Why look out for a USA exit strategy!

If you are a founder or part of a startup team in Latam, you should be looking into the US market as your way to begin a path for a growth or exit strategy in the USA. There are several advantages for Latin American (LATAM) tech companies to exit in the USA. Start by having access to a larger market; The USA offers access to a significantly larger market compared to most LATAM countries. This allows tech companies to scale their operations and reach a broader customer base. Access to capital is another great reason why the USA has one of the most developed and sophisticated capital markets in the world. Tech companies can access a wide range of funding options, including venture capital, private equity, and public markets with clear vertical focus, which may be more limited in LATAM. And when thinking of strategic sell, you will be faced with a lot more potential buyers helping you create a competitive bidding environment to raise your valuation numbers. The M&A Opportunities are much stronger given the number of large tech companies that are actively looking to acquire innovative startups or middle market tech companies that will solve their innovation and growth challenges opposed to developing in house solutions. In addition, Latam Tech companies will be able to scale a lot faster not only because of the market but also because of the Tech Ecosystem and Talent Pool available. The USA has a vibrant tech ecosystem with access to top talent, mentors, advisors, and potential partners. Being part of this ecosystem can provide valuable resources and support for growth and innovation.

Looking into the future of a company and the follow-on investments, having a US based company will enhance a company’s brand recognition and credibility, both domestically and internationally which can be especially beneficial when expanding into new markets or attracting customers, investors and partners. This will help exit options including IPOs, acquisitions, and strategic partnerships. Having multiple exit options can provide flexibility and liquidity for founders, investors, and employees. As much as venture capital and private equity are a great way to access capital you should always keep on the radar Corporate Development better known as Corporate Venture Capital. Corporate venture capital can be a valuable source of funding, strategic support, and growth opportunities for LATAM tech companies, helping them overcome challenges and unlock their full potential in the global market. The exit landscape for tech companies in LATAM has been evolving, though it still faces some challenges compared to more mature tech ecosystems like those in the USA or Europe.

Acquisitions have been a common exit route for LATAM tech companies. Larger corporations, both within the region and internationally, have been acquiring startups to gain access to talent, technology, and market share. However, the number of significant acquisitions by global tech giants or companies outside the region has been relatively limited compared to other regions; IPOs have been less common in LATAM compared to other regions. A few tech companies from the region have successfully gone public on stock exchanges like Globant in 2014; Despegar in 2017; StoneCo and PagSeguro in 2018. One of the great opportunities for founders and entrepreneurs is access to a mature investment environment that will provide liquidity for a secondary market where early investors or employees sell their shares to other investors or acquire secondary liquidity through private transactions. Another great opportunity available by looking into the US Corporate landscape is pursuing Strategic Partnerships and Joint Ventures with larger corporations as a means of achieving growth and accessing new markets. Even if it does not result in a traditional exit it provides valuable resources, distribution channels, and market access.

Overall, the venture capital landscape for tech companies in LATAM has evolved rapidly, driven by increased investor interest, the emergence of local and international funds, and supportive regulatory environments. While challenges remain, such as access to follow-on funding and talent retention, the future looks promising for the region’s tech ecosystem. This is why we are strong proponents of cross-border M&A and we see a great opportunity with the talent and potential of Latam Tech companies.