NEW YORK (Reuters) - 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 "Latin America Digital Transformation" report by venture capital fund Atlantico.
Venture capital funding in the second quarter slumped 65% in Latin America, compared with last year, and down more than the 49% globally during the reported period.
As the volume of IPOs recovers globally, venture capitalists and Latin American unicorns 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.
Latin American companies will be attentive to valuations in the recently announced public offerings of large companies such as SoftBank (TYO:9984) Group Corp-backed chip designer Arm Holdings and grocery delivery service Instacart.
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 launch of a new digital payment system in Mexico, as well as the arrival of digital banks, can change the scenario, according to the report.