Latam Startups Lay Off Staff, Expect More IPOs Next Year - Report

• Two-thirds of Latin American startups have laid off staff over the last 18 months, as venture capital funding fell sharply in the region, according to the "Latin America Digital Transformation" report by venture capital fund Atlantico.
• Venture capital funding in Latin America took a significant hit in the second quarter, plunging 65% compared to the same period last year. This decline was more substantial than the global downturn of 49% in venture capital funding for the same quarter.
• As the volume of IPOs recovers globally, venture capitalists and Latin American unicorns (privately held startup companies with a value of over $1Bn.) may return to capital markets. Of the 37 unicorns launched in the region, only seven went public. "We expect at least 10 new companies to list in public markets in 2024," said Julio Vasconcellos, Atlantico managing partner, in a phone interview on Tuesday, August 29.
• Notably, Fintechs are among the fastest-growing startups in the region, with digital payment systems such as the Central Bank of Brazil's PIX scheme helping to increase bank account penetration in the region. About 87% of Chileans and 84% of Brazilians hold bank accounts. Argentina comes next with 72%, although cash continues to be the preferred payment method in Mexico, with only 49% of the population having bank accounts.
• The introduction of a new digital payment system in Mexico, coupled with the proliferation of digital banks, has the potential to revolutionize the country's financial landscape in multiple ways. Enhanced accessibility and affordability could lead to greater financial inclusion, stimulating economic activity through quicker, more secure transactions. This digital shift is likely to not only introduce market competition, thereby compelling traditional banks to improve services, but also provide the Central Bank with more comprehensive data for effective monetary policy, ultimately positioning Mexico as a more competitive player in the global financial market.

(Source: Reuters)