure debt,which reached a record of$1.1bn across 25+transactions.There is a trend towards bridging

67、 the funding gap driven by the increase in the number of fund managers,the size of existing funds,and the alternative funding instruments,which point to a maturing ecosystem.However,it is still blue ocean for various stakeholders,like late-stage regional funds,secondary funds,non-dilutive capital al

68、ternatives,project advisors,and others which can accelerate sophistication.Sources:GP Bullhound Insights and LAVCA(as of April 2023)Note:Non-exhaustive list;logos displayed in each stage include the most active players across the region from 2015 to 2022,and USD funding ofeach stage as a%of total fu

69、nding in technology companies in 2022Robust dynamics point to maturing capital ecosystem,but blueocean remains for all stakeholdersPERSPECTIVES13Latin Americas tech factoriesThe new generation of entrepreneurs is mentored by the tech ecosystems key players.Theseserial founders and their early employ

70、ees have experienced multiple economic cycles,buildingnetworks and learnings to deploy into new endeavours.Not only are there new projects,but alsonew alternative funds and platforms for the next generation of Unicorns.This powerful snowballeffect boosts the ecosystem by creating more jobs and attra

71、cting the interest of even moreinvestors.Together,Globant,Rappi and Mercado Libre have created 450+tech companies,raised$3.4bn in equity and employed over 22,000 people.Sources:GP Bullhound Insights,Crunchbase,Pitchbook,and LinkedIn(as of April 2023)Note:Statistics based on information gathered from

72、 public sources;includes only technology companies founded by former employees of eitherGlobant,Rappi or Mercado Libre,and does not include non-technology companies,venture capital firms,or other types of organisationsSuccessful founders are supporting the next generationof entrepreneurs,with Globan

73、t,Rappi and Mercado Libreleading the creation of new projects14PERSPECTIVESThe first challenge was raising money and convincing investors that there was a real problem that we could solve.Thesecond biggest challenge was educating ourselves on the supply-chain process,from manufacturing,down toconstr

74、uction and retail.Without fully understanding how individuals and organisations in this space work together,wewerent able to show how Tul could benefit them.Earning their trust was very difficult,because this industry hasntchanged much in the last 100 years.It was like convincing someone used to a r

75、otary dial telephone to switch to asmartphone.We wanted to prove to them that there is a more efficient way to do business.I come from a corporate background and entrepreneurship was never apath I considered.But my co-founder,Enrique Enrique Villamarin Lafaurie,CEO of Tul floated the idea of potenti

76、ally venturing into the startup worldby setting up an ecommerce business for small-sized retailers.I knew Iwanted to take a chance on it.So I went to the market to meet potentialcustomers and quickly realised that the technology we had in mind for Tulcould solve many of the issues they were facing.N

77、ot only were we offeringthem a way to fulfil large orders and reach profitability,but we also offeredthe convenience of buying what they wanted,when they wanted.Our investors are really connected to what goes on in the tech world and we learn from them.Some investors are moreinvolved than others.The

78、 more active ones not only provide funding,but they also bring“cross-pollination”from othercompanies.They share ways in which other companies deal with similar issues to us.I really enjoy it when investors askus difficult questions.It helps us introspect.HOW DID YOU START TUL AND WHAT INSPIRED YOU?H

79、OW IS THE RELATIONSHIP WITH THE INVESTORS ON YOUR CAP TABLE?Expert viewCO-FOUNDER|TULWHAT WERE THE BIGGEST CHALLENGES AND HOW DID YOU OVERCOME THEM?From the investors side,its much more mature and professional.From the innovation side,Brazil is the mostsophisticated market,with other LatAm countries

80、 still learning how they can speed up digitalisation,or how technology canimprove the value chain,which is what were doing with Tul.Distributors in manufacturing and construction are finallylooking for ways to innovate to keep up with market expectations.Additionally,the success stories of companies

81、 like Rappihave put Colombia and LatAm in general on the map and proved to investors that there is a lot of great talent in theregion,as well a big untapped market to prove an idea.While theres been a decline in investments recently,I think theresa real opportunity for companies to create sustainabl

82、e businesses that dont rely heavily on VC money.HOW HAS THE ECOSYSTEM IN LATAM EVOLVED SINCE YOU STARTED OUT?Choose the right co-founders and partners.I think its important to have the same values but different capabilities.Invest in the best people and nurture your companys culture from the beginni

83、ng.But culture is not the slogans thatyou cover your walls with its understanding what you want from your people and hiring accordingly.WHAT ADVICE DO YOU HAVE FOR EARLY-STAGE STARTUPS?When we started Tul,we thought we were offering a solution to developing countries only,but with time we realised t

84、hatmore developed regions could also benefit from our offer.So the market is bigger than we expected.Our model isreplicable in other countries,but at the same time we dont want to stretch ourselves too thin and lose focus.Right nowwe want to fully develop our value chain and deliver to our investors

85、.We want to keep achieving sustainable growth,building our technology and increasing our customer base.Thats our playbook.WHERE DO YOU WANT TO TAKE THE BUSINESS?WHATS NEXT FOR TUL?EXPERT VIEW:TUL15JUAN CARLOS NARVEZSource:GP Bullhound Insights,Dealroom,and Crunchbase(as of April 2023)Note:Stats and

86、graph includes companies founded in either 2010,2015 or 2022 that operate under DigitalCommerce or Fintech verticalsWhen we analysed the Latin American tech ecosystem six years ago in our“Spain the gatewaybetween Europe and Latin America”report,consumer-focused startups dominated given the sizeof th

87、e population,smartphone penetration,and“still-to-be-digitalised”economy.From basicdigital commerce/marketplaces to more complex consumer fintech,the user was top of mind.Today,we find that the solutions tech founders provide have evolved in complexity,specialisation,and the end-user focus,particular

88、ly towards SME and enterprise.As the global digitalisation trendcontinues,boosted by the pandemic,LatAms incumbent companies need more digital solutions.Whats more is that most LatAm economies structurally rely on SMEs,and founders are acting onthe opportunity to serve them,which has created an enti

89、re ecosystem with fintech services tomore verticalised software(procurement,HR,ERP,etc.).On the enterprise side,the demand for advanced digital transformation services(including Cloud,AI/ML and more)has boomed in recent years,and the lack of large digital consultancies to servethose clients has incr

90、eased the demand for tech talent in the region.And as the regions flywheelhas shown,this talent is likely to become the next generation of LatAms founders.An evolving ecosystem:From consumer-internet focus to increasingspecialisation in enterprise software and SME digital solutions B2B versus B2CSHI

91、FT IN BUSINESS MODEL FROM B2C TO B2B(%OF TOTAL COMPANIES FOUNDED)PERSPECTIVES16Software has become one of the fastest-growing markets,representing 34%of capital investedand 320 of fundraising deals,reflecting the confluence of various shifts:The rise in Software startups clearly reflects demand,as c

92、.40%of total deals are early-stage investments.Focus on B2BMove towards the development of global,scalable productsInfrastructure enhancementSMB digitalisationBrazil is the most mature ecosystem in the region,placing it at the forefront of upcomingtrends.While the ecosystem is seeing success stories

93、,this is only the beginning and,as the customer base matures,should develop into more niche and verticalised solutions.Sources:GP Bullhound Insights and LAVCA(as of April 2023)Note:%of funding per software vertical based on disclosed 2022 funding figures;logos are key LatAm-based players in each ver

94、tical that mayhave not raised in 2022The new era:SoftwareGoverned by the growth of software solutionsSPLIT OF SOFTWARE VERTICALS BY FUNDING(%)-leadingthe LatAm coverage,has been oneof the first international fintechinvestors in the region.QEDs firstinvestment was Nubank,and givenits strong expertise

95、 in fintech,ithas looked at hundreds ofopportunities in the region for thelast decade.Mike Packer,Partner,QED“We have seen a big shift in the region.There has been a strong growth ofSMBs in the ecosystem and the B2B market is ripe for disruption.We areseeing a lot of tech adoption from large corpora

