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Over the last years, startups in LatAm lived their first significant boom, with an innovation environment never seen before. Now they are experiencing their first real down cycle.
This rollercoaster ride requires from startups a much earlier path to profitability. If, before, was all about growth, the current dilemma is how to balance growth and profitability. The following study is a comprehensive investigation of the current context of startups in LatAm and what to expect next.
CONTEXT
The rollercoaster ride
Over the last years, LatAm startups underwent their first significant venture capital boom
An innovation environment never seen before and an abundance of capital flow in the region
34
Unicorns
2021
vs.
9 in 2018
USD
18 bn
invested in
2021
vs.
USD 3 bn in 2018
Over the last years, LatAm startups underwent their first significant venture capital boom
An innovation environment never seen before and an abundance of capital flow in the region
Source: LABS, SlingHub
And now they are experiencing their first real down cycle
The volume of capital dropped and the loss in value amplified
-30%
value markdown on selected VC Fund portfolios
33%
of startups had a down round
-51%
less VC funding volume between 2021 and 2022
Source: Capital IQ, Valor – Pipeline, SlingHub McKinsey LatAm Startup Study (2023)
Research
McKinsey study
We conducted a comprehensive study to better understand the context of this ecosystem
~200
Top Startups in LatAm surveyed
~30
Market leaders interviewed
300+
Startup employees surveyed
300+
STEM students surveyed
8
Countries covered
15+
Different industries
INSIGHTS
Key dimensions
We grouped the main insights into
4 dimensions
We grouped the main insights into
4 dimensions
CLOSING
Looking forward
It's time to ...
REVIEW +
It's time to review startups value prop and strengthen culture
RECALIBRATE +
It's time to recalibrate strategic decision balancing growth and profitability without losing focus
REWIRE +
It's time to rewire founder-investor relationship and define timely funding strategy
And there is a silver lining about down cycles:
A great vintage wave of talent and entrepreneurs
1998 - 2002
Social media
Dotcom bubble and crash
2007 - 2008
Shared economy
Financial Crisis
2022-2023
Future
Authors
Marina
Mansur
Partner
Heitor Martins
Senior Partner
Yran Dias
Senior Partner
Luiz Lima
Partner
Santiago Carbonell
Partner
Carolina Gracia
Associate Partner
Ranyer Soares
Engagement Manager
Bruna Del Negro
Engagement Manager
Ligia Azevedo
Associate
Bruno Longo
Associate
Yasmin Melo
Business Analyst
Bruno Palmeira
Business Analyst
Contributors
Bruna Losada
Engagement Manager
Guilherme Franzoni
Engagement Manager
Daniel Yamada
Engagement Manager
Luisa Moschioni
Fellow Associate
Mariantonia Rojas
Associate
Juanita Ferrer
Analyst
