VC Market in South America
Efraim Landa is the founder of Effi Enterprises which is one example of the many venture capital firms in existence today. Effi Enterprises works closely with emerging businesses to help them secure funding for growth or improvement. They also offer venture capital opportunities to businesses that develop technologically advanced health care equipment. Efraim Landa is an entrepreneur and understands the obstacles and difficulties faced by those needing funding to startup or expand their business. Venture capital firms have been in existence for a very long time and are presently having more of a global impact. VC in South America has drawn from other regions of the world such as the US and Europe.
History of VC in South America
VC investing began in South America in the 50s; but similarly to Europe they did not experience noticeable growth until the mid 80s. According to some experts, venture capital in South America is divided into three major phases: the 1980s to ’95, 1995 to 2005 and from 2005 to the present time. In the 80s there was a relatively solid rise of venture capital firms. There were many challenges and long term investments did not find an economic environment that was conducive to their productivity. There were very high interest rates and inflation during this time. Short term investments did relatively well during this time as one day could bring about major changes. After 1995 VC in South America began to improve as interest rates and inflation were both lowered. This helped create a better economic environment for entrepreneurs which helped to give venture capital firms more investment opportunities. Since 2005, VC funding has grown and there have been many more IPO’s which along with the improved stock market make for a very good combination for investment firms.
The Current State of VC in South America
Venture capital firms have been investing in the South American market for some time partly due to the economic opportunities. But the policies in the region also have a lot to do with making it an inviting market for VC investors. In the last few years, investing has become very popular and many venture capitalists are concentrating on investing in entrepreneurship that fosters environmental improvements. In 2002 the Latin American Private Equity & Venture Capital Association began bringing together industry leaders and global investors. They also partner with the Mexican Private Capital Association and the Brazilian Venture Capital Association to present various VC possibilities to investors. The organization is in place to create and support interaction between the VC industry and entrepreneurship in Latin America. They work with other venture capital firms and organizations which can assist the economic development of the region.
There are presently many VC investors who are turning their attention to the South American market. And several of them are investing in the Latin American market. Investors have been focusing on Brazil and Mexico but are beginning to look further into other possibilities in the region.
Future Outlook for VC in South America
The outlook for venture capital endeavors in South America is looking very good; from 2009 to 2010, funding through VC and PE more than doubled. Chile, Mexico and Brazil remain the most favorable economic climates for investors. When compared with some of the other global markets, South America is a new frontier. This is due to the fact that there is a high need for the region’s government, financial institutions and regulatory agencies to support entrepreneurship. There is reportedly a high growth rate of entrepreneurship in the region which is encouraging to venture capital firms who are looking for profitable investment possibilities. The future of entrepreneurship and VC in the region is very positive and more instances of collaboration is occurring between venture capital firms in the US and entrepreneurs in South America.
Posted on January 21, 2013, in Business financing, economics, financial history, investing, VC financing, Venture Capital and tagged business financing, VC market, Venture Capital. Bookmark the permalink. 1 Comment.