96、tions,which implies a biggrowth potential for companies in the region.There are still a lot of gapsin enterprises where companies can look for efficiency improvements andsolve problems which could increase ROI and bring costs down.Fintechsolutions are maturing and developing and while the first phas

97、e of embeddedsolutions was mostly focused on retail and marketplaces,we expect to alsosee new use cases play out this year as SMEs and corporates continue toidentify ways to engage,monetise and optimise their client base.”PERSPECTIVES17The exit route:A robust tech pipelineIn the past 10 years,14 Lat

98、Am-founded tech companies have gone public in the US and 19 in localmarkets,showing public listing has traditionally been the preferred route.Of the 280+investmentsled by selected growth funds,only c.15%have completed the full cycle and achieved exit.A robust pipeline is being created,which will ret

99、urn additional shareholder value.Severalcompanies have recently filed to go public and investors speculate other potential IPOs,togetherwith strong interest from private trade deals.The US has historically been the preferred listingmarket given its size and sophistication,providing more liquidity,bu

100、t we could see more exits inlocal markets as the regional ecosystem matures.Companies like Mercado Libre,Globant,Nubank,Despegar,and 99 are success stories,and these first full-cycle entrepreneurs are driving growthand confidence in the ecosystem for entrepreneurs and investors.(1)(2)Sources:GP Bull

101、hound Insights,Funds website,Capital IQ,Crunchbase,and Pitchbook(as of April 2023)Note:1)Disclosed investments or acquisitions carried out by GIC,QED Investors,SoftBank,General Atlantic,DST Global,Riverwood Capital andEndeavor Catalyst;and 2)Publicly disclosed exits,non-exhaustive list;and image:Cur

102、rent portfolio companies of displayed funds that havepublicly disclosed over$250m in equity fundingHigh shareholder returns generated,driven by numerous successful privateand public exists,but still robust pipeline for additional value creation18PERSPECTIVESWe seek to identify emerging companies wit

103、h strong fundamentalperformance and organic growth that can accelerate their expansion andscale globally.Beyond capital,we actively partner to help entrepreneursgrow their businesses through our value creation capabilities,globalresources,and deep collaborative network.Within Latin America,GeneralAt

104、lantic was one of the first growth equity funds to establish a presencein the region.General Atlantic has been investing in Latin America since2000 and today has more than 20 active investments across Brazil,Mexico,Colombia,and Uruguay.We seek to identify investment themesthat are driven by innovati

105、on and entrepreneurship and supported bylong-term secular growth.GAs portfolio is highly diversified by sector andregion,with more than one-third in emerging markets.Since 2020 the region has gained increased investment attention.As the investment landscape became morechallenging to navigate in othe

106、r Emerging Markets,Latin America became attractive on a relative basis and drewattention from investors looking for appealing risk-adjusted returns.Many VCs,growth,and crossover funds startedinvesting in the region,which we believe has helped propel entrepreneurship and promote Latin America as anat

107、tractive region amidst the global landscape.Growth in the LatAm IPO market may return during the first half of2024,provided macro conditions improve.In addition,we see a lot of consolidation opportunities,even with smallercompanies acquiring traditional companies to expand capabilities and improve u

108、nit economics.We believe that being on the ground and fully committed to the region has been a determinant factor to GAs success.We have a long-term mindset and a local network and presence,and we are betting on local entrepreneurs.We aim topartner with strong entrepreneurs who are creating innovati

109、ve business models that can travel well both across theLatAm region but also internationally,where we can help them grow through our deep global network.Examples ofsuch companies include Dlocal,Incode,Kavak,Gympass,and Hotmart,among others.(1)CAN YOU GIVE A BRIEF OVERVIEW OF GENERAL ATLANTICS STRATE

110、GYIN LATIN AMERICA?WHAT DO YOU THINK ABOUT THE FUNDING/INVESTMENT SENTIMENT AND WHAT DO YOU EXPECT IN THE FUTURE?Expert viewVICE PRESIDENT,LATAM|GENERAL ATLANTICWHAT ARE GENERAL ATLANTICS MAIN FACTORS FOR SUCCESS IN THE LATAM TECH ECOSYSTEM?WHICH SECTORS DO YOU THINK HAVE RECEIVED MOST INTEREST?HOW

111、WILL THIS EVOLVE IN THE COMING YEARS?We are focused on six key sectors in Latin America,including Technology,Financial Services,Healthcare,Consumer,Life Sciences and Climate.I believe that business models centred on financial inclusion,SaaS,increased healthcareand insurance penetration,and marketpla

112、ces will continue to generate interest going forward.We are optimisticabout the future and believe the current environment will help nurture stronger entrepreneurs that can create world-class companies.Note:1)Companies listed represent Latin America portfolio companies with revenues outside of Latin

113、 America.General Atlantics full list of its Latin America portfolio is available on its website.EXPERT VIEW:GENERAL ATLANTIC19ZEEV THEPRISRiverwoods mission is to invest in and support a selected group of high-growth proven technology companies fromacross the globe that can scale into long-lasting c

114、ategory-defining businesses.In the past 15 years we have invested inmore than 70 growth-stage tech companies,28 of which are from Latin America and have grown their revenues at anaverage of 50%per year during the past decade.Some of our portfolio companies have become established leadersin Brazil,bu

115、ilt platforms serving countries across the region,and have become global leaders in their respectivesectors.We have invested in companies that have achieved some of the most relevant exits and IPOs,helping toestablish the region as an attractive end market and source of technology talent globally.La

116、stly,we have alwaysendeavoured to build a community,including founding the LatAm Tech Forum,a leading event for top tech founders.(1)We continue to see Latin America as a large,growing,and attractive market for tech investing,with the tech opportunityincreasing at a faster pace than in more develope

117、d regions.LatAm has been catching up with the US,Europe and Asia interms of technology business formation and digitalisation,with a meaningful growth in companies during the past fiveyears.Building on the momentum of the last decade,we are also seeing the emergence of LatAm tech companiesbecoming gl

118、obal contenders in their respective sub-sectors and showing up as industry frontrunners on internationallyrecognised leaderboards from providers like IDC,Forrester,and Gartner,all of which illustrates the maturation of thetech ecosystem,as well as the development of world class talent.In 2021,Latin

119、American tech went through a boom,reaching$16bn in capital invested,a 283%YoY increase and by farthe peak investment year.Excitement was fueled by growing technology opportunities in the region,the acceleration intech trends due to Covid,and low interest rates that drove excess liquidity and risk-ta

120、king globally.After a record surgein 2021,deal activity was down in 2022.And we expect this correction to continue.Despite the reduction in capitalcommitments,technology adoption trends are stronger than ever,and we believe that business building in LatinAmerica will continue to be robust,driving th

121、e development of a new generation of companies and becoming a maincontributor to macroeconomic development.CAN YOU GIVE A BRIEF OVERVIEW OF RIVERWOODS STRATEGY,ITS MAIN CONTRIBUTIONS/MILESTONES TO THE LATAM TECH ECOSYSTEM AND ITS MAIN MISSION FOR THE COMING YEARS?HOW HAS THE FUNDING/INVESTMENT SENTI

122、MENT BEEN IN 2022 AND WHAT DO YOU EXPECTFOR 2023?IS THE MARKET MATURING IN TERMS OF DIFFERENT CAPITAL ALTERNATIVES?Expert viewPARTNER|RIVERWOOD CAPITALHOW HAS THE LATAM TECH ECOSYSTEM MATURED IN THE LAST COUPLE OF YEARS?DOYOU THINK IT IS STILL AN EMERGING ECOSYSTEM?20EXPERT VIEW:SOFTWARE AND B2B FRO

123、M THE INVESTOR RIVERWOOD CAPITAL AND PORTFOLIO COMPANY SUMAALEXANDRE PORTODuring the end of the last cycle,“full stack”and highly visible companies disrupting entire industry value chainsreceived the most interest and dollars.This was most notable in ecommerce,fintech,proptech,and deliverybusinesses

