The Americas experienced another strong quarter of VC investment to round out the year. While much of this investment was driven out of the US, both Brazil and Canada both saw significant deals during Q4’19 – a continuation of the strong VC market activity seen in both countries during Q3’19.
The continued focus on late stage deals in the US no doubt contributed to the 71 new unicorns birthed there in 2019; Q4’19 saw 17 new US unicorns, including grammar-checking website Grammarly, AI company Faire, cybersecurity firm Riskified, and fintechs Next Insurance and Figure Technologies. In the Americas more broadly, both Brazil and Canada saw 2 new unicorns; in Brazil, fintech EBANX and mobile gaming company Wildlife Studios reached unicorn status, while in Canada AI company Corveo and payments company Nuvei became unicorns in Q4’19.
In Canada, family offices have played an increasing role in the VC market, particularly with respect to early stage deals between approximately $1 and $5 million. The makeup of family offices has evolved in Canada in recent years – coming less out of traditional sectors like manufacturing or oil and gas, and more from high growth company founders interested in investing without opening up a full VC or PE firm. With the number of first-time financings dropping in the US, it could also see an increase in VC market participation by family offices in the future.
Despite some macroeconomic concerns, VC investment in the Americas is expected to remain strong in in Q1’20 given the significant amount of dry powder in the market.
While IPO results have been mixed, there will likely continue to be a number of IPOs in the US during Q1’20 as companies look to exit prior to the US presidential election. Profitability is expected to be a significant factor in the success of companies that IPO in 2020; as a result, VC investors will likely be putting more emphasis on due diligence, profitability, and unit economics in the future.
Despite some concerns about a slowdown, VC investment in Canada is expected to be strong in Q1’20, particularly related to fintech and AI. Fintech is also expected to remain hot in Latin America. Brazil’s government recently passed a bill focused on infrastructure improvements; this could spur additional VC investment in the country related to infrastructure, transportation, and logistics.