It is cautiously optimistic The sentiment among founders and investors in Latin America today, amid an uncertain global climate.
In this year’s Latin America Digital Transformation Report, The Atlantic Investment Group reports on how the region is providing a rearview mirror in technology value creation. Latin America overtakes the global stage, reaching a record $16 billion in venture funding in 2021, a nearly four-fold increase compared to last year. But while we’ll see the overall funding halve this year, the region will still save more on investment than any other year before 2021, prompting “cautiously optimistic optimism”.
The last five years have seen the birth of Latin America’s first unicorns, marking a long-awaited turning point in the digital transformation of a region of more than 650 million people.
Now, with the dust of market turmoil still settling, local players are wondering how to play their hand: Ignoring calls for austerity could mean squandering the gains made in these golden years, but not taking advantage of the region’s special post-pandemic position could leave a lot of money on the table.
In recent months, we’ve seen a pandemic-fueled surge in technology adoption in the United States and other developed markets. Pandemics from Shopify to Peloton have been forced to reduce headcount as usage levels return to pre-pandemic historical trend lines.
The persistence of Latin America’s digital gains is perhaps most evident in sustained gains in e-commerce penetration.
Oddly enough, Latin America hasn’t suffered from this hangover from digital adoption. Instead, what appears to be a sustained two- to three-year gain is seen in a variety of technology adoptions: e-commerce penetration, grocery delivery rates, and digital banking and telemedicine use all continue to grow faster than 2020 levels. – Operating profit.
Online retail share versus pre-pandemic trend, US versus Brazil. Image Credits: Atlantic
Caution in an uncertain world
Uncertainty remains the order of the day in markets around the world as tech companies and investors try to figure out how to weather the storm. After a long period of excess liquidity and low interest rates, inflation finally took its toll on the party, prompting central banks to hit the brakes.
