The report, which considers the period 2010-2019, shows how the local VC industry has been maturing and acquiring an increasingly relevant role in the development of Chilean startups.
In an effort to systematize industry data, the Chilean Venture Capital Association (ACVC) released its first report on the activity of investment funds, startups and associated companies.
The study analyzed 90 startups, 18 investment funds and 243 deals, between 2010 and 2019. One of the main conclusions obtained was that although until 2017 there was no clear trend towards an increase in Venture Capital (VC) deals, from that year onwards they began to grow explosively.
Between 2017 and 2018 closed transactions were 29, while only one year later, between 2018 and 2019, a total of 59 were executed. While the average number of transactions for the period 2016-2019 showed a growth of 82.7%.
"The panorama is changing significantly, since it is not just a matter of a few companies that achieve success and internationalization, but rather a real investment ecosystem that promotes the sustained growth of this type of companies," says Francisco Guzmán, president of the ACVC. Among the most outstanding examples are Cornershop and The NotCo, but there are also several others less mentioned that are a contribution to the technological development of Chile and the world, he adds.
One of the explanations for this phenomenon is the creation, during the period under consideration, of new Venture Capital funds supported by the recently established Corfo lines. This made it possible to accelerate the financing of young companies and laid the foundations for the growth of the VC industry.
The analysis also revealed a significant difference in the amounts of the financing tickets. Ninety percent were under US$500 thousand, while only the remaining 10% were above this amount. Of the latter, only 1% was above US$5 million.
Although this is understandable given the incipient state of development of the ecosystem, this should change. The natural evolution is an inverse distribution, i.e. 90% of the total investment should be allocated to tickets over US$1 million and only 10% to early stage deals.
As for the type of startups, e-commerce startups received the most VC funding (35% of the total). Meanwhile, companies in the scientific-technological area have begun to gain strength. The Healthtech/Biotech and Agtech/Foodtech industries alone accounted for almost 25% of the investment.
Regarding sales, despite the fact that fintechs ranked fifth in investments, in 2019 their sales locally exceeded by more than 12 times what was invested in them that same year. The increase in the number of companies in the sector, the growth in investment obtained between 2018 and 2019, and their sales abroad, which reach 65% of their total turnover, would be the reasons for the phenomenon.
While the overall sales of the startups studied correspond to almost twice the aggregate investment, with a ratio of 1.87 times, their global sales have had a strong increase, coming to represent in 2019 almost twice the local turnover with 570 million dollars.
Download the study here