Latin American Venture Capital

One of the emerging stars in global venture capital and private equity investing is Latin America. At last years 5th Annual summit of the Latin America Venture Capital Association (LAVCA), the more than 100 international fund mangers attending proved this point.

Latin American has been struggling to overcome some bad public relations issues. The truth is that the bad press of the past was mostly well deserved. The region seemed to have very little that would attract venture capital, unless it was a dangerous and illegal interest in drugs. This has changed very much in the last couple of decades. The major areas of improvement have come in the area of government stability that has led to regulatory reform and an increased tradition of entrepreneurship. Latin American venture capital interest is not surging.

At the LAVCA meeting last year, the tone was high optimistic. It was reported that venture capital and private equity investment activity in the region increased by 400% in 2006 with almost $4.25 billion dollars invested. It was generally agreed that the area was moving in a very positive direction. The major area of improvement was in the local segment that is so important in attracting foreign investment.

The local IPO market is a good example. There must be strong local fund raising potential to attract outside investment. It is only when the local population has a strong vested interest in the economic stability that foreign investment is safe. This has been what has changed the picture of Latin American venture capital so drastically. It is really the increased local participation.

private equity and venture capital firms

Although it would not be completely accurate to term Latin America as an under developed region of the world, it does represent an area of great untapped potential. It is this fact that makes it so attractive to international venture capital fund managers who see an opportunity to get in on the ground floor as the region moves toward the future. Political instability and isolation were the main factors holding it back. The movement toward a more global marketplace has helped propel it into a rich source of opportunity.

It will be interesting to watch this region in the coming years. There is already an increasing sophistication being noted among local fund managers. Today, Latin America seems to be an excellent hunting ground for international venture capital opportunities. In the near future, it might be likely that Latin American venture capitalists might be viewing the United States and Europe in the same manner.follow her latest blog post for more details.