For this reason, Argentina is in first position in Latin America, ahead of Chile, Mexico and Colombia, in terms of the presence of large companies that are actively developing their Corporate Venture Capital (CVC) areas.
The data comes from the report Corporate Venturing Latam 2024which presents an x-ray of the state of CVC in Latin America. It was prepared by Wayrathe Corporate Venture Capital and open innovation area of Telefónica Movistar, in alliance with Global Corporate Venturing, the largest CVC organization globally.
The main difference between Corporate Venture Capital (CVC) and Venture Capital (VC) is that in CVC the investor is a corporation, while in venture capital it is generally about investment funds that bring together independent investors.
Furthermore, in the case of corporate capital, the funds They come from large, established companies that seek to obtain strategic benefits in addition to financial returns.. That is, adding actors that enhance your production chain and allow you to optimize your profitability. It is there where they obtain the most relevant return on their risk investment.
CVC is defined as the “practice in which a large company acquires an equity stake in a small but innovative or specialized company, to which you can also contribute management and marketing knowledge; the goal is to obtain a competitive advantage specific”, according to the Corporate Finance Institute.
In the case of the Corporate Venturing Latam 2024 report, the results show a significant growth in the number of corporations investing in Latin America, with an emphasis on Argentina, increasing their participation in transactions from 10% in 2020 to 15% in 2023. In addition, they went from closing 21 agreements in 2020 to closing 45 agreements last year.
The main sectors that corporations choose to invest in startups
Regarding the sectors in which corporations allocate greater investments, 62% do so in agtech and foodtech, another 62% in transportation, mobility and logistics, and 54% in financial services and energy and public services.
Furthermore, the study specifies that 4 out of 10 corporations links with startups to cover internal needs and establish a type of customer-supplier relationship.
Regarding the reasons that lead corporations to invest in CVC programs, it was found that half consider it a priority to prepare for future disruptions in a long-term horizon.
On the other hand, for 44.7% it is essential create new businesses in a medium-term horizon and for 39.1% support existing businesses in a short-term horizon.
One fact that the report highlights is that 70% of CVCs in Argentina were created as of 2020, which means that their number has tripled from that year to date.
In turn, the majority of CVCs They are focused on early stages of investmentwith 100% investing in seed and 83% in early stage.
On the other hand, the CVCs of Argentina They mainly make their investments in the region (92%), but they also invest in the United States (46%) and Europe (23%).
Added to this information is that, among the tools and strategies that companies use to link up with innovative startups, the most used by Argentine corporations is the CVC.
He is followed by Technology Scouting with 46%, which refers to the active search for technological startups to address the company’s internal challenges.
A relevant piece of information offered by the Corporate Venturing Latam 2024 report is that the number of active corporate funds has doubled between 2020 and 2023making the region one of the fastest growing globally.
According to the report, 80% of CVCs are concentrated in five Latin American countries, among which stand out Argentina, Mexico, Chile and Colombia.
According to the study, 55% of Corporate Venture Capital programs are in an early phase with less than 5 years of maturity, 32% are between 5 and 9 years, and 14% have been created for more than 10 years.
Finally, the study also identifies key challenges for the development of the CVC in the region, such as the need to build solid frameworks, overcome internal barriers and encourage collaboration between the different actors in the ecosystem.
The report included the participation of 46 corporations, of which 90% stated that they were based in five countries: Argentina (25%), Mexico (20.8%), Chile (20.8%), Spain (16, 7%) and Colombia (10.5%).
“Corporate Venture Capital is a study that helps understand the corporate investment ecosystem and its emerging opportunities. The results show a significant growth in the number of corporations investing in Latin Americaindicating a promising future for innovation and entrepreneurship in the region. We are sure that this study will help more corporations decide to structure their own funds, contributing to the growth of the sector,” said Agustín Rotondo, director of Wayra Hispam.
Source: Ambito
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