124、.We expect these segments to continue to disrupt and take share from incumbents,but perhaps at a moremeasured pace while moderating capital consumption needs.The consumer was“digitalised”across severalindustries,and we expect the B2C opportunity to evolve from an initial phase of digital adoption to

125、 a chapter ofconsumer experience and retention.In addition to this category,there exists a large and growing demand for LatAm B2B software,data,and services,which is something that Riverwood has been investing in for over a decade.We expect this trend to accelerate asenterprises and mid-market compa

126、nies seek to digitise and automate,increasing productivity.Buying and leveragingsoftware in Latin America is evolving from a“nice to have”to a necessity,and the region has high-quality talent inorder to build software companies to serve local communities,as well as to expand globally.WHICH SECTORS D

127、O YOU CONSIDER HAVE RECEIVED MOST INTEREST?HOW WILL THIS EVOLVE THIS COMING YEAR?Global inflation and geopolitical tension are creating a mixed context for LatAm:on one hand,there is increased riskaversion and interest rates,but on the other hand,the rising commodity prices can be a driver of growth

128、 and stabilityfor the region.Additionally,we see expanding secular technology adoption trends such as the increasing utilisation ofcloud/SaaS,automation tools,and emerging AI use cases.HOW IS THE GLOBAL MACROECONOMIC SITUATION AFFECTING TECH FUNDRAISING/M&A ACTIVITY?WHICH OPPORTUNITIES/THREATS DO YO

129、U FORESEE?As lead growth partners,Riverwood assists our companies to scale up across product and go-to-market,drivingcompound growth with proven unit economics and profitability to create a sustainable competitive advantage.Inaddition to organic growth,we support our portfolio in M&A.We also help ou

130、r portfolio companies attract capitalalternatives,including liquidity events through sales to local strategic players,sales to international strategic players,and IPOs.We think a successful exit strategy is mainly driven by maintaining an attractive business,coupled with ameasured approach to buildi

131、ng visibility across the different capital markets for the company.HOW ARE YOU APPROACHING A SUCCESSFUL EXIT STRATEGY?Note:1)Revenue CAGR calculated from LTM from the date of the investment to the LTM ended December 31,2022 or the date of exit of theinvestment,as applicable,and weighted by invested

132、capital.Such weighted average CAGR includes data from all investments across allfunds made since inception through December 31,2021.CAGR calculation uses constant currency figures,before exchange rate variations.EXPERT VIEW:SOFTWARE AND B2B FROM THE INVESTOR RIVERWOOD CAPITAL AND PORTFOLIO COMPANY S

133、UMA21Breaking generational barriers was challenging.Many business owners here are still very analogue.In thebeginning,it was incredibly difficult to issue electronic invoices,collect payments,complete tax filings andreconcile bank statements.Theres an ocean of small businesses in Latin America,with

134、over 26 million in theformal market,and millions more in the informal market.More than two million small businesses are born inLatin America every year and there are various factors driving digitalisation of SMBs.First,theres agenerational shift.Young people arent bookkeeping the old-fashioned,theyr

135、e embracing software.Second,theres a massive increase in network bandwidth and reliability of the internet.Finally,there is a big shift inregulatory trends to digitalise SMBs its now a requirement to issue electronic invoices or file electronic taxreturns in many LatAm countries,and this pushes busi

136、nesses into the new era of technology adoption.I moved to Chile from the US over 10 years ago.My mission was to digitise millions of Small and MediumBusinesses(SMBs)in Latin America.Together with Riverwood Capital we acquired Nubox in Chile,to createa product that combines global standards and world

137、-class benchmarking,but with local solutions in everycountry where we operate.Today,SUMA supports more than 100k SMBs in Mexico via Bind-ERP,in Chile viaNubox,and in Argentina via Colppy.When we started we knew we wanted to build beyond Chile.So everything we did,we did as a platform thatcould add a

138、nd integrate other operations.I think you can have a sense of local culture,but still maintainglobal standards.If you look at the best things which come out of Latin America,they are truly world-class,whether its Chilean wine,Argentine football,or Mexican cuisine.Being local does not mean having low

139、standards.While there is still some volatility in the region,you can adjust for the lack of infrastructure andtransparency in certain cases,but that doesnt mean lowering your standards.We decided we werentshooting for the average and thats something we worked hard to build and maintain.With Riverwoo

140、d as aninvestor,the bar is raised across the board in everything that we do at SUMA:developing talent,buildingproducts,supporting our clients,and managing our company.HOW DID YOU START SUMA AND WHAT INSPIRED YOU?WHAT WERE SOME OF THE CULTURAL DIFFERENCES AND BARRIERS YOU FACED WHILESETTING UP A COMP

141、ANY IN LATIN AMERICA?Expert viewCO-FOUNDER&CEO|SUMAWHAT WERE THE MAIN CHALLENGES AND HOW DID YOU OVERCOME THEM?22EXPERT VIEW:SOFTWARE AND B2B FROM THE INVESTOR RIVERWOOD CAPITAL AND PORTFOLIO COMPANY SUMAMATT COLEWhen we looked at potential targets to pull into the SUMA platform,chemistry with the f

142、ounding teams wasthe most important.We wanted to have the same view of what success looked like for them.We also lookedfor native cloud players.Building a scale-up is difficult enough,but migrating from on-premise legacysystems to the cloud would be even more so.Lastly,we wanted partners that alread

143、y had a critical mass interms of customers.We figured we could always improve the product,but if we started with a bad cultural fitor a legacy platform,it would be too difficult to get these businesses to align in the same direction later on.WHAT WERE YOUR CRITERIA FOR PARTNERSHIPS?Theres more capit

144、al available now than ever before in Latin America.If youre benchmarking today against2021/22,its a very different scenario,but post-Covid entrepreneur and investor expectations just got wayahead of themselves.Today,there is a lack of clear planning to generate sustained profitability on a durableba

145、sis.Maybe its easier to project for companies that arent in the tech sector,but with tech,the prioritywas growth over durability.The question is whether there will be a semi-permanent repricing of assets,or ifthis is just a dip that will see things returning to normal soon.Also,there is a very slim

146、market of bank debtfor asset light companies,and not just for technology.Unfortunately lending to tech companies tends to bea“no-fly zone”for most traditional banks in Latin America.WHAT ARE YOUR THOUGHTS ON ACCESS TO CAPITAL IN LATIN AMERICA?Our mission is to make Latin America more successful in c

147、reating a growth and employment engine withSMBs.Our average customer has about nine employees.If we could take that to 10,thats more than 10%growth in employment.And,of course,we want to continue developing a product that simplifies andautomates business tasks so that our customers can integrate the

148、ir business information with the variouscounterparties in their ecosystem.We want to free our customers from the burden of spreadsheets thatdont add up,or a bunch of paper bills that theyre not running through accounting systems or the local taxoffice.And were not waiting for this digital revolution

149、 to happen were actively fostering it.As SUMAmakes SMBs more successful,they will drive economic growth and prosperity of Latin America.WHAT DOES SUCCESS LOOK LIKE FOR SUMA?WHERE DO YOU WANT TO TAKE THE BUSINESS?EXPERT VIEW:SOFTWARE AND B2B FROM THE INVESTOR RIVERWOOD CAPITAL AND PORTFOLIO COMPANY S

150、UMA23SHIFTING TO AN EARLY-STAGE INVESTMENT FOCUS($BN)2022:A material shift in investmentand operating strategyWe expect the focus on early-stage funding to continue through 2023;however,with the strongbacklogand pipeline of potential IPOs,the market could begin re-allocating funds to growth and pre-

151、IPOcompanies.Theemergening venture debt and hybrid instruments are also becoming an option for a selectnumber of companies that fit issuer criteria.From growth mode to profitability2020-2021 saw the rise of growth-stage investing in Latin America.There was a record number ofcapital raises,resulting

152、in a record number of new investors entering the region.This allowed for a highlycompetitive investment environment where price,valuation and speed drove investment decisionsversus quality(picking the right investment partner).2022 marked a sobering year for all parties in the Latin American venture

