Given that the quarter’s top exits (Technysis and Satellogic) both came out of Argentina, we’re taking the opportunity to analyze the country’s tech scene. Perhaps no other country in the region has experienced Argentina’s simultaneous lows of economic misfortune while maintaining a relatively thriving technology sector.
Argentinians have suffered decades of high inflation, which has sat above 50% since June 2021. The economic tradeoffs needed to curb inflation are politically unpopular, and the country has turned to the IMF to fund its government 21 times in the past 66 years. As a result, purchasing power in Argentinian pesos has diminished, a shadow economy in USD thrives, those Argentinians that can look for a better life abroad, while laws try to prevent capital flight and GDP per capita sits below Cuba’s.
And yet, despite the economic and psychological toll this has taken on Argentinians, the nation still thrives in other respects. It is the region’s 3rd largest economy and still ranks 2nd in the region for HDI and 3rd for Gini. When it comes to the tech scene, Argentina ranks 4th in a number of metrics:
- Total funded companies (408)
- Total equity financings (777)
- Total equity dollars raised ($3.2 billion)
However, in perhaps the most important metric of all, Argentina ranks 2nd, with 66 total exits. Argentinian start-ups, therefore, have a higher likelihood of exit success than many other nation’s start-ups and require relatively less capital to get there.
The impact on tech from the country’s larger economic issues only becomes apparent when looking at per-capita figures. So while it consistently ranks fourth in investment metrics and second in exit metrics, the country’s position drops to fifth and fourth respectively when we account for its 46 million inhabitants. Considering the size of its monetary challenges, this impact looks relatively small and points instead to the resilience of the nation’s technology industry.
Digging in, this industry looks much like the region’s as a whole in terms of sector, although with some interesting outliers. For example, much like Latin America overall, Argentina’s e-commerce and fintech sectors have raised the most funding at $1.4 billion and $768 million raised, respectively. Interestingly, however, travel and hospitality startups have raised the 4th highest number of equity dollars in Argentina, while this sector comes 11th for the region as a whole. Much of this is due to the success of Despegar, a travel marketplace that has the distinction of breaking the decade-long IPO dry spell for regional technology companies when it listed in 2017.
Also uniquely, companies in the media and advertising sector raised 17% of Argentina’s total financings, while this number sits at only 9% for the region, and the sector ranks 2nd nationally in terms of total exits, when it is 4th regionally. The country has yet to see a breakout media and advertising company in terms of either funding or exit, but the most successful company to date is Navent, which raised a total of $50 million and was acquired by QuintoAndar this quarter.
All in all, Argentina looks to have a dual-track economy. It struggles with monetary and economic issues that have not seemed to damage its long-standing role as a technology innovation leader. But this assessment tempts us to look toward the hypothetical: what could Argentina’s powerful start-up engine accomplish if, instead of pushing against its larger economy, it was bolstered by it?
For more insights and analysis like this, subscribe to the Ventara Quarterly.
