Valuations of startups in Latin America will be recalibrated in the following months: Endeavor

At least until the end of 2021, the unicorn startup in Latin America were worth an average of 18 times their annual income, which reached 150 million dollars ─also on an annual average─, according to the report Ecosystem of Venture Capital and Growth Equity in Latin America, prepared by Endeavor Mexico and the background Glisco Partners.

If you take into account that unicorn startups in Latin America have average income of 150 million dollars a year, the multiple of valuation to income or sales is around 18x, which means that a company would have to maintain that income for at least 18 years to reach its current market value.

Vincent Speranza doesn’t know if this multiple means the startups were overvalued, given the environment of high inflation and rising central bank interest rates. For the director of Endeavor in Mexico, something like this can only be known in the future. However, he finds that the Latin American entrepreneurial ecosystem is going to rethink whether it is sustainable for a startup to have an ever-increasing valuation without having the necessary fundamentals.

“I believe that the investment issue is going to be recalibrated in the following months, mainly in valuations. They are going to have to focus on the teams, on the unit economics, on the path to profitability and see if their plan is credible and if it is, then the value of the companies is going to continue to grow,” he said.


After receiving more than $700 million of investment in 2020 and 2021, the Mexican used car trading unicorn Kavak reached a valuation of $8.7 billion. The Colombian Rappi received, until last year, 500 million dollars and has a valuation of 5,250 million dollars. Therefore, Latin American unicorns have a valuation that, on average, is six times what they have received as investment, according to the Endeavor report.

The readjustment of the valuations proposed by Speranza will imply that the investment rounds in the near future are at par or below those that have taken place in recent years, when only in Mexico there have been 32 mega-rounds. A hypothesis confirmed by Hernán Fernández and Camilo Kejner, from Angel Ventures (AV), one of the main Venture Capital funds born in Mexico and oriented to the Latin American market.

AV’s founders and directors believe the post-series B rounds, which have topped $36 million, will be gone for at least the next 18 to 24 months. Most of the investments that will occur in the medium term will be focused on seed series (Seed) or series A, which are around 2 to 9 million dollars, that is, they will not be very large, but there will be several of them.

Local and regional funds to the rescue

The main source of venture capital that arrives in Latin America is abroad, since 62% of the shares in Latin American Venture Capital come from funds outside the region. It is in the flow of this capital, of which 47% comes from the United States, where both Endeavor and Angel Ventures see a fall that is already having consequences, among which is the freezing of series B or higher rounds.

Local and regional funds will be the ones that will be among the startups that require help to start or continue in an adverse environment.

Especially if one considers that the capitalization of the funds of Latin American countries such as Mexico, Brazil, Argentina, Colombia and Chile, is estimated at around 1,000 million dollars, according to Enrico Robles del Río, director of Intelligence of Endeavor Mexico.

Camilo Kejner, from AV, has come to observe valuation multiples of up to 150 times the income of startups in Latin America, which indicates that the value of some of these companies is well above that of other companies that compete in the same verticals. However, the investor thinks that there is still room to grow within the startup ecosystem, especially considering that, according to the analysis of Endeavor and Glisco Partners, without taking into account countries such as the United States, China or India, America Latin America should be receiving between 17 and 21 billion dollars a year, while Mexico has the potential to receive 6.5 billion dollars from Venture Capital from the 3.7 billion it received in 2021.

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