Startup leaders in Latin America were surveyed by LAVCA in a study, which aims to explain how the new macroeconomic scenario of 2023 is impacting the region’s businesses and what the companies’ response is to it. Access to investors, fundraising, revenue growth, and talent acquisition were topics raised by the research. Read on to dig deeper!
2021 was a year marked by a high volume of investments in startups, with $16 billion allocated to Latin American businesses in venture capital investments. However, the landscape changed in 2022 when the volume of capital allocated to the innovation ecosystem decreased.
To understand how startups are dealing with this new context, LAVCA gathered companies that raised at least $1 million between 2021 and the first half of 2022. Insights show a new perspective regarding fundraising, revenue growth, and talent acquisition.
Fundraising for startups
Founders and leaders are adapting to fundraising expectations according to current market conditions and are relying on well-capitalized balance sheets to weather this moment.
39% of responding companies were not raising funds at the time of the survey; of those seeking investments, 84% stated that the fundraising process took longer than expected. Seed companies faced the greatest fundraising challenges.
Roadmap and revenue growth
Operational efficiency has become a focus for Latin American startups, which are focused on internal restructuring and building leaner teams to extend operating time, renegotiating agreements with suppliers, and reducing sales and marketing expenses.
Another relevant point is that early-stage companies had the highest revenue growth. Almost two-thirds of all surveyed startups reported monthly revenue growth of 10% or more, with 40% of companies growing from 20% to 29.9% month-over-month and 33% growing from 10% to 19% MoM.
However, revenue growth seems to decrease with the company’s scale; none of the startups with a valuation above $300 million reported monthly revenue growth higher than 20%.
Talent acquisition
The search for talent has ceased to be local and has expanded globally. Startup leaders began having teams inside and outside their operating country, a task for which they dedicated a significant portion of the company’s capital.
In 2023, Latin American startups started to focus more on globally distributed teams, and the proportion of employees operating outside of Latin America increases with the maturity and investment stage of the company. 39% of participants have 20% – 39% of their team located in other regions.
As a comparison, 95% of respondents in a 2018 survey reported that 80% of their team operated in Latin America.
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