Q3’19 was a robust quarter of VC investment across the Americas. While the US continued to dominate region in terms of both investment and the number of VC deals, both Brazil and Canada experienced strong quarters. In Brazil, fintech garnered substantial investment, while AI, healthtech, and biotech continued to attract significant investment in Canada.
The fintech industry in Brazil drove a substantial level of VC investment during Q3’19, led by a $400 million raise by Nubank — a funding round that made the neobank Latin America’s first Decacorn with a valuation above $10 billion. Given the significant percentage of unbanked people in Brazil and across Latin America, many VC investors see a lot of room for growth in the space. Over the past few quarters, fintech in Brazil has continued to mature, with a number of fintechs now offering white label banking for other brands. At the same time, there is increasing interest in fintech from traditional banks. With interest rates at a historical low in the country — and expected to decline further — banks recognize the increasing need to invest to remain competitive.
Canada experienced a record quarter of VC investment in Q3’19, led by a $250 million raise by Clio — a software platform for lawyers, and a $151 million raise by Element AI — a software firm focused on providing machine learning solutions to businesses. These large deals highlight the growing focus of Canadian firms on the B2B market, in addition to solutions that align with Canada’s strong AI and machine learning capabilities. They also showcase the growing maturity of Canada’s tech sector, with companies attracting larger and larger deals in a diversity of locations across the country.
VC investment across the Americas is expected to remain strong moving into Q4’19. In Latin America, fintech is expected to continue to be the hottest area of investment. Both the size of checks and the number of late-stage fintech deals are expected to grow as companies in the industry begin to mature, particularly in Brazil. International interest in the region is also expected to grow, with the $5 billion Latin America-focused SoftBank Innovation Fund expected to increase international investor attention on the region.
In the US, VC investment is expected to remain strong for the remainder of the year given the amount of capital in the market. AI is expected to remain a top priority for US investors given its broad applicability, while transportation is expected to continue to gain attraction — particularly as it relates to commercial solutions.