Latin America is a giant. Our numbers speak for themselves: we have a GDP that surpasses US$ 5T, over 600 million habitants, and a territory that stretches from Tijuana to Tierra del Fuego.
These big numbers also come with challenges. This could be a deterrent, but we've seen time and time again that it works much like the opposite. Startup founders are diving head-first into opportunities as vast as The Amazon River, finding – to borrow from our friends at NFX – the fast-moving waters that allow them to use technology to build amazing solutions. Not just incrementally better ones, but rather market-changing.
This journey of discovery can be a solitary one, often with unexpected storms.
When the skies are clear once more, how to know if you'll spot a shore to explore? In the first edition of The LatAm Tech Report, we hope to provide new coordinates for your opportunity map.
Take a deep dive into the present and future of seven of the industries that have been gaining investors' attention the most in recent years: Fintech B2B, Fintech B2C, E-commerce, SaaS, Proptech, Healthtech, and Climate tech.
Through data analysis and interviews with 40+ experts in each industry, we aim to answer a few questions:
- What changed in the past few years?
- What are the common threads between segments and business models?
- And what's next in terms of opportunities and challenges?
You can download The LatAm Tech Report in full here (for free, available in 3 languages).
We know you're busy though, and that it's a lot of information to process. Want to save the read for the weekend and get some digestible insights instead? We got you covered.
B2C Fintech: an ample sector with ample opportunities
We all know that B2C Fintech is the apple of the investors' eyes. But The LatAm Tech Report brings the numbers: LatAm total fintech funding hit a record US$ 12.9B across 312 deals in 2021 - and consumer fintech represented more than half of that amount, at US$ 7.2B and 247 deals, per Crunchbase.
Despite this impressive hike, LatAm consumer fintech still only represents about 5.5% of the record total global fintech funding of US$ 132B in 2021. That means we have a lot of opportunities to explore – and players from various segments within B2C Fintech are already on the move.
Here are some of the present and short-term trends by segment in B2C Fintech we talk about more in-depth in The LatAm Tech Report:
- Digital Banks are exploring price comparison, focusing on new demographics (such as Gen Z), and more customized offers;
- Payments & Remittance fintech startups are merging in other categories, such as Digital Banks and Crypto;
- And Wealthtechs see a bigger demand for alternative assets and for transforming investments into a more social experience.
B2B Fintech: an ever-growing opportunity
B2B Fintech might not be as talked about as B2C Fintech – but let's remember it takes the rest of that huge pie of fintech investment.
Having consumers with new digital habits means that companies need to adapt to maintain and expand their market share. And they might need the help of B2B Fintechs for that.
Here are some of the present and short-term trends in B2B Fintech presented by The LatAm Tech Report:
- Facilitate payments-as-a-service and B2B payments, taking the expanding e-commerce market into consideration
- Expense Management, Accounting, and Procurement software, especially for unbanked SMEs;
- Infrastructure and API-based software while leveraging Open Banking, and having special attention to the embedded finance trend.
E-commerce: its most recent boom is not enough
E-commerce is also an industry that has taken the spotlight in the last few years. While it leaped because of the isolation brought by covid-19, e-commerce still has a lot of room to grow in Latin America.
The LatAm e-commerce market is still only 19% of the size of the US market (US$ 538B) and 8% of the Chinese market (US$ 1,344B). Startups in the region are already on the move to fill that gap with innovation (cheers to that!).
Here are some of the present and short-term trends in E-commerce brought to you by The LatAm Tech Report:
- The cross-border market has a rising relevance, but it's still 11% of the total retail e-commerce market in LatAm;
- Digital goods and services are the new thing in e-commerce. Items like video games, e-books, and streaming already take 45% of the e-commerce sales in Brazil;
- And Social commerce is also a trend on the rise, replicating China's success with cases such as Pinduoduo. Latin Americans' willingness to share their life on social media and the tendency for high mobile engagement as a whole urges e-commerce companies to look at the social commerce potential.
SaaS: more and more decentralized
SaaS is a global market by definition – and while the US is home to 80% of the top global SaaS companies, the market is getting more and more decentralized. Some of the capital is flowing to Latin America and enabling new leaders in SaaS.
In the LatAm Tech Report, we even show which segments already have strong local players, and which ones still have weak local players, in the Latin American SaaS market.