153、 ecosystem:Founders and companies had to,for the most part,pivot from“growth mode”to profitability andlearn how to operate a capital-constrained environmentInvestors new to the region experienced a combination of negative-impact events,including rapidlyincreasing interest rates in the fund-domiciled

154、 country(most likely the US,the UK,and the EU),andfluctuating Forex and interest rates in the portfolio company country.This caused many to re-evaluate their exposure in the region and,in some cases,exit investments via secondarytransactions at an embedded discountInvestors with a long track record

155、of investing in the region experienced the same macroeconomicheadwinds,but executed on a developed thesis.In some cases,blue-chip investors wereopportunistic to increase their equity position in portfolio companies(via secondary transactionsmentioned in point two)and bridge roundsAnother clear shift

156、 was the rotation into early-stage investments from growth/pre-IPO opportunities.Webelieve this is due to the following:Digital transformation continues to accelerate technology adoption in the region,expanding the TAMof existing offerings,and creating new TAMs to targetThere have been significant e

157、xits over the past 24 months.Many of these management teams havestarted new ventures(i.e.Rappi)and have finally reached“backable”scale(typically post-MVPstage,generating$500k+in revenue)Timing the investment to capitalise during the next bull runA correction in private company valuations leading to

158、investor-friendly terms Sources:GP Bullhound Insights and LAVCA(as of April 2023)2022 INVESTMENTS THROUGHOUTTHE COMPANY LIFECYCLEANNUAL INVESTMENTSIN LATIN AMERICA*Percentages represent proportion of deal count(#)andtotal transacted($)2022 IN REVIEW242022 at a glance15Sources:GP Bullhound Insights a

159、nd LAVCA(as of April 2023)Note:Not all transactions have a disclosed investment amount;stats above reflect technology transactions;and 1)Figure represent the totalnumber of investors participating in each stage and do not filter for unique counts of investors who participate multiple times.Countries

160、770Uniquecompanies$8bn+Invested intotechnologyFrom left:Bolivia,Chile,Costa Rica,Ecuador,El Salvador,Panama,Peru,and UruguayBRAZILMEXICOCOLOMBIAARGENTINAOTHER2022 IN REVIEW25A growing universe of foreign investors,partnering with local capitalistsSources:GP Bullhound Insights and LAVCA(as of April 2

161、023)Note:1)This figure represents the total number of unique foreign investors participating in LatAm tech deals;2)North America includes the USand Canada;for data integrity purposes,Mexico is designated as Central America&Caribbean;3)represents deals where an investor in thesyndicate is established

162、 in the designated region;4)to represent international money inflow across syndicated investment rounds,we assumethat investors provided equal checks;the total deal value is divided in proportion to the percentage of investors from each region;and not alltransactions have a disclosed an investment a

163、mountNORTH AMERICA(EXCL-LATAM)(2)EUROPEAPAC&OTHER*Percentages represent proportion of deal count(#)and total transacted($)262022 IN REVIEWDeal volume anchored by local investorsSources:GP Bullhound Insights and LAVCA(as of April 2023)Note:The investors shown are not exhaustive;and 1)this figure repr

164、esents the total number of unique LatAm investors participating in LatAmtech deals*Percentages represent proportion of deal count(#)and total transacted($)2022 IN REVIEW27Investing across the company lifecycleThe rise of early-stageNote:Early-stage includes startup capital for companies including Se

165、ed,Series A to Series B rounds,and venture debt.Growth is non-control investment in an existing company to finance growth strategy.Typically,this is the first outside institutional capital in a traditionalbusiness.Late-stage includes capital for companies that have reached a sustainable level of dev

166、elopment and may be expanding past theirhome country;includes PIPEs,Senior Loans,and Series C rounds and beyond.*Percentages represent proportion of deal count(#)and total transacted($)282022 IN REVIEWSources:GP Bullhound Insights and LAVCA(as of April 2023)Note:1)Figure represents the total number

167、of investors participating in each stage and does not filter for unique counts of investors who participatemultiple times;stages exclude buyouts,secondary buyouts,distress/restructuring,and mezzanine.*Percentages represent proportion of deal count(#)and total transacted($)2022 IN REVIEW29The state o

168、f technologyinvestmentsIn 2022,investor appetite for Software and B2B grew as the ecosystem continues to evolve andsophisticate.While the Fintech sector continued to dominate from a total dollars transactedperspective,Software saw the most volume,sitting at 38%of total transactions.Not all sectors a

169、re created equally;the amount of moneyinvested doesnt necessarily reflect most popular sectorPopular themes remained constant throughout 2022.“Banking the Unbanked”(consumer finance,financial&banking,and digital banking)-focused ventures received themost attention from investors.Early-stage investme

170、nts intoFintech were the most popular as investors continue to fuelthe financial transformation of the region.Software was the second-most active vertical,driven bysignificant late-stage into subsectors such as IT software,ERPs,and PropTech.LatAm has all the ingredients tobecome a leading Software h

171、ub:talented developers,attractive pricing dynamics,and time zone overlap with thewestern hemisphere.The growing digital commerce companies in LatAm arelargely focused on helping SMEs manage and scale theirbusinesses.Several of these companies are creatingecommerce solutions that enable the digitisat

172、ion of smallbusinesses through inventory management,accountingautomation,and online distribution channels.30SECTOR DEEP-DIVESources:GP Bullhound Insights and LAVCA(as of April 2023)Note:Early-stage includes startup capital for companies including Seed,Series A to Series B rounds,and venture debt,and

173、 growth is a non-control investment in an existing company to finance growth strategy-typically,this is the first outside institutional capital in a traditionalbusiness;late-stage includes capital for companies that have reached a sustainable level of development and may be expanding past their home

174、country-includes PIPEs,Senior Loans,and Series C rounds and beyond;and:1)Figure represents the total number of investors participating ineach stage and does not filter for unique counts of investors who participate multiple times;stages exclude buyouts,secondary buyouts,distress/restructuring,and me

175、zzanine.Digital Services represented 4%of investmentsand 3%of dollars transacted.Digitalinfrastructure and innovation remain leadingareas of investment as the region continues tomodernise.Later-stage investors typically lookat cash flow generating companies.While the Digital Media and EdTech sectors

176、 sawthe least activity in 2022,these transactionsare propelled by significant tailwinds in theregion.Digital Media was driven by gaming,which has seen a spike in interest over recentyears.Growing EdTech businesses in LatAm areprimarily focused on professional developmentof the regions talent.*Percen

177、tages represent proportion of deal count(#)and total transacted($)SECTOR DEEP-DIVE31The state of FintechIn recent years,Fintech has been a rapidly growing sector in Latin America.2022 was no exception.Compared to the other five GP Bullhound sectors,Fintech saw the most dollar inflow,accounting for33

178、.6%of the total invested in LatAm technology.Leading the pack were companies focused onconsumer finance,digital banking,and payments.Thirty universe constituents participated inmultiple rounds.Latin America is poised for Fintechs continued growth as confidence in theregions financial institutions we

179、akens and consumers look for more alternatives.Sources:GP Bullhound Insights,LAVCA,Capital IQ,Ebanx,and 2021 Global Payments Report(as of April 2023)A new fuel for the consumer economyWhats driving the sectorBANKING IN THE PALM OF YOUR HANDSTILL-WIDE PENETRATION GAP AS CASH REMAINS KINGFor decades,m

180、uch of the Latin Americanpopulation has struggled with a poor quality ofservice from consumer banks,facing highrejection rates and bureaucratic processes.Coupled with the fact that much of the ruralpopulation in Latin America is unbanked oftenmiles away from the nearest branch bankingservices have b

181、een inaccessible to many.Digital banking has plugged this gap.As mobilephones have become affordable and proliferated,access to banking services is now a tap away.Adigital environment gives way to innovativemethods of assessing a customerscreditworthiness by using their digital footprints enabling t

182、hose that have struggled to buildcredit traditionally.As the pandemic caused morepeople to adopt online services,this trend is setto continue.While payments and banking have gone mobile inthe digital environment,cash remains the numberone payment method for brick-and-mortartransactions.In 2022,cash

183、comprised 31%ofLatAms total POS transaction value,with creditcards a close second at 30%.This comes as nosurprise given the penetration of mobile devicesand digital adoption by older generations.Fintechs continued growth hinges on a shift tocredit cards and digital wallets,likely surpassingcash by 2

184、026.TOTAL OUTSTANDING BALANCE OF RETAIL CREDIT(BRAZIL)LATAM POS PAYMENT METHODS SHARE OF TRANSACTION VALUE,2022-2026E32SECTOR DEEP-DIVEDouble clicking on:FintechCONSUMER FINANCE THE MOST POPULAR SUBSECTOR($M)BY THE NUMBERSSources:GP Bullhound Insights and LAVCA(as of April 2023)Note:Not all transact

185、ions have disclosed an investment amount*Percentages represent proportion of deal count(#)and total transacted($)SECTOR DEEP-DIVE33In 2015,I realised that the time was ripe for the creation of an efficient and innovative bank that understandscustomers needs.I wanted to give people financial freedom.

