Seed Capital in 2013: The Most Active Investors and the Landscape in LatAm

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A look at the most active players in seed capital in 2013 and the panorama for the issue in Latin America.

Accessing capital is among the biggest challenges entrepreneurs face, chasing after investors and trying to convince them that their projects are really worth it. And seed capital is a fundamental piece of the puzzle in strengthening ecosystems. When it’s missing, entrepreneurship rates take a huge dive.

According to a CB Insights report, 2013 was a good year for seed capital in the United States. It was largely driven by micro VC funds and multi-stage venture firms, which maintained active portfolios throughout the year. According to the report, in 2013, 112 businesses invested seed capital in startups – similar to what happened in 2012 and a major improvement over 2011 and 2010.

Here’s a look at who’s who in seed capital in the States:

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What’s Happening in LatAm?

There’s no doubt that Latin America’s early-stage tech ecosystem has undergone a notable amount of growth, strengthened by tools and mechanisms that favor the creation and consolidation of startups.

But let’s take a closer look. In 2013, OCDE released a study on promoting innovation in the region to analyze the startup investment scene.

Unsurprisingly, Chile and Brazil have more complete systems in terms of startup management and financing. While the report delves into investment throughout the startup lifecycle, in this case, we’re going to focus on the seed stage.

Here are a few notable finds:

Argentina: Things are going well in terms of support and seed capital in the early stages of a startup. With respect to expansion needs, regulations and financial tools are lacking. The report highlights an interesting point in the creation of sector-specific funds and the quality of scientific investigation and dynamic sectors as related to the management of new companies (areas like biotechnology, design, software).

Brazil: In Brazil, there’s more balance in both management and expansion. The barriers? Aspects like infrastructure, such as internet access in some areas. Regulatory framework is still scarce, and entrepreneurship rates remain low. However, technological parks have a major role in connecting research and business, and states and cities are pushing for more startups to be created.

Chile: With an economic vision projected on a global scale, Chile has been extremely successful in fostering a startup ecosystem. The pillar has been its homogenous focus on distinct levels, such as financing (seed capital and expansion), business skills, legal framework and expansion. The country faces other challenges, like growing venture capital and angel investment.

Colombia: With iNNpulsa Colombia, seed capital and new entrepreneurs have come front and center. Local governments have proven fundamental in driving activity, and the National Development Bank (BANCOLDEX) is a major player in supporting the country’s venture capital sector.

Mexico: While policies have improved the legal landscape for starting a business, a complicated system for accessing credit renders the scenario tough.

Peru:  This one is definitely a surprise in the region, as the country continues to demonstrate that it is more than willing to roll out public policies that stimulate the creation of new companies. Start-Up Peru is poised to have a major impact in terms of seed capital and consulting, and Wayra Peru is a valuable asset, too. The coordination of public and private actors and the growth of seed capital are two issues that have to be addressed in the country right now.

See below a comparison of the state of startup support in Latin America (in Spanish):

startups-america-latina-comparacion-paises

This text has been adapted and translated by Emily Stewart from its original Spanish publication

About the author

Clarisa Herrera

Communications professional and journalist specialized in marketing, branding and media analysis. Professor of journalism and communications. Investigator of trends and behaviors with relation to business. Content editor. Twitter @theguapa