Cross Border Capital Markets Report: LATAM Investors and USA Companies in 2020

This report outlines the announced investments made by investors from Brazil, Mexico, Panama, and other Latin American countries in USA companies, with a focus placed on deal count, volume, and industry. Only announced deals are analyzed. We reviewed Mindset Ventures and Mojo Vision as part of our investor and deal spotlight.

Latin American Market Overview: USA Companies

In 2020, 96 cross-border deals were announced between Latin American-based investors and USA-based companies for a total of $5.26 billion deployed. This report shows the volume, industry, and number of deals completed in this cross-border category.

FIGURE 1: Investments Over Time

  • Deal count peaked in Q1 of 2020. Deal count was reduced significantly in Q2 as the economic effects of the COVID-19 pandemic took place, and the volume of deals steadily increased in Q3 and Q4.
  • Venture capital firms accounted for the majority of transactions in the sectors with 98% of deal count and capital deployed, while only 2% came from private equity sources.
  • Deal size average in the whole year was $54.79 million.
  • Deal count rose in Q3 and Q4 of 2020 after pandemic effects were measured and the markets stabilized.

LATAM Investors and USA Investments: Investments by Industry

Latin American investors deployed capital into USA companies operating in markets unique and not present in Latin American countries, such as aerospace, e-commerce, and technology industries, which saw large capital deployments.

FIGURE 2: Capital Breakdown

  • Artfo Holdings, from Mexico, deployed $1.90 billion into SpaceX for their later stage VC raise on August 18.
  • Business and productivity software received the second-highest amount of funding, with $1.79 billion raised. The industry experienced the highest deal flow, with a total count of 38 transactions. Some of the companies that received investments are Netskope, a cloud security platform that raised $340 million; Farmers Business Network, which received $250 million; and the fintech company Tradeshift, which raised $240 million.
  • Financial software and financial services companies received investments from a total of 25 Latin American capital sources, or roughly 13% of all Latin American investments in USA companies.
  • In general, Middle Eastern and North African (MENA) investors select a diverse set of industries in which to deploy capital. Investors in the MENA region often have a more flexible mandate than USA or European investors because of the less crowded fund management market in the Middle East. It is common for large Middle Eastern family offices or holding companies to be diversified into multiple industries and verticals.

Investor Spotlight: Mindset Ventures

Mindset is a venture capital fund headquartered in Sao Paulo, Brazil. Mindset was the most active cross-border investor in USA companies in the LATAM region. Mindset Ventures typically invest in early-stage companies and are industry agnostic. They usually participate in seed funding and Series A deals.

Mindset focuses on IT companies and B2B-based firms, and has an appetite for companies in financial services and healthcare. The firm participates in less than 12 deals per year. They deployed over $10 million for each deal in their 2020 financing activities.

FIGURE 3: Mindset Ventures Deals Overview

Deal Spotlight: Mojo Vision

The Company

Mojo Vision is an international company that develops augmented reality products and platforms for implementation in several industries, though most of their technology and services have been used for medical devices, which was their focus in 2020.

The Product

Mojo Lens is a smart contact lens with a built-in display that can output information without interrupting the focus, all while delivering real-time data analytics without the need for external devices.

Most Recent Financing Status

The company raised $51 million of Series B1 venture funding in a deal led by New Enterprise Associates on April 29, 2020, putting the company’s pre-money valuation at $450 million. Liberty Global Ventures, Intellectus Partners, Numbase Group, WndrCo, Gradient Ventures, Horizon 3 Venture Capital, and 13 other investors also participated in the round. The funds are being used to accelerate the development of the company’s smart contact lens, the Mojo Lens.

Investment Forecasts Moving Forward

2021 will serve as a recovery year for the USA market, with all firms looking to achieve their forecasted expectations with fundraising activities. Latin American investors will continue to invest in USA companies in select technology industries that they do not have access to in domestic markets. J&A forecasts the continued investment in e-commerce and technology sectors, as their market trends have been accelerated by the effects of the COVID‑19 pandemic.