186、Thats how Albo was born in 2016,becomingthe number one digital bank in Mexico.Were empowering people by providing easy access to a new era ofdigital banking,technology,and finance.The main challenges I faced were in Albos first year,because itrequired building the tech stack of the platform while be

187、ing compliant with financial regulations,andunderstanding if a digital banking model was possible at all.Were talking about a time when managing moneythrough a smartphone wasnt at all common.Creating financial inclusion for all is my top priority.Many people in developing countries lack access to ba

188、sicfinancial services,like bank accounts,loans,and insurance.Albo plays a key role in addressing these issuesby developing innovative solutions that make financial services more accessible and affordable tounderserved communities.Financial education is also very important to me,as many dont have bas

189、icfinancial literacy skills.Fintech companies can develop educational resources that help consumersunderstand financial concepts and make better decisions.Some countries in LatAm have highly-skilled engineers,while others have a shortage.The quality ofengineering education has a significant impact o

190、n the talent pool,as does migration many skilled engineersmigrate to more developed countries for better opportunities.The types of industries that are prevalent in aregion impact the availability of engineering talent as well,as do cultural factors and attitudes towardseducation and careers.In many

191、 countries there still is a significant gender bias in STEM fields,includingengineering,which results in a smaller pool of talented engineers.WHAT INSPIRED YOU TO START ALBO AND WHAT WERE THE MAIN CHALLENGES?WHAT ARE THE MAIN ENGINEERING TALENT CONSTRAINTS IN LATIN AMERICA?Expert viewFOUNDER&CEO|ALB

192、OHOW ACTIVE ARE YOU IN THE FINTECH ECOSYSTEM?Fintech in LatAm is still relatively nascent,with significant room for growth and expansion.There is also alarge underbanked population,which presents opportunities for fintechs to offer alternative financialservices.In addition,many LatAm countries are t

193、aking steps to support fintech innovation,includingimplementing supportive regulations and investing in fintech hubs and incubators.Lastly,weve seenaccelerated adoption of digital financial services during the pandemic.Fintech is also nearing maturity,withan increased trend towards it being integrat

194、ed into other business models,and the potential for it to beconsolidated into a range of industries.WHAT OPPORTUNITIES DOES LATAM PRESENT FOR ENTREPRENEURS ANDFOR THE FINTECH SECTOR SPECIFICALLY?34EXPERT VIEW:ALBOANGEL SAHAGUN FERNANDEZWHAT IS THE ULTIMATE VISION FOR ALBO?Our go-to-market strategy w

195、as different from that of other digital banks in Mexico because we focused onserving lower-income customers through retail partnerships.We have also recently expanded our offeringsto include B2B services,such as Albo for Business,which allows companies to manage employee expensesand payments through

196、 the Albo platform.While our retail customers are primarily looking for convenient andaffordable banking services,our B2B customers are looking for tools to help manage their businesses moreeffectively.We always had a roadmap for expanding into B2B,as we saw an opportunity to leverage ourtechnology

197、and expertise to serve small and medium-sized businesses in Mexico.Our ultimate vision is tobecome the leading digital banking platform in Mexico,serving both retail and B2B customers.When that happens,there are several ways to adapt its strategy.One approach is to focus on improving operationaleffi

198、ciency and reducing costs to increase profitability.This could involve streamlining processes,optimising thesupply chain,or reducing overhead expenses.Another approach is to focus on revenue growth by expanding intonew markets,developing new products or services,or increasing market share.However,in

199、 some cases,this mayrequire a significant investment of resources upfront,which may not be feasible for companies focused onimproving profitability.HOW HAVE YOU ADAPTED THE COMPANYS STRATEGY WHEN THERE WAS A SHIFT OFFOCUS TOWARDS PROFITABILITY OR A SHIFT IN MARKET DYNAMICS?Having both has been incre

200、dibly valuable.Regional investors bring deep knowledge and expertise of the local market,which helps navigate regulatory and compliance issues,as well as understand the needs and preferences of ourcustomers.International investors bring a broader perspective and access to global networks and resourc

201、es,whichhelps us stay on the cutting edge of technology and innovation.There is definitely room for regional growth investorsin Mexico and other emerging markets.These investors provide critical support and capital to startups that are lookingto grow and expand,but may not yet have the international

202、 reach or profile to attract global investors.HOW DID HAVING REGIONAL AND INTERNATIONAL FUNDS ON YOUR CAP TABLE HELP YOU GROW?The tech ecosystem will continue to evolve.As fintech grows,new companies enter the market and established playersexpand their offerings,resulting in increased competition an

203、d innovation,and greater consumer choiceand convenience.With AI and ML adoption in tech,there will be opportunities for companies to improve their servicesand UX.The rising acceptance of blockchain technologies will also play a part.Im convinced that crypto will be themoney of the future,facilitatin

204、g the world towards more financial liberty.WHAT WILL THE TECH ECOSYSTEM LOOK LIKE IN LATAM OVER THE NEXT FEW YEARS?EXPERT VIEW:ALBO35The state of SoftwareWhile Fintech attracted the most dollar inflow in 2022,the Software sector led in terms of deal volume,comprising 37.9%of technology rounds in Lat

205、in America.It also attracted 34%of total dollars invested,second to Fintech.The adoption of software tools has been on the rise as the region undergoes a digitaltransformation.Coupled with the cost-effective advent of cloud computing,services like accounting,salesmanagement,human resource insights,a

206、nd IT,have become more accessible and affordable.This hasbenefitted small businesses,which can now automate time-intensive processes by subscribing to a softwareplatform.IT software and enterprise resource planning software attracted the most funding in 2022 with$2bn in aggregate value 71.2%of total

207、 dollars invested in software.Sources:GP Bullhound Insights,LAVCA,Capital IQ,S&P Global,BCG Platinion,and Triton Market Research(as of April 2023)Levelling the global playing fieldWhats driving the sectorINFRASTRUCTURE AND CONNECTIVITYEnterprise resource planning(ERP)hashistorically been expensive t

208、o adapt andimplement,especially in Latin America wheresmall-to mid-size enterprises(SMEs)have lackedaccess to these services.As cloud computing hasrevolutionised the simplicity and costs of ERPsoftware,increasingly more Latin American SMEshave implemented these services to automateand scale their op

209、erations.The region hasexperienced a spike in cloud platforms,enablinghigher productivity and data-driven insights.Thishas attracted the attention of industry leaderslike Oracle,AWS,Google,IBM and Microsoft.Theonset of the pandemic also contributed toLatAms cloud computing growth,with theselegacy pl

210、ayers establishing over a dozen cloudregions since 2020.JOURNEY TO THE CLOUDThe Software sectors success in Latin America isonly possible with proper connectivity andadequate infrastructure to support onlineservices like cloud computing and appropriatedata transfer speeds.While industry leaders arei

