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Deciphering LatAm VC: Deep dive into the workings of the Venture Capital ecosystem in LatAm
Deciphering LatAm VC: Deep dive into the workings of the Venture Capital ecosystem in LatAm

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Deciphering LatAm VC: Deep dive into the workings of the Venture Capital ecosystem in LatAm
Given the dynamic and expanding nature of the LatAm ecosystem, Endeavor Chile and IDB - with the support of Nazca - have decided to carry out this study to shed more light on the dynamics at play. Specifically, we’ve decided to focus on the decision-making process of LatAm VC funds to try and better understand precisely where capital is invested and why. To do this, we surveyed more than 100 VCs and asked them how they make decisions about their investments and portfolios, generating relevant data for a base-line that will allow us to continue to monitor the LatAm ecosystem and make interesting follow up studies.

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Endeavor

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Why the study is important if we look at it from the point of view of

VC

This transparency in the decision-making process is beneficial. For one, the more entrepreneurs that understand and meet the criteria for VC investment the more options the VCs have in where to allocate their capital.

ENTREPRENEURS

This is invaluable because to be able to scale-up and make an impact entrepreneurs need capital, and this capital comes from VCs; indeed, a previous Endeavor research effort focused on Chile ranked Access to Capital as the number one challenge in scaling-up. Understanding the exact criteria that Venture Funds use to invest can help entrepreneurs meet those criteria and get the funding they desire.

PUBLIC-POLICY ENTITIES

Understanding what motivates VCs to make certain decisions over others is crucial for designing effective incentives and focus efforts in certain directions.

DEAL ORIGINATION

Funds invest only in 7 out of 200 companies they review over one year

Picture1

The funnel is highly selective: VCs invest in only

3.5% OF PROSPECTIVE COMPANIES

 

Of the deals that make it to the funnel, 

75% OF DEALS ARE REFERRED
BY A
VCs NETWORK:

other VC firms, professional networks, existing portfolio companies, LPs and entrepreneurs in residence.

THIS POINTS TO A COLLABOTATIVE INVESTING ENVIROMENT

DEAL ANALYSIS & MAKING

81% of VCs consider the founding team to be the most important factor when it comes to investing in a startup

LatAm VCS invest significant resources in closing deals

On average, the VCs of our LatAm data sample state that they spend

ADDING VALUE

LatAm VCs are high
touch interacting
with their portafolio

2-3 TIMES PER MONTH

Frequency of interaction with founders In the first six months after making an investment, ¿how frequently do you interact substantially with the founders? (n=63)

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