SoftBank led LatAm’s rise, and its retreat

On Aug 1, 2022

Venture investing in Latin America is correcting quickly to pre-pandemic trends after enjoying an unprecedented run in 2021, illustrated by the pullback of the region’s most prominent champion: SoftBank.

The Japanese firm is a notable example of a retreat among investors that last year pushed startup investment in the region to new highs. Since 2019, SoftBank was involved in more than a third of LatAm VC deals by value and was a lead investor in 15% of them, according to PitchBook data.

VC investment in LatAm fell to $2.04 billion in Q2 2022, a 71% decline from a quarterly high of $7.12 billion in Q3 2021. SoftBank participated in LatAm VC deals worth $1.57 billion in the first half of 2022, down from $4.31 billion in the preceding two quarters.

The decline of investment in LatAm is more pronounced than that of more well-established regions like the US and Europe.

SoftBank has established itself as a preeminent investor in LatAm unicorns, with a portfolio that includes car marketplace Kavak, real estate specialist QuintoAndar and fintech lender Creditas. Along the way, it has helped to validate the destination for other global VCs.

International investors flooded into the region in 2021, with more than 1,100 unique nondomestic investors completing a deal, nearly double the number recorded in 2020, according to PitchBook data. Ribbit Capital, Tiger Global and DST Global are among the other prominent international VCs that have actively targeted LatAm startups.

Following a sell-off in global tech stocks, SoftBank has taken a more cautious strategy to startup investing. The firm has also lost key personnel who oversaw its strategy in the region.

Marcelo Claure, who led SoftBank’s efforts in the region, left his role as COO in January. Claure plans to deploy his $2 billion fortune in real estate, technology, gaming and crypto, Bloomberg reported.

Paulo Passoni and Shu Nyatta, who served as partners at the Latin America Fund, departed in April to launch their own firm. Nicola Calicchio, tasked with steering strategy in the region, left in January.

SoftBank has also changed the structure of its LatAm funds, which are now part of the Vision Fund group, and it created an independent firm, Upload Ventures, to run early-stage investments in the region.