211、nvesting in developing these capabilities,inadequate infrastructure has historically been abarrier to LatAms digital transformation.Leadingcountries like Argentina and Brazil have achievedimpressive connectivity levels,with an internetpenetration rate of 80-90%.However,as itstands,this remains an ar

212、ea of opportunity formost of Latin America and the continuedinvestment signals investor optimism.CLOUD SALES IN LATAM BY SERVICE TYPE2021 INTERNET PENETRATION IN LATAM36SECTOR DEEP-DIVEDouble clicking on:SoftwareIT SOFTWARE-MOST POPULAR SUBSECTOR($M)BY THE NUMBERSSources:GP Bullhound Insights and LA

213、VCA(as of April 2023)Note:Not all transactions have disclosed an investment amount;“Other”category includes Fitness/Wellness Tech,ESG,Travel&Leisure,Data&Analytics,and Talent Marketplace*Percentages represent proportion of deal count(#)and total transacted($)SECTOR DEEP-DIVE37The state of Digital Co

214、mmerceDigital Commerce has also experienced rapid growth in recent years,driven by rising consumer confidencein online shopping,internet penetration,and a growing middle class.Pandemic lockdown policies alsodrove Latin American consumers to online marketplaces.The LatAm ecommerce market is valued at

215、$84bnas of 2021,with an 8.6%CAGR,reaching$117bn by 2025.The leading category for investment in 2022was retail shopping,attracting$400m across 34 transactions.Rising challengers like Mexicos Valoreo andBrazils Inventa are competing for market share,which incumbents like Mercado Libre(LatAms Amazon)ha

216、ve established and investors are showing increasing support for these new entrants.Sources:GP Bullhound Insights,LAVCA,Capital IQ,Ebanx,and Statista(as of April 2023)LatAm finds new appetite for online retailWhats driving the sectorSHOPPING GOES MOBILEMOBILE PENETRATION TO INCREASEDigital Commerce i

217、s another industry that hasbenefited from the proliferation of mobiletechnology in Latin America.Just five years ago,Digital Commerce transactions were largelycompleted using a desktop,comprising 61%oftotal sales.That meant more intentionalshopping sessions at a lower rate.Mobile nowmakes up 59%of t

218、otal ecommerce sales.Amajor contributor was the pandemic,withmillions adopting ecommerce in lieu of in-person shopping.Mobile transactions remain a strong driver ofdigital commerce in Latin America and in 2021shopping apps were among the mostdownloaded mobile applications.While thepenetration of mob

219、ile devices has varied indifferent countries across Latin America,on thewhole,it has remained consistent at 69%since2019.This is set to increase to 73%by 2025 forthe region,bolstering consumer and investorappetite for the Digital Commerce sector.MOBILES SHARE OFTOTAL ECOMMERCE SALES IN LATAMSMARTPHO

220、NE PENETRATION IN LATAM38SECTOR DEEP-DIVEDouble clicking on:Digital CommerceRETAIL THE MOST POPULAR SUBSECTOR($M)BY THE NUMBERSSources:GP Bullhound Insights and LAVCA(as of April 2023)Note:Not all transactions have a disclosed an investment amount;“Other”category includes B2B,Logistics,Manufacturing

221、,Materials&Infrastructure,Fitness/Wellness TechBlockchain&Crypto*Percentages represent proportion of deal count(#)and total transacted($)SECTOR DEEP-DIVE39My co-founders and I were working in different parts of the technology sector I was at Index Ventures,one of myco-founders worked at Google and t

222、he other was at Patreon.We all had complimentary views on the tech ecosystemand investing in the space.We started thinking about how we could improve healthcare in Mexico.We wanted todisrupt the established set of practices that were no longer providing solutions to people across the country.Insuran

223、ce is a very bureaucratic process in Mexico,so navigating the regulatory space was very challenging.Compliance was tough because the insurance space is designed and built around the big players,and there is noplaybook for startups in the space.So adapting this old-school model into what we were tryi

224、ng to build was difficult.We had to build a very robust compliance team that could help with legal matters,which is unusual for a seed-stagestartup.In addition,on the commercial front,we were building a new insurance company and asking people to trustus with their money,and with insurance,people don

225、t get anything immediately tangible in return,they get protection,but that can be an abstract concept.In the beginning,we didnt appreciate just how much work we were required todo to get to a point where people would trust us.Today we have thousands of users and enough success stories ofpeople who h

226、ave come to us for better access to quality healthcare through their insurance plans,which gives uscredibility with our customers.HOW DID YOU START SOFA AND WHAT INSPIRED YOU?Expert viewCO-FOUNDER&CEO|SOFAWHAT WERE THE MAIN CHALLENGES YOU FACED AND HOW DID YOU OVERCOME THEM?WHAT WERE THEMAIN OPPORTU

227、NITIES YOU SAW?40EXPERT VIEW:SOFAARTURO SNCHEZ CORREAInsurance,and particularly health insurance,is an industry that has been slow in adopting technology.But today weall carry a device in our pocket that enables a different approach to healthcare as a whole.Mexico is an outlier inthat there is no de

228、dicated health insurer at scale in contrast with the US,with companies like Kaiser Permanente orUnited Healthcare.So there is an opportunity to create an iconic company that combines technology with financialprotection.Our vision is to create an integrated healthcare system that utilises software an

229、d data to help peoplepiece together all the different parts which conform a care episode to help them get better care and,ultimately,help them be healthier.HOW DO YOU SEE THE MARKET FOR HEALTHECH SECTOR EVOLVING IN LATAM?WHAT ISYOUR VISION FOR SOFA IN THE COMING YEARS?HOW HAS THE FUNDING LANDSCAPE C

230、HANGED?WHAT DO YOU EXPECT FROM THE NEXT FEWYEARS IN TERMS OF INVESTING IN LATAM?We are fortunate to have really great investors.There was a phase over the past couple of years when capitalbecame very commoditised.Today,and for the next few years,that capital is going to be scarcer.As anentrepreneur,

231、you need to be more thoughtful,less optimistic and probably more conservative in how you thinkabout accessing capital.But at the same time,todays environment can be beneficial.If you are able to accesscapital,that creates a barrier to competition because it is harder to fundraise right now.It is a m

232、atter of placingyourself in a position where you can make the most out of the environment.We still sell our B2C product,but the main avenue for growth is on the B2B side.It is not that our B2C product wasnot working,it was just that our B2B product was working better.Although there are opportunities

233、 on the B2C sidethat we wish we could explore right now,it will pay off more to focus our efforts on the B2B sector and go afterthat opportunity with full force to take us to new heights.YOU ARE ALSO TARGETING B2B,SO WHAT DOES SUCCESS LOOK LIKE FOR YOUR COMPANY?EXPERT VIEW:SOFA41The state of Digital

234、 ServicesDigital Services was LatAms third most popular sector in 2022 with$2.9bn invested 27.0%of totaldollars in tech.Stonepeaks$2.7bn acquisition of Cirion(former Lumen Technologies LatAm operations)represented the sectors largest cash inflow and is a testament to continued digital transformation

235、 andconsolidation in the region.As digital advertising grew in LatAm and people turned to online platforms forboth employment and skilled employees,business services and online talent marketplaces emerged astop investment verticals.Sources:GP Bullhound Insights,LAVCA,Capital IQ,Statista,Deel,Tecla,a

236、nd Insider Intelligence(eMarketer)(as of April 2023)Workforce enters the global jobs marketA GROWING WORKFORCE FOR THE WORLDWhats driving the sectorLACKLUSTRE ADVERTISING SPENDDigital services companies that broker betweenemployers and Latin Americas workforce haverisen in popularity.As the regions

237、populationbecomes more educated and upskills to becompetitive,the opportunity for talentmarketplaces to match a candidates profile withjobs has become a need,particularly asinternational employers have taken a specialinterest in LatAms skilled workforce with majorcorporations tapping the region for

238、outsourcing ITsoftware and software development.NorthAmerican employers,in particular,have begunoutsourcing in the region due to proximity,similartime zones,English proficiency,and less culturalfriction.One of the most effective avenues for growth inthe digital environment is digital ad spend,whichr

