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The Vamos Latam Summit of 2023 was organized by Latitud in São Paulo at the end of September. The event featured a great lineup of speakers from investors and founders to leaders and operators. What was clear from this event, was that the continental (or even cross-continental) ecosystem development is evident in Latin America. Different actors are eager to make connections and help each other develop the ecosystem together.
As Gina Gotthilf (co-founder of Latitud) mentioned in the opening speech, Latin America has its A and B sides. The B side often being very apparent in the media, from political turmoils to economic instability. Yet, what is clear from the event is that the Latin American A side is still shining bright: there is a great potential for growth considering the rising number of entrepreneurs, startups, innovations, increasing pool of talent, and even the pipeline of future unicorns.
The Vamos Latam Summit event provided valuable insights into the current state and future prospects of the Latin American startup ecosystem. Mainly pondering two questions:
In the first session of the summit, Julio Vasconcellos from Atlantico shed light on why this optimism is warranted in Latam, considering the potential catch-up Latam has compared to other markets.This trend has already been happening to some extent: a common theme throughout the summit was the region's strong economic growth, highlighted by increasing foreign investments and emerging entrepreneurial ecosystems, as well as rising number of startup founders. For instance, fintech is experiencing tremendous success, with innovative solutions addressing the unmet financial needs of the population. The presence of a large unbanked population creates a significant market opportunity, which has attracted both local and international investors. The sector is expected to expand rapidly in the coming years.
Beyond the technological potential, much attention was given to the emerging human potential, as the number and depth of talent is increasing. The availability of talent in Latin America is not only sufficient but also of high quality. Furthermore, the increasing number of talent in Latin America is not limited to technical roles. There is a growing pool of individuals with expertise in marketing, finance, operations, and other critical areas of business.
Yet, one might question if the potential really means growth. On one hand, there is clearly a lot of potential, considering, for instance, the innovative tech startups present in the summit. On the other hand, it was also clear that a lot needs to be done in order to attract investments to all of the innovative solutions.
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As the Brian Requarth (co-founder of Latitud) jokingly said when introducing the investor and author of "Hard things about hard things" Ben Horowitz, things are hard in Latam. There are significant challenges for strengthening the ecosystem even further. One of the biggest one being lack of funding for startups. A key message throughout the summit was that the funding conditions have drastically changed from 2021, and Latam is experiencing a 'funding winter' similar to the rest of the world. Yet as Ben Horowitz mentioned, "environment is what it is" - entrepreneurs just have to cope with it.
Latin American startups face several challenges when raising capital. These challenges can be attributed to the unique characteristics of the region's business environment and investor landscape. Compared to more developed startup ecosystems like Silicon Valley or Tel Aviv, Latin America faces a shortage of venture capital and angel investors. This scarcity of capital makes it difficult for startups to secure the necessary funding to launch and scale their businesses. The importance of foreign investments was also emphasized.
For instance, as mentioned by many speakers, before you needed to convince investors to invest in Brazilian fintech, yet, nowadays the potential is evident for everyone. Recognising that this same potential lies in other verticals and countries is important, and showing this to international investors even more important - to show that Latam startups can provide unique opportunity for investments. Therefore, in many talks, it was noted how fundraising should be a constant state, where multiple conversations are kept open, mainly to learn from investors.
Another challenge is the lack of a mature exit market. In developed startup ecosystems, investors can expect a potential exit through IPOs, mergers, or acquisitions. However, in Latin America, the exit options are limited, making it challenging for investors to realize returns on their investments. This lack of exit opportunities reduces the overall attractiveness of investing in Latam startups.
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Overall, it is clear that the potential of Latam shines bright, yet, what remains a question is how this eager and clearly very talented young player could evolve into a consistent and solid ecosystem of mature players across different verticals.
