Deep Tech is Poised for Rapid Growth in Latin America and the Caribbean. A report suggests that investment in deep tech startups in Latin America and the Caribbean (LAC) has the potential to increase twentyfold.
Bloomberg contends that the forthcoming Tesla Gigafactory in Mexico should be viewed as a significant milestone for Mexican manufacturing. Additionally, there is optimism that the CHIPS bill, championed by President Joe Biden to boost semiconductor production in the U.S., will also have positive effects on Mexico.
Deep Tech is Poised for Rapid Growth in Latin America and the Caribbean
The potential for new factories and additional job opportunities is positive for Mexico. However, a new report suggests that Mexico and its Latin American and Caribbean (LAC) counterparts can have even greater expectations in the field of deep tech.
The report, titled “Deep Tech: The New Wave,” was developed in partnership with the Inter-American Development Bank’s innovation laboratory (IDB Lab). It suggests that there is potential for a twentyfold increase in VC investment in deep tech startups in Latin America and the Caribbean (LAC) over the next decade. While projections like these can be subject to discussion, it’s valuable to examine the rationale and data supporting this conclusion.
The meaning of “deep tech” varies depending on the perspective. In this report, the consulting firm Surfing Tsunamis adopts the definition provided by Propel(x) CEO Swati Chaturvedi:
Deep Tech Company’s
Deep technology companies are founded on concrete scientific discoveries or engineering innovations. They are focused on addressing significant global challenges. This could include the development of a new medical device or technique to combat cancer, the use of data analytics to assist farmers in increasing food production, or the creation of clean energy solutions to reduce humanity’s impact on climate change.
According to this definition, the report identifies cybersecurity startup Auth0 as the “most notable deep tech success story to date” in Latin America and the Caribbean (LAC). Okta acquired Auth0 for $6.5 billion in 2021.
Although this definition encompasses a wide range of fields, from cybersecurity to biotech, it appears that the majority of startups in LAC do not align with it. Referring to a previous report, Surfing Tsunamis estimates that deep tech companies make up approximately 10% of the overall startup ecosystem in the region.
The majority of startups in Latin America and the Caribbean (LAC) primarily emphasize product and business model innovation, with minimal technology-related risks.
Venture capital investment in LAC’s deep tech sector constitutes a small portion of the total VC investments made in the region. However, this investment is steadily increasing, both in terms of absolute amounts and as a proportion. It grew from $96 million (0.59%) in 2020 to $172 million (2.2%) in 2022.
The beneficiaries of this venture capital funding are quite diverse, encompassing a variety of sectors and originating from different countries in the region.
Frequently Asked Questions
How Diverse are the Recipients of Venture Capital Funding in LAC’s Deep Tech Sector?
The recipients of venture capital funding in LAC’s deep tech sector are quite diverse, representing various sectors and originating from different countries within the region.
Are there Specific Sectors Within Deep Tech that are Particularly Promising in LAC?
Deep tech spans various sectors, including healthcare, agriculture, clean energy, and more. Promising areas may vary by country and region within LAC.
What are the Fey Factors Contributing to the Growth of Deep Tech in LAC?
Factors contributing to the growth of deep tech in LAC include the increasing recognition of the region’s potential, investments in research and development, and the emergence of startups focused on solving complex global challenges.
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