Dear IGNIA Friends,
The IGNIA team would like to wish you a joyful and festive holiday season. We want to express our gratitude for your unwavering support throughout 2023 and hope the next year is full of prosperity and new opportunities. This is also a moment for us to reflect on the most significant events from the past year.
I. Where We Are:
IGNIA VC Fund I (2016 Vintage)
The global VC funding slowdown and overall macroeconomic uncertainty throughout the year have indeed posed new challenges to our portfolio companies. As our IGNIA VC Fund I founders continue to navigate tough market conditions, we can’t help but feel immense pride towards our companies that are not only weathering the storm, but thriving amidst adverse conditions. The ultimate beneficiary, of course, is the LatAm end-consumer and SME—the backbone of the regional economy. Standout performers include Rapyd, Tiendanube, Covalto, Petlove, Fondeadora, UnDosTres, Finnovista, and GoTrendier during a turbulent and eventful year. Thanks to them, our fund has continued to perform strongly, ranking among the top quartile of Vintage 2016 VC funds globally according to Cambridge Associates benchmarks.
IGNIA VC Fund II (2022 Vintage)
The best startups are forged under fire, and the ecosystem’s current blaze has yielded exceptional founders building extraordinary companies. We are excited to be actively investing in such dynamic times, having made over 14 investments during the past 18 months. Kontempo, Trellis, Fertilidad Integral, nocnoc, Erudit, Worky, and Piper are among some of the recent additions to the IGNIA Family, all led by outstanding, seasoned founders. Despite the challenges ahead, we are more bullish than ever on the drive of LatAm founders. Such market conditions breed discipline into every facet of a company’s DNA, compounding over the long term and ultimately resulting in the most resilient and sustainable business models. In the inimitable words of Scottish philosopher Thomas Carlyle, “No pressure; No diamonds.”
II. 2023 Highlights
Looking back, 2023 was an eventful year. The following are only a few of the moments that made us #IGNIAproud.
In October, we hosted our first edition of IGNIA Insight Sessions, as part of Mexico Tech Week, aimed towards entrepreneurs, investors, and other key players in the ecosystem. Partner Fabrice Serfati moderated a panel discussing AI and Navigating Emerging Tech Horizons, featuring JB Rolland from Covalto, Lorena Sánchez from Erudit, and our incredible host Anibal Abarca from Wizeline. We are excited to host more IGNIA Insight Sessions editions throughout 2024.
During LAVCA Week, Partner Christine Kenna participated in a stimulating and enriching discussion on new investment themes and rising sectors in Latin American VC alongside Lorena Suarez from Alaya, Izabel Gallera from Canary, Alex Busse from NXTP, and Jonathan Whittle from Quona. LAVCA Week is always an incredible opportunity to reconnect with regional ecosystem players, including other GPs and potential LPs, to discuss the immense opportunities in our target region.
Co-Founder and Managing Partner Álvaro Rodríguez moderated a panel on DeFi during South Summit 2023 in Madrid this summer, a great representation of IGNIA overseas.
In August, IGNIA VC Fund I portfolio company Rapyd announced the acquisition of a portion of PayU, the fintech and payments group of Prosus Group, focusing on emerging markets, for US$610 MM. An impressive milestone for the Company, as it continues to expand its global presence.
Erudit’s founding team stands in front of the Nasdaq displaying the announcement of their US$10 MM Seed round, in which we participated back in August.
Partners Christine Kenna and Fabrice Serfati participated in engaging panel discussions during Finnovista’s Finnosummit 2023, Latin America’s flagship fintech event, alongside all-star founders and investors in September.
The IGNIA Investment team at our annual offsite. A great opportunity to strengthen our values, and align our mission and goals with the team.
III. What’s Next: Perspective and Outlook
Echoing perspectives expressed earlier, 2023 was an eventful and challenging year for the VC ecosystem globally, starting with a series of industry-shaking events. Latin America endured similar results, with a significant slowdown in deal volume versus 2022, not to mention against the outlying 2021, reverting to pre-pandemic levels. Regardless, startups continue to get funded in the region, with over 2,616 deals closing so far this year according to LAVCA (versus 2,393 in 2022 and 1,777 in 2021). Startups are managing to secure seemingly scarce capital, under constrained terms, reflecting adjustment rather than decadence. This makes us hopeful that the worst might be behind us, and that 2024 could be a year of recovery.
According to a survey conducted by our friends at Latitud for their 2023 LatAm Tech Report, 78% of founders and 89% of investors anticipate that the fundraising environment will get better in 2024. Pessimism about the fundraising environment has been the common denominator, however it reduced significantly versus 2022. Investors sitting on loads of dry powder will likely accelerate their deployment of capital. Yet, they will remain cautious, supporting companies with the strongest fundamentals and sustainable business models, as opposed to growth at all costs.
We are witnessing Latin America’s dynamic ecosystem come of age. Our pipeline is now riddled with repeat founders, many on their third or fourth venture. This is as good a sign as any of a healthy market where founders and seasoned operators are achieving exits and reinjecting liquidity into the ecosystem via angel investing or by starting another company. Most of these business models build on top of the foundations created by those that came before them. In our own portfolio, VC I PortCo Rapyd’s world-class financial infrastructure powers the underlying architecture of VC II PortCo Kontempo. In short, the realm of what’s possible across LatAm is being redefined every day. The future is now the present.
This year's surge in Artificial Intelligence (AI) investment has garnered much attention, and rightly so. While there's a prevailing skepticism about the tangible value emerging from the influx of funding into AI startups, particularly in saturated markets like the U.S., it's undeniable that AI has become a pivotal element in contemporary technological models. Companies that adeptly harness AI's potential are poised to distinguish themselves, gaining remarkable momentum and creating substantial value. The implications of this shift are profound, surpassing even the monumental impacts of the internet and mobile revolutions. We are at a historical crossroads, witnessing a pivotal moment in the evolving synergy between humanity and technology. The full extent of AI's transformative effects remains elusive, but one thing is certain: we are entering an era of unprecedented and, perhaps, unexpected changes.
The entrepreneurial spirit in Latin America is as vibrant as ever, and the underlying fundamentals haven't changed. The region still boasts a young, tech-savvy population, a growing middle class, a largely unbanked population, a lack of digital solutions for SMEs, frictional service offerings by incumbents, creating a vast untapped market that remain alluring prospects. As we toast the new year, let's embrace the inevitable ups and downs, knowing that the next act in this drama promises to be just as thrilling, and perhaps even more impactful.
As always, we would like to thank all of our partners, investors, and supporters for their continued trust and partnership.
Wishing you all joy, peace, and prosperity in the coming year.
Sincerely,
The IGNIA Team