VC View of China as a Compelling Market for Startups has Declined Significantly While Interest in Latin America Has Increased

Third Annual Venture Capital Survey from Copec WIND Ventures Reveals Shifting Sentiment from US and European VCs

SAN FRANCISCO, April 24, 2023 /PRNewswire/ -- Copec WIND Ventures, the strategic venture capital arm of Copec, a leading energy company in Latin America and the Southeast United States, today announced the results of its third annual survey of the venture capital community's outlook on global growth markets.

Globally, VC interest in China and Southeast Asia declined significantly from 2020 to 2022, with interest in China dropping 74% and 75% in Southeast Asia. During the same timeframe, interest in Latin America increased 142%. The research reveals that the decline in interest in China was mostly driven by US investors, while European investors still view China favorably. US investors are also driving the increased interest in Latin America. 

The research also honed in on specific sectors that continue to show promise in Latin America, with VCs strongly favoring fintech (42%) and being relatively less optimistic about climate tech (18%), highlighting the barriers to getting new energy and climate tech into emerging markets where they are sorely needed. In contrast, VCs strongly favor Climate Tech (45%) in North America.

"Our research made clear that venture capitalists are increasingly understanding the compelling fundamentals of the Latin American market in terms of size and technology adoption readiness, making it an attractive growth market for global startups," said Brian Walsh, Head of WIND Ventures. "Now is the time for innovative global startups to consider Latin America as their next big growth opportunity. In the survey, and in practice, we see differences between North America and Europe versus in Latin America that can make entering Latin America difficult for startups without a strong strategic partner. This is a significant challenge specific to solving climate change that is global in scope. WIND Ventures aims to solve this."

In late 2022, WIND Ventures surveyed venture capitalists from a diverse cross-section of professionals including traditional venture capitalists and corporate venture capitalists. While the majority (70%) of those surveyed were early-stage investors, 15% were growth-stage investors, and 15% were seed investors.

Additional findings include:

• Market size and rate of tech adoption are top considerations for attractive startup growth markets: When measuring attractive growth markets for startup expansion, 47% of VCs surveyed chose market size first, up 23% from 2020, while 25% said a region must exhibit a high rate of tech adoption as most important compared to 28% last year. Other key attributes include:
• Supportive local partners first (13% vs. 15% in 2021)
• High mobile adoption (3% compared to 13% in 2021)
• Large and growing middle-class first (13% vs. 8% in 2021)
• Large urban population (3% this year as well as in 2021)
• The primary perceived challenge for startup expansion into Latin America is perceived to be political (91%), while the impact of cultural differences and COVID-19 have become less important: Only 27% of VCs cited cultural differences as the most important factor in 2022, down from 48% in 2020; and only 3% cited COVID-19 as the biggest challenge, down from 15% in 2020.

"Although VC activity in Latin America has traditionally lagged other regions, investment in the region is about to take off like a rocket, benefitting the Latin American population of 650 million people," continued Walsh. "The nearly $15 billion of venture capital invested into startups in Latin America in 2021 was more than the previous six years of venture investment combined, according to PitchBook. We believe there are opportunities for startups from around the globe to expand to the Latin American market; however, choosing the right markets to target and navigating political elements will be crucial."

The full findings can be found here: https://www.scribd.com/document/635878585/2022-WIND-Ventures-VC-Survey-on-Latin-America-for-Startup-Growth

About Copec WIND Ventures

Based in San Francisco, Copec WIND Ventures is the corporate venture capital (CVC) arm of Copec, one of the leading energy, mobility, and retail companies in Central and South America and one of the most valued brands throughout Latin America. WIND Ventures leverages Copec's significant resources to accelerate growth, primarily within Latin America, for startups and scaleups across the world within the new mobility, energy, and retail sectors. Visit windventures.vc or follow us on Linkedin and Twitter.

Media Contact:
Mary Magnani
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SOURCE WIND Ventures