239、ewards platforms for high viewership andtraffic.In LatAm,however,ad spend hashistorically lagged behind other regions.Thiscomes as no surprise as most of LatAms digitaltransformation remains underway and analogueoutlets still see significant traffic.More digitaldollars mean not only more revenue ave

240、nues forbusinesses but higher brand visibility andcustomer acquisition it is an integral part of adigital platforms growth efforts.We expecttraditional ad dollars to shift to digital in thenear-term.Digital spend growth in LatAm is setto outpace the world average by 3.5%in 2023.REGIONAL HIRING GROWT

241、H RATE,JULYDECEMBER 2021DIGITAL AD SPEND IN 2022($BN)42SECTOR DEEP-DIVETELECOMMUNICATIONS THE MOST POPULAR SUBSECTOR($M)Double clicking on:Digital ServicesBY THE NUMBERSSources:GP Bullhound Insights and LAVCA(as of April 2023)Note:Not all transactions have disclosed an investment amount;“Other”categ

242、ory includes IT software,AR,VR,&Web 3,and Fitness/Wellness Tech*Percentages represent proportion of deal count(#)and total transacted($)SECTOR DEEP-DIVE43A product presents a solution to a problem.But a platform presents a problem to a solution.Ive livedthrough most trends out of Silicon Valley and

243、have seen many companies build products for imaginaryproblems,or build platforms with no corresponding solutions.These companies were created with a focuson making money and exiting,without providing a necessary service.FCamara has existed for 16 years andhas been bootstrapped for 14,with only recen

244、tly raising capital.And thats not because we wanted to dosecondaries,or take chips off the table,but because we wanted to accelerate growth and invest more intothe business.We commit to growing the business every year by 35%,whether its a good year or a difficult one.Everyemployee commits to helping

245、 the company grow at this pace.Between 2019-2022,our CAGR was over 50%.We dont go telling our people that we plan to“generate$1bn in sales in 2025”or that we are going forunicorn status.We just want to grow at 35%annually.This gives us flexibility,since we commit to the day-to-day vs the long-term,e

246、nabling us to be attentive to new opportunities when they were not initiallyconsidered in the annual planning.When I started,there were only very large companies that were considered“full-service”providers,but inpractice it was more staff augmentation and IT outsourcing.Alongside these large compani

247、es you had verysmall specialised shops.This was an issue I had to navigate early on-we had to adopt a pure technologyapproach and identify market segments to specialise in,as opposed to“offering everything”.We originallyfocused on ecommerce,and over time became the largest digital service provider f

248、or ecommerce and retailin Latin America.We are also one of the main players in Brazil in the healthcare and finance markets focusedon Open Finance,giving we developed Open Banking and Open Insurance for regulatory agencies there.GIVEN YOUR PROGRAMMING BACKGROUND,SHOULD THE PROBLEM OR THE PLATFORM CO

249、ME FIRST?WHAT DO YOU THINK ABOUT FCAMARA SCALING TO COMPETE AGAINST THE INCUMBENTSIN THE SPACE SO QUICKLY?Expert viewFOUNDER&CEO|FCAMARAHOW HAS DIGITAL TRANSFORMATION CHANGED FROM WHEN YOU STARTED TO TODAY?44EXPERT VIEW:FCAMARAFABIO CAMARAHOW DO YOU PLAN TO MAINTAIN THIS CULTURE AS YOU GROW,ESPECIAL

250、LY IFACQUISITIONS ARE MADE?At our core,we are dedicated to employee development.For example,when I started the business,I decided to usemy name(FCamara stands for Fabio Camara),but in case it backfired,I would change it to FC for“FormacaoConsultoria”or“Development Consultancy”.We deploy a significan

251、t amount of training across the organisation,from interns and part-time employees to the C-Suite.We focus on these employees early on to develop a purposeand buy into the organisation.Today,professionals from within the business have a significant interest in FCamarabecause of our culture.FCamaras r

252、etention is best-in-class.It is harder to compete with multinational organisations,as their compensationis tied to stronger currencies,but we go head-to-head for talent because of our core pillars:training,commitment,and developing a passion for the industry.Our ideal employee profile is similar to

253、a football player:young,from alower-income background,without a strong educational pedigree.Why?Because we offer a career path anddevelopment beyond the role.This type of relationship leads to loyalty to each other.Our training programme has17k+subscribers for 150 slots,and were bringing together te

254、chnology lovers including FCamara employees andnonemployees through our initiative called Orange Juice,which has over 20k participants.Another reason ouremployees dont leave for clients is that they dont want to be“pigeon-holed”into a specific technology-theyunderstand that it can become obsolete ov

255、er time.EMPLOYEE RETENTION IS KEY,BUT SOMETIMES EMPLOYEES LEAVE BECAUSE OF COMPENSATION,OR TO A CLIENT THEY WORKED ON.WHAT ARE YOUR THOUGHTS ABOUT THIS?To be an entrepreneur,you need to know a little about everything.Universities teach you how to be a good employeebut not a good founder.That is a bi

256、g issue for anyone plunging into entrepreneurship.No degree will teach you aboutHR,accounting,recruiting,corporate finance,legal documents,or compliance.I had to pay a lot of fines in my earlydays because of ignorance.My advice is to hire highly competent professionals to help you on your journey.Al

257、so,strive to be the most organised person in the room-the most organised person organises the least organised person.WHAT ADVICE WOULD YOU GIVE TO SOMEONE WHO WANTS TO START THEIR OWN BUSINESS?EXPERT VIEW:FCAMARA45While Digital Media and Edtech saw the least investment activity in 2022,there are cle

258、ar tailwinds that couldbolster the sectors.An increasing number of Latin Americans are engaging with digital media and educationalplatforms for both entertainment and professional training.Higher engagement levels present an opportunityfor monetisation and growth in these sectors.Anchoring the Digit

259、al Media and Edtech verticals are gamingand workforce development.The state of Digital Media&EdtechSources:GP Bullhound Insights,Statista,HolonIQ,and Global Web Index(as of April 2023)Sectors with growing potentialWhats driving the sectorDIGITAL MEDIA:LATAMPRESSES PLAY ON GAMINGEDTECH:THE LATAM WORK

260、FORCE UPSKILLSGaming has seen a recent explosion in LatinAmerica.The overall gaming sector was proppedup in 2020 due to lockdown restrictions and inrecent quarters has normalised as those policieseased.In LatAm,however,tailwinds likeincreased internet penetration,the proliferationof mobile devices,a

261、nd Spanish-speakingstreaming influencers,have popularised thedigital medium further.LatAm gaming revenueshave had a steady increase and are set to reach a10%4-year CAGR in 2023.Additionally,68%ofadults in Latin America are playing mobile gameswith an even split between men and women.Thisdemographic

262、is also consuming other forms ofdigital media with nearly 100%using socialnetworks and watching online videos.The edtech space in Latin America hasdemonstrated the potential to accelerate theregions economy and strengthen the skillset ofits workforce to competitive global standards.Asthese countries

263、 continue to heal from the tolls ofthe 2020 pandemic,which include a spike indropout rates and unemployment,theaccessibility of edtech could close the skills gapand address societal inequalities.In 2022,themajority of edtech capital raises were focused onthe professional development/workforce space.

