Technology sector grows in Latin America
A more sophisticated capital, the rise of electronic commerce or business needs are some of the key points of this emerging market
Latin America has enormous potential for growth and investment for the development of the technology sector in the region, being a market that is receiving increasing attention from investors around the world.
This is one of the main conclusions of the report ‘Latin America – a technologically emerging region’, prepared by GP Bullhound, which distinguishes some factors to take into account when looking at the region, such as the rise of electronic commerce, the needs of companies in digital matters or the existence of sophisticated capital, which is reflected in great financing opportunities.
In figures, Latin America adds from 2015 to 2022 more than 35,000 million dollars (32,300 million euros) in investments in the technological branch, at the same time that more than 30 companies listed on the Stock Exchange operate in the region and around 50 unicorns.
However, as a region, the activity of the technology sector is not homogeneous, but rather there are two very different ecosystems. On the one hand, Brazil is considered the largest and most mature market with its own dynamics. They are followed by Mexico or Colombia, which are making great strides and could be considered the next contenders in the fray, catching up “quickly.”
These three countries concentrate 40 % of the 8,000 million dollars (about 7,390 million euros) invested in Latin America in 2022. Meanwhile, on the other hand, there are the rest of the Latin American countries that, despite having an ecosystem less technologically mature, they are following the model of Brazil, influenced by its success story. Thus, a rapid contagion effect is taking place.
Despite the fact that 2022 was a year “of many changes”, GP Bullhound remains optimistic regarding Latin America and identifies a series of key points when defining the technological landscape such as the financing gap, the business models of the region or the promotion of certain technological trends.
Digital commerce brings confidence to the region
Digital commerce has also seen rapid growth in recent years, fueled by growing consumer confidence in online shopping, internet penetration, and a growing middle class. The lockdown policies caused by the pandemic also drove Latin American consumers to online markets.
It is estimated that the Latin American e-commerce market is valued at 84,000 million as of 2021, and could grow around 8.6% annually, reaching 117,000 million by 2025. The proliferation of mobile technology has meant a benefit for this sector. Mobile devices now account for 59 % of total eCommerce sales. One big element was the pandemic, with millions of people embracing e-commerce over in-person shopping.
While mobile device penetration varies by country, in Latin America overall it has remained constant at 69 % since 2019. It is expected to rise to 73 % by 2025 in the region, reinforcing the consumer and investor appetite for the digital commerce sector.
(Reference image source: ThisisEngineering RAEng, Unsplash)
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