Investments in Latin American start-ups have continued to contract dramatically since 2021.
In fact, Crunchbase reported in 2023 for the second consecutive year, that the region is among the fastest-shrinking for venture capital funding, experiencing a sharp 84% decline since 2021’s record-setting levels in seed capital through growth-stage investments.
Experts have noted that markets in the region may be further impacted after the U.S. Federal Reserve announced an interest cut rate of 0.5% in September. In this, rates are placed from 4.75% and 5% and may lead to increased risk perceptions for foreign investment in Latin America.
Start-ups, however, have appealed to new platforms to access capital. Last year, 30% of Latin American start-ups turned to crowdfunding, intermediaries between donors and beneficiaries, to raise capital, according to Mordor Intelligence’s 2024 report.
Arkangeles is the first online platform to make start-up and alternative finance investing accessible to Latin America, with a secondary market exchange to enhance liquidity to private investors.
“One of the biggest aims for Arkangeles in Mexico and Latin America is to allow people with less assets to diversify their investment as millionaires do, while having the same return opportunities,” Arkangeles CEO Luis X Barrios told Entrepreneur.
Founded in 2017 in Mexico, Arkangeles allows for safe, quick and efficient investments to private companies from 5,000 Mexican Pesos ($259 USD), with the purpose of maximizing returns. For start-ups, this means access to capital, in addition to support for managing investment campaigns and advice from world-leading experts.
Arkangeles’s committee carefully selects the start-ups they work with considering factors like viability, opportunity cost and scalability, and both investors and entrepreneurs have access to the company’s online platform through which they can manage their investment and calls for funding.
The democratization that crowdfunding promotes for the investment industry mitigates the dependence on great investors. However, there is also a generational component to this rising trend: Millennials and Gen Z are drawn to businesses that have a social impact, as noted by Nasdaq.
Because crowdfunding platforms are more flexible and cover a broader range of multi-stage entrepreneurs, in addition to fostering a sense of ownership, shared purpose and active participation, younger investors are more drawn to them.
In turn, young investors are moving away from the stock market and betting on alternative investment platforms.
This article includes a client of an Espacio portfolio company