Latinx-led Startups Are Flying High🦄
Every company goes through at least three stages of development, during which the amount of funding they receive makes or breaks them at some point. The majority of businesses obtain millions of dollars in funding, with the goal of increasing their investments to tens of millions of dollars. However, the “technological unicorn” — the rare and magical beast; the startup whose value soars into the billions — appears out of nowhere. Airbnb, Facebook, and Uber are all examples of technological unicorns. Now, Latinx leaders are producing their own unicorns, whose visionary brilliance is sweeping the globe.
Hot Latinx Startups to Watch🔥
In recent years, there has been an unusually high number of unicorn sightings led by Latinx in Latin America and the US. Latinx unicorns — privately held startup companies valued at over $1 billion — are becoming more and more common. Though valuing early-stage startups might be difficult, it’s anticipated that the number of Latinx unicorns has increased from a few in 2017 to roughly 15 by the end of 2019. And in 2020, at least five firms in Brazil achieved unicorn status, trailing only the United States and China in rankings.
Creating a Unicorn is a Tall Order.
Aileen Lee, a venture capitalist, created the phrase unicorn in 2013, referring to the 39 digital companies (formed after 2003) that had earned a $1 billion valuation at the time. Cowboy Ventures, Lee’s business, discovered that just about 1 in every 1,538 of these startups made it past the first round, making them almost as rare as… a mythological creature! Popular site Crunchbase, currently has over 600 private unicorns, however, this is still a small percentage of all startups.
The increase is partly due to an increase in the number of startups and investors, which has been spurred by disruptive technologies (smartphones, online marketplaces, the ‘cloud,’ and so on) and a burning desire to be the ‘next great thing.’
According to the Latin American Association for Private Capital Investment (LAVCA), venture capital investment in the region nearly doubled each year from $500 million to $4.6 billion between 2016 and 2019. Identifying a tech unicorn can be very easy in Latin America. If you ever visited Bogota, Lima, or Mexico City, you might have used Rappi for food deliveries or anything in between. Rappi is an example of an unicorn with great market traction. And that doesn’t stop there. FinTech has become a focus of startups with the emergence of Bitcoin and some of the most valued companies currently operate in this sphere. So some of the hottest unicorns in Latin America right now are in FinTech.
Here in the USA the story is no different and Latinos account for the largest share of new small businesses opened. Checkout this Airtable list of companies that have raised over 1 million in funding. Who knows, maybe one of these companies will become a unicorn one day too!
Other Latinx-led Startup Unicorns to Watch
Founded by Brazilian Cesar Carvalho, Gympass is an apt name for a company that gives firms and their employees access to the world’s largest global network of fitness facilities (over 47,000!). Carvalho says that he had enrolled to pursue an MBA in the US but saw his business grow so exponentially that he had to drop out and focus solely on it. Today, Gympass intends to have a positive impact on the cultures of companies that utilize their software, resulting in “more active and productive employees and organizations.” Gympass presently operates across the hemisphere with plans to expand into additional nations and has achieved over a billion dollars valuation recently.
As Rappi continues its immense growth across the south cone, in cities such as São Paulo it is met with high competition from iFood.
iFood, which is now considered Brazil’s largest delivery startup, allows consumers to order their favorite foods from local eateries using an innovative and user-friendly interface. With over 70% of Latin Americans having access to the internet, a stunning amount of individuals desire to buy food online! iFood also competes with UberEats, a well-known North American firm you may be familiar with.
Argentinians have also led some companies to massive unicorn status (take eCommerce giant MercadoLibre). Auth0, led by Argentinean-American Eugenio Pace, specializes in digital security. Auth0 also operates in the UK and Latin America. It bills itself as a “new method to solve identity” for app developers who work on the web, mobile, and IoT apps (the internet of things). For firms who seek to combine the authorization process for numerous unrelated systems, they provide a universal identification platform.
More to Come…
Despite the Covid-19 pandemic’s broad destruction and disruption in 2020, there is reason to believe that good things are on the way. The SoftBank Innovation Fund (SIF) launched in 2019 is the largest-ever technology fund focused exclusively on the fast-growing Latin American market, and it is already shaking up the region’s venture capital scene.
To Sum Up
The developing economic panorama in our hemisphere has prompted a frenzied and astonishing increase in investments from some of the world’s wealthiest financiers and shareholders in recent years.
In Latin America countries such Brazil, Mexico, and Colombia, are attracting billions of dollars to their local economies through technological, financial, and software-as-a-service advancements. In the USA, Latinos are coming into the spotlight from underserved individuals to leading global companies contributing millions of dollars and providing jobs.
Latinx-led startups are indeed flying high, so watch out for some unicorns popping up everywhere 💸.