According to the results of a survey conducted by the Brazilian Private Equity and Venture Capital Association (Abvcap) in partnership with KPMG covering the first nine months of 2021, it appears that investments by venture capital funds reached an all-time high of R$33.5 billion. By comparison, this volume is three times higher (205%) than the amount invested in these companies in the same period last year.
Also according to the survey work, the number of startups that received funding this year is also a record.
109% increase in venture capital investments
According to the study conducted by Abvcap in collaboration with KPMG, the number of startups that received investments in the year to date is also a record: 226, compared to 147 a year ago.
In the third quarter of 2021, venture capital investments totaled R$ 11.1 billion, an increase of 109% over the same period in 2020. Between July and September, 85 companies were invested, against 66 in the same period last year.
On the other hand, the investments of private equity funds fell 27% in the year to September, to R$ 4.5 billion, compared to the same period of 2020. In the third quarter, however, there was an increase of 29% compared to the same period in 2020, to R$ 2.2 billion.
In the first nine months of 2021, the number of companies invested in private equity was 13, compared to 48 a year earlier. In the third quarter, there were only three companies, compared to 13 in the same period of 2020.
Brazil as a hub of differentiated entrepreneurs with high success potential
Venture capital focuses on emerging companies with high growth potential, while private equity focuses on consolidated companies. Adding both modalities, the investments reached R$ 38 billion in the year to September, an increase of 121% compared to the same period in 2020. In the third quarter, these investments were R$13.3 billion, an increase of 90% over a year earlier.
The disinvestments of private equity and venture capital funds reached R$16.9 billion by September 2021, an increase of 42%. In the third quarter, these divestments totaled R$4.3 billion, a 40% drop when compared to R$7.2 billion a year earlier.
“Despite political noises, legal insecurity and economic uncertainties, Brazil is experiencing the biggest wave of entrepreneurship in its history,” says Piero Minardi, president of Abvcap, in the note. “Long-term capital from the private equity and venture capital industry has been a protagonist of this movement by supporting companies with financial resources, sectorial knowledge, management improvements and access to capital markets.”
According to Roberto Haddad, partner leader of private equity and venture capital at KPMG in Brazil, the latin country is already considered one of the main global hubs of differentiated entrepreneurs with high success potential. “And private equity and venture capital funds are the main responsible for making these businesses flourish and take off. Knowing that money is available for venture investments in new companies stimulates entrepreneurship in every corner of the country,” it says in the statement. “In addition, around the world the pandemic has required new technological solutions and the expectation is that these changes are here to stay, which makes digital companies even more attractive.”
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