264、These companies help users upskill and re-skillfor the demands of the global job markets.WhileK-12 represents 40%of all EdTech startups,itattracts less funding than its workforcecounterparts,which are more commerciallyoriented and quickly monetisable.LATAM GAMING REVENUE($BN)NUMBER OF EDTECH STARTUP

265、S IN LATAM,202146SECTOR DEEP-DIVEDouble clicking on:Digital Media&EdtechGAMING AND PROFESSIONAL DEVELOPMENT THE MOST POPULAR SUBSECTOR($M)BY THE NUMBERSSources:GP Bullhound Insights and LAVCA(as of April 2023)Note:Not all transactions have a disclosed an investment amount*Percentages represent propo

266、rtion of deal count(#)and total transacted($)SECTOR DEEP-DIVE47TECHNOLOGY INVESTMENT EVOLUTION(3)Investment activityOver the past few years,Latin Americas technology industry hasreceived a significant boost in investments,thanks to thecreation of local early-stage funds and the recent involvement of

267、international investors.These investors have brought significantfunding:Latin American Venture Capital Association(LAVCA)estimates over$35bn of capital deployed across techcompanies,allowing these companies to grow and scale at anunprecedented rate.The largest funding rounds have been primarily allo

268、cated tofintech and digital commerce companies,which have gainedsignificant traction due to the high demand for digitalisation andreduced access to traditional financial services.Increasingactivity in the early-stage funding of software companiespositions it as the next sector to receive large round

269、s of funding.(1)Sources:GP Bullhound Insights and LAVCA(as of April 2023)Note:1)Accumulated investment in tech companies from 2015 to 2022;and 2)Based on the targets HQ for the top 25 funding rounds in theregion,further details available in the following exhibit;3)Investment data from LAVCA based on

270、 their LAVCA Tends in Tech report,statsmight include VC investments outside of tech.2022 is based on GP Bullhound industry classificationsGP BULLHOUND LATAM INDEX CONSTITUENTSSource:Capital IQ(as of 25 April 2023).Note:Figures represent the averageRecord investment from international funds;Fintech a

271、nd Digital Commerce lead the way48INVESTMENT ACTIVITYBrazil,as the largest economy in the region,historically accounts for over 50%of the largest funding rounds2.However,other countries such as Mexico,Colombia,and Argentina have also attracted substantial investments in theirtech sectors in recent y

272、ears,increasing the diversification of the tech ecosystem,which is crucial to accelerating the“snowball effect”and establishing permanent business startup hubs across all countries.The professionalisation of funds investing in the region as well as the entrance of experienced international investors

273、has not only provided access to significant amounts of capital but also expertise in scaling businesses.This hasenabled Latin American startups to expand their operations globally and compete with established players in theirrespective industries.Top investments in the regionSources:GP Bullhound Ins

274、ights,Capital IQ,Pitchbook,Crunchbase,LAVCA,Mergermarket,and press releases(as of April 2023)Note:Non-exhaustive list;includes largest funding rounds in the region to companies originally founded in LatAm or with a strong presence inthe local ecosystem that could have re-headquartered later to other

275、 regionsINVESTMENT ACTIVITY49TECHNOLOGY M&A EVOLUTION:NUMBER OF DEALSSECTOR BREAKDOWN(AS%OF TOTAL DEALS)BUYERS,BY TYPE(AS%OF TOTAL DEALS)M&A activityThe Latin American tech industry has seen asignificant increase in M&A activity in recentyears,with over 1,000 transactions.Braziland Argentina lead th

276、e exit race.In digital services,domestic buyers(e.g.Globant)are looking for potentialconsolidation cases.International players(e.g.Accenture and IBM)are focusing onproduct and geographical expansion,whilealso benefitting from the notable wage gapversus other countries,especially in thebusiness proce

277、ss outsourcing(BPO)segment.Software has enjoyed significant traction,particularly when compared to the lack offunding received.This trend suggests thatmany bootstrapped companies from the firstwaves,as well as legacy players,are beingacquired by other companies,enablingproduct expansion and growing

278、their clientbase by locking in B2B customers.Only a few transactions have been carried outby financial players,indicating a lack ofbuyout funds operating in the region.As a result,the main exit routefor entrepreneurs has been more limited,unlike in other markets such as Europe andthe United States,a

279、nd mostly focusedtowards strategic buyers.There is still a shortfall of mega-exists inthe region,but this could shift in the comingyears given the increase in funding that largetech players have received.inrecent yearsSources:GP Bullhound Insights and Capital IQ(as of April 2023)Note:M&A transaction

280、s of LatAm-based technology companies that have been publicly disclosed from 2015 to 2022Surge in strategic players,but mega-exit shortfall50INVESTMENT ACTIVITYTop M&A activity in the region Sources:GP Bullhound Insights,Capital IQ,Pitchbook,Crunchbase,LAVCA,Mergermarket,and press releases(as of Apr

281、il 2023)Note:Non-exhaustive list,based on publicly available data;includes largest M&A transactions in the region of companies originally foundedin LatAm or with strong presence in the local ecosystem that could have re-headquartered later to other regions51INVESTMENT ACTIVITYMethodologyInvestment a

282、nd fundraising data of 2022 for this report are sourced from the LAVCA Annual Fund Manager Survey.LAVCA has conducted this survey since 2008 and the 2022 edition included over 500 fund management firms activein Latin America.LAVCA confirmed 92%of transactions with primary sources and 85%included fin

283、ancial details.GP Bullhound ran a proprietary analysis on this data set.Transactions were classified by industries and subsectorsaccording to GP Bullhounds technology stratifications.These include Software,Fintech,Digital Services,DigitalCommerce,Digital Media,and EdTech.Non-technology-related deals

284、 were parsed out of the data set.These includeand are not limited to,transactions related to industrials,telecommunications,infrastructure,hardware,wholesalers,and power.GP Bullhound acted in good faith to classify each transaction accurately.GP Bullhound also leveraged data from Capital IQ and publ

285、ic sources to establish demographics for investors activeacross all syndicates.These demographics include investor type,country,region,and headquarter location.Todetermine money inflows,each transaction was classified as Foreign,LatAm,or Hybrid according to thedemographics comprised in each investor

286、 syndicate.Investment stages were reclassified into Early-stage,Growth-stage,Late-stage,and Other:Early-stage includes seed rounds,venture debt,and startup capital including Series A and B rounds.Growth-stage includes non-control investments in existing companies to finance a growth strategy.Late-st

287、age includes Senior Loans,PIPEs,Secondary Portfolios,and Series C and beyondOther includes secondary buyouts,distress/restructuring capital,and mezzanine debt.LAVCA DataPERSPECTIVES DATA&MARKET DEEP DIVEGP Bullhound has created a proprietary dataset for multiple perspectives and deep-dive sections o

288、f this report usingpublicly available information from sources such as Capital IQ,Pitchbook,Mergermarket,Dealroom,Crunchbase,LinkedIn,CB Insights,as well as other sources such as press media and interviews.The accuracy of our dataset islimited to the disclosed data.For the classification of the comp

289、anies under the term technology,the verticals in which GP Bullhound operateshave been used as a reference:Software,Fintech,Digital Services,Digital Commerce,Digital Media,and EdTech.Insome cases,technology company statistics that have been obtained from third-party sources may use anothertechnology

290、company classification than the one mentioned above.For the classification of companies under the term Unicorn,a threshold of a minimum valuation of$1bn+in thepublic or private markets has been established,including companies that have been acquired in the same year or inprevious years for$1bn+;the

291、valuation of these companies is based on information published by the press orfinancial sources and may have received subsequent adjustments without being made public.For this report,companies are tracked for inclusion as billion-dollar companies until 31 December 2022,with valuations updated asof D

292、ecember 2022,unless otherwise stated,which has limitations related to,for example,the state of equitymarkets,recent company performance,etc.For the classification of companies under the Latin American region,due to the number of companies that havemoved their headquarters to other regions(e.g.United

293、 States or Europe),they have been assumed to maintain theirclassification as Latin American companies if they were originally based there,if they maintain offices/team in theregion or if press/media sources continue to classify them as Latin American.Whenever logos are shown in the graphs,the lists

294、are not exhaustive and represent a sample of the informationpresented.The selection of logos is based on relevance according to a set of attributes such as total funding,number of employees,size,etc.as indicated by the information our sources disclosed.The status of funds portfolio companies(current

295、 or exit;private or public)is based on the information published bythe funds themselves on their websites or as disclosed by our public information sources as of April 2023,and is notexhaustive.52METHODOLOGYAbout GP BullhoundGP Bullhound is a leading technology advisory and investment firm,providing

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