Startup funding in Latin America dropped sequentially in the first quarter of this year, mainly due to a decline in later-stage investments. Despite this, overall funding remained higher than the depressed levels seen a year ago, with early-stage investments showing signs of strength.

In total, investors put over $800 million into seed through growth-stage deals across Central and South America during Q1. This is about 17% higher than the same period last year, but a 35% decline from the previous quarter, which saw strong late-stage dealmaking.

For context, we’ve highlighted the total investment by stage for the last nine quarters below.

Early-Stage and Seed Investments

Early-stage investments were the standout in Q1, with around $435 million raised. Fintech companies dominated, with over half of the early-stage funding going to financial services firms.

A significant portion of the total came from a few large rounds, including:

• Plata, a Mexico City-based startup offering MasterCard credit cards, raised $160 million in a March Series A round led by Kora, reaching a $1.5 billion valuation.
• Buk, a Santiago-based HR software provider, secured $50 million in a January Series B round led by Headline.
• Paytrack, a Brazil-based business travel and expense management tool developer, raised $40 million in Series B funding from Riverwood Capital in January.
• Mendel, a Mexico City-based corporate expense management platform, raised $35 million in a March Series B round led by Base10 Partners.

While early-stage funding was strong, seed investments fell in Q1. However, we expect final numbers to be slightly higher, as seed rounds are often reported after they close. Some notable seed investments included:

• Niko Energy, a Mexico City-based solar provider, raised $8 million.
• Neofin, a Brazilian B2B payment tech startup, secured $6 million.

Late-Stage Investments

The pace of late-stage dealmaking slowed in Q1 after a strong Q4. Just $281 million was invested in Series C and later rounds, which is above last year’s figures but about a third of the amount raised in Q4.

Despite the slowdown, there were several notable late-stage deals:

• Ualá, a Buenos Aires-based digital banking startup, raised $66 million in a Series E round led by TelevisaUnivision.
• Alice, a São Paulo-based health plan provider for employers, raised $22 million in an extension round in February.
• Turbi, a Brazilian digital car rental platform, raised $12.5 million in a Series D round in February.

Muted Quarter and Slow Exits

The first quarter was relatively quiet in terms of startup exits, though some deals did take place.

On the M&A front:

• Gringo, a Brazil-based vehicle care app, was acquired by Cambridge Global Payments for $172 million.
• xFarm Technologies acquired Check Plant, a Brazilian agricultural software provider.
• Cencosud purchased Vopero, a Mexico-based fashion resale marketplace.

As for IPOs, the quarter was quiet, with no major offerings from Latin American venture-backed companies.

Looking Ahead

Although Q1 saw slower dealmaking, there’s plenty of potential for growth in the coming months. The decrease in activity this quarter leaves room for an uptick in both investments and exits as the year progresses.