In the last In recent years, Latin America has become a major growth market for big tech, including Uber, Airbnb, Amazon, Facebook, Coursera and others.
It has also become a growing and vibrant native startup ecosystem. In the region, more than 19 unicorns, several exits and even a billion dollar one-round financing have arisen. However, the coronavirus pandemic has a huge impact on Latin America’s startup activity compared to other regions as measured by activity for the first quarter of 2020 – and this is just the beginning.
Including the United States, Western Europe (WEU), the United Kingdom, China and Latin America, the global startup innovation landscape saw a 27% decrease in Q1 2020 compared to the previous quarter in terms of transactions completed. Providing comfort to venture capitalists and startups alike is that the amount of capital invested has remained essentially constant. The average store size in these regions rose 27%. From a global perspective, the venture capital community did less, but larger, business on average in the quarter in which COVID-19 caused major economic losses.
If we look at each of these innovation centers individually, we see different effects of what is presumably COVID-19 between the fourth quarter of 2019 and the first quarter of 2020. The number of transactions for the USA, the WEU and Great Britain each decreased by around 20% . All in all, quite modest. However, China’s deal count fell almost 50%, while Latin America’s deal count decreased almost 60%.
We also see a strong difference between these regions from an invested capital perspective. The United States, the WEU and the United Kingdom each invested around 28% more capital in the first quarter of 2020 compared to the fourth quarter of 2019, while the invested capital in China and Latin America has decreased significantly. China used a little more than a third less capital and Latin America two thirds less.