The Rise of Latam Unicorns and the Future of VCs

In the world of business, “innovation” and “technology” are keywords that have allowed companies that were once risky startups to become unicorns by surpassing $1 billion in unlisted market value.

New and attractive ideas, along with identifying specific industry needs, are the perfect combination that has led startups to belong to this group of unicorns, where Brazil has the largest number of startups in Latin America.

According to Statista, the most profitable businesses over the last decade in Latin America belong to the finance, e-commerce, logistics and real estate industries. This led us to create Casai two years ago, a hospitality startup that is the new face of accommodation for travelers and digital nomads, where experiences, local value and technology brought to the home guarantee a more personalized and relaxed stay.

One of the main challenges we faced when we started was raising the funding required to support this ambitious project. This, considering the Latin American market has an excellent performance outlook, has led to more than 900 percent growth in venture capital investments between 2016-2019, according to data from the Latin America Private Equity and Venture Capital Association (LAVCA).

In my experience, I have seen how the latest innovative tech startups and the sustained growth of the middle class in the region are encouraging investors to join the startup revolution. The Inter-American Development Bank's innovation lab, IDB Lab, expects more than $40 billion in venture capital investments for Latin America by 2030.

Latin American tech startups would not be the same without venture capital, which is Casai’s main financial engine. In 2017, Global Network Perspectives identified this region as the second-most entrepreneurial in the world. According to IDB Lab, its value has multiplied 32 times within the last 10 years, reaching a record high of US$221 billion.

As more unicorn tech startups are born, Latin America is seeing a significant digital transformation that spells economic growth. For example, China invests seven times more and in model countries, such as Israel, the indicator is 117 times higher. 

In my experience, if you want to succeed in today’s entrepreneurial ecosystem of tech startups, there are a few things to consider:

• Explore markets that have not yet been disrupted by technology and digitalization.
• Adopt an international outlook to find venture funding opportunities and consider expansion beyond your home country.
• Build your teams around a positive thinking and growth mindset. Team turnover can cause delays and stumbling blocks; therefore, your recruitment processes need to be thorough and serious.
• Sound data management is the new invisible gold for businesses, as it is important to understand consumer preferences and needs through the use of technology.
• Although everything revolves around technology, prioritize the human factor. This means planning organizational and social responsibility campaigns aimed at helping specific vulnerable groups or benefiting society as a whole.
• Finally, don't give up hope of achieving your dream. With care and the right tools, new startups can also join the unicorn club, and become a pivotal economic accelerator for our region.

Given that venture capital is on the rise across Latin America, the future looks bright for those with great ideas and the ability to turn them into thriving businesses. It is estimated that 90 out of every 100 startups do not survive beyond the first two years. The remaining 10 startups are able to generate significant economic and social value, with the potential to generate prosperity and leave a positive footprint on society on their way to becoming the next unicorns.