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One of Argentina’s first venture-capital funds to emerge since the country’s economic meltdown is poised to formally launch in October following the approval of $5 million in financing from the Inter-American Development Bank. The IDB’s Multilateral Investment Fund said it will provide Argentina-based TGLT Consultores Ventures with $5 million investment along with a $100,000 technical assistance grant.

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August 28, 2006 — One of Argentina’s first venture-capital funds to emerge since the country’s economic meltdown is poised to formally launch in October following the approval of $5 million in financing from the Inter-American Development Bank.

The IDB’s Multilateral Investment Fund said it will provide Argentina-based TGLT Consultores Ventures with $5 million investment along with a $100,000 technical assistance grant.

Federico Weil, who runs TGLT Consultores Ventures along with prominent Argentine real-estate businessman Eduardo Elsztain, said his venture-capital fund seeks to fill a financing gap for small businesses that have been crucial in driving Argentina’s economic recovery.

According to data from TGLT Consultores Ventures, 80% of small businesses – which are known as Pymes in Argentina – finance growth without equity or debt. The need for alternative sources of financing coincides with a longstanding dearth of venture capital in Argentina, where the industry has lagged behind its regional peers.

In 2005, there were three venture-capital deals in Argentina totaling about $260 million, compared with nine deals worth $215 million in 2004, according to Ramona DeNies, research director at the Latin American Venture Capital Association. She was citing figures from industry newsletter Venture Equity Latin America. Brazil, by contrast, had 30 deals totaling $475 million.

Argentina saw some high-tech venture capital investing between 1999 and 2001, but that activity soon disappeared with the economic downturn. For the next several years, private equity deals were mostly focused on distressed assets. Now, with Argentina competing its fourth straight year of powerful recovery, investors are seeing good timing to revive venture capital.