Here are some of the present and short-term trends in SaaS you can find in The LatAm Tech Report:
- The global market size of SaaS is expected to reach US$ 171.9B by 2022, according to Gartner. This would represent an impressive 24% CAGR since 2015. For LatAm, we expect this number to be even higher. Annual SaaS spending in Brazil, by far the market leader in LatAm, was € 1.5B in 2020, around 1.6% of that of the USA. By 2025, the SaaS market size in Brazil is expected to triple to € 4.5B;
- Gone are the days when IT departments selected technology for the entire organization. The use of SaaS is widespread across all departments. The SaaS apps with the most growth are in IT & Security, Customer Support, and HR. On the flip side, trying to control and track how technology is used in the company can create a headache for IT departments;
- The effects of the pandemic: remote working bolstered enterprise cloud solutions ranging from Cybersecurity (Auth0 acquisition, Unico’s large round) to ERPs (Omie, Conta Azul). Also, e-commerce enabler SaaS companies, such as Nuvemshop and Olist, gained important momentum after the pandemic - both raised large rounds and became unicorns in 2021.
Proptech: lots to do in a trillionaire market
Proptech is a trillionaire market, worth US$ 9.6T globally. But it still has a lot of opportunities for disruption.
Remote work has created new trends, such as the boom in the search for suburbs and amenities. The growing development of technology also brings to light longer-term opportunities, such as delivering more efficiency to the construction segment.
Here are some of the trends and opportunities in Proptech presented by The LatAm Tech Report:
- The integration of work and leisure is creating a demand for houses in suburbs and more amenities and services inside properties. The integration of work/life/play is creating a new need for amenities and greater services in their offerings, said Clelia Warburg Peters, partner at Bain Capital Ventures, in the LatAm Tech Report.
- Proptechs still need to explore the commercial real estate market. There is a big opportunity for mortgage and rental solutions in this space, according to Marcos Leite, General Manager at ZAP+.
- Likewise, construction is also a market to explore. There are multiple opportunities for the development of models that enable all parties involved in a construction project to better collaborate, for instance, on order management, say Julian Roeoes and Santiago Danino, from Picus Capital.
Healthtech: investments are here to revolutionize healthcare
In Latin America, healthtech companies grew their venture funding in a more accelerated rhythm than startups in general. Healthtech has grown its annual funding by 4700% between 2015 and 2021, while startups, in general, have grown by 1800%.
An aging population and a mostly inefficient public healthcare systems open opportunities for healthtechs in Latin America to innovate and provide more access to healthcare services.
Here are some of the present and short-term trends in SaaS discussed in The LatAm Tech Report:
- Telemedicine had a boom during the pandemic and it's still going strong. It provides health services virtually using professionals in order to prevent, diagnose, and treat different diseases. Telemedicine allows people in areas with difficult access to have the possibility of obtaining a quality health service. In addition, by removing distance as a limiting factor, you can have greater cost efficiency and a high level of assistance.
- Likewise, Mental Health has become extremely necessary nowadays, especially after the impact of the pandemic on our lifestyles. Mental Health platforms have become indispensable as a way of improving people's life quality;
- And healthtech startups in the sector of Health Insurance offer access to comprehensive plans, that are easy to purchase and with transparent terms.
Climate Tech: huge importance and lots of opportunities
There's no sugarcoating it. Climate change will have a disproportionate impact on LatAm: there are exacerbating devastating consequences for Latin America more than for other regions of the world.
Even with that massive importance and a growing interest from investors, Climate tech is still a nascent segment in the region. At The LatAm Tech Report, we focused more on its opportunities rather than the few actions taken currently in Latin America (that range from paid protection of ecosystems to carbon sequestration).
Here are some of the medium and long-term opportunities in Climate Tech as listed by The LatAm Tech Report:
- Agricultural technologies, or agtechs, have a huge potential impact in LatAm. There are over 130 million farms in Latin America and the Caribbean (LAC), where 46% are smallholder farmers. Opportunities in the segment range from agfintech solutions to facilitating the commerce of surplus food.
- The falling demand for fossil fuels will contribute to the decline of oil revenues in the region, and open the space for climate techs focused on renewable energy. 10 countries in LatAm have already committed to a collective regional objective of 70% of renewable energy in their matrices by 2030 (Organización Latinoamericana de Energía).
- LatAm has the potential to easily gather data and test with big amounts of samples. This represents a competitive advantage for the development of tools that improve our understanding of nature, by using AI and machine learning. One example is machine vision technology, paired with big data and artificial intelligence, to develop monitoring that could help us decide in pro of conservation of our biodiversity. Other opportunities include improving prediction on electricity; discovering new materials; optimizing supply chain; and helping making more efficient buildings.
Go deeper into all 7 industries and take note of your own insights. In The LatAm Tech Report, we disclose how we got to this point and where we go from here, by pointing out more opportunities and challenges in the medium and long term for the region's tech ecosystem. Download the report here, or through the form below: