By Mariana Cristancho-Ahn
December 8, 2011— The gloomy economic outlook in the U.S. and Europe is encouraging private equity and venture capital investors to look for opportunities in Latin America, and they are already finding good deals.
Investments in technology-related business like e-commerce, software development, and data storage to mobile applications started to take off in the region in 2007, according to the Latin American Venture Capital Association (LAVCA).
Fundraising for private equity and venture capital in the region reached a record of $8.1B in 2010. Chile, Brazil, and Mexico are the top ranking countries promoting the development of entrepreneurial opportunities with a stable regulatory environment.
“There were about 30 member firms in LAVCA in 2007 and today we have over 120 firms. That includes all kinds of global private equity and venture capital firms going into Latin America and lots of local firms that are active across the region as well,” said Cate Ambrose, President and Executive Director of LAVCA in an interview with Univision News after a panel about the 2012 outlook for private equity and venture capital in Latin America.
The panel, organized by the Americas Society/Council of the Americas in New York, gathered technology entrepreneurs and investment firms together to discuss the challenges and successes they have had stepping into this alternative form of investing.
In June 2010, Colombian-born Andres Barreto launched OnSwipe, an online platform that allows publishers to make their content and advertising more accessible and visually appealing on touch enabled devices. Since then, the company has received nearly $6M in funding from private investors. The main operations of the company are in New York but it works with several Colombian and Mexican-based engineers.
“There’s a lot of talent in Latin America and it is cheaper than doing the same things over here, and the opportunity is the same,” said Barreto in an interview with Univision News. “And before there was no capital, and today there’s actually a lot of capital going to Latin America.”
Argentinian Francisco Alvarez-Demalde is the founding partner of Riverwood Capital, a fund that invests globally in technology, but with particular emphasis in Latin America.
“We help companies to really become more global,” said Alvarez-Demalde. “We don’t focus on small size or big size [companies], we focus on the middle [size companies], and Latin America from this perspective is a great region because there’s a lot of economic growth, a lot of entrepreneurs, and a lot of human capital.”
Alvarez-Demalde is also a founding partner of Globant, a software development company based in Argentina that has gained global recognition. There have been rumors that Globant is preparing to get listed at NASDAQ, but when Univision News asked him to confirm the rumors of a potential initial public offering (IPO) Alvarez-Demalde just said that “it is possible,” and that he couldn’t give further details.