Deciphering LatAm VC: Deep Dive into the Workings of the Venture Capital Ecosystem in LatAm (Endeavor Chile / Glisco Partners)

Summary

• A survey of +120 leading LatAm GPs found that 98% of VCs recognize the founding team as the most important factor in the successful outcome of an investment.p.6
• The survey was sent to 219 VCs and CVC funds; 116 responses were received, of which 88 were VCs (a 67% response rate).p.13
• According to PitchBook, LatAm VC funding in 2021 was more than 3 times what it was in 2020, with an 87% CAGR from 2017 to 2021.p.9
• 53% of respondents are first time fund managers, and the median fund size ranges from US$ 50 to 99M.p.14
• Only 7.5% of potential deals reach due diligence, and of the 15 potential deals that enter the process, only half receive a formal investment proposal.p.19
• Unit economics (90.5%), churn (43.2%) and sales margin (37.8%) are the performance metrics VCs consider most important.p.22
• Comparable investments (67.2%) and founder dilution (58.2%) are the most important factors in determining a valuation.p.25

Key insights

1. 81% of respondents ranked the founding team as the most important factor when deciding whether to invest.p.20
2. 82% of respondents invest in seed stage entrepreneurs and 73.8% in early and Series-A, showing an early stage focus.p.14
3. On average, women represent 22% of the funds' partners.p.14
4. VCs with unicorns in their portfolio get 27% more potential deals and close 50% more (10.5 investments vs. 6).p.19
5. Funds with unicorns have a median fund size of USD $100-199M, versus USD $10-50M for funds without unicorns.p.15
6. Only 44% of VCs have ESG criteria as part of their investment policy, even though approximately 8 out of every 10 take ESG and diversity criteria into account.p.23
7. 33% of respondents said they had invested in companies valued at over $1Bn USD.p.15
8. Pro-rata rights are a key contractual term, ensuring future access to financing rounds.p.27