Dealflow | February 27, 2023

In Latin America, bigger impact funds and investments defy venture capital slowdown

Roodgally Senatus
ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, February 27 — Impact investment in Latin America has remained strong even as overall venture capital activity is slowing down after a record-setting $15.9 billion in venture funding deployed in the region in 2021.

London-based impact private equity firm Lightrock is looking to increase its investments to more than $1 billion in Latin America over two years. Lightrock raised $300 million in May last year to invest in Latin American tech solutions.

São Paulo-based Monashees is looking to raise a total $700 million for a pair of funds to invest in early- and growth-stage fintech, edtech, healthtech and logistics startups as well as startups building tech solutions for small and medium-sized businesses in Latin America. The firm secured an undisclosed commitment from IDB Lab earlier this month.

LatAm’s impact unicorns

Startups in Latin America raised 19 rounds above $100 million last year. Among them is Chile’s Betterfly, a company that promotes wellbeing by rewarding people’s healthy habits. Betterfly, which early last year became Latin America’s first B-certified unicorn, contributes a portion of its revenues to social impact projects.

Creditas, a Brazilian consumer lending startup that has raised $1.1 billion from investors, was valued at $4.8 billion early last year. Last May, Xepelin raised $111 million to streamline financial tasks for small businesses in Chile and Mexico. In January last year, Colombia’s Tul raised $181 million to digitalize independent hardware stores in Latin America. 

Smaller ticket sizes

IDB Lab also backed Guatemala’s Acceso Impact Fund, which is raising an evergreen fund to fill small businesses’ need for debt and revenue-based financing. The fund has raised $4.5 million to date. Ecuador-based IMPAQTO Capital, is raising $2 million, also for revenue-based financing for high-impact enterprises in the Andean region (see “The Liist”). In January this year, Mexico City-based venture fund Amplifica Capitalraised $11 million to invest in early-stage women tech founders in Latin America.