A new report reveals that Latin America and the Caribbean (LAC) countries can anticipate even greater advancements in deep tech.
In a collaborative effort with the innovation laboratory of the Inter-American Development Bank (IDB Lab), Surfing Tsunamis, a consulting firm released a report titled “Deep Tech: The New Wave.”
It reports a twentyfold increase in venture capital (VC) investments in LAC startups for over the next decade, presenting an optimistic outlook for the region.
Defining “deep tech” depends on the perspective of those employing the term. The report adopts the definition put forth by Swati Chaturvedi, CEO of Propel(x):
“Deep technology companies are built on tangible scientific discoveries or engineering innovations. They are trying to solve big issues that really affect the world around them. For example, a new medical device or technique fighting cancer, data analytics to help farmers grow more food, or a clean energy solution trying to lessen the human impact on climate change.”
Using this definition, the report identifies cybersecurity startup Auth0 as LAC’s most notable deep tech success story to date. Auth0 was acquired by Okta for $6.5 billion in 2021.
However, despite encompassing a wide range of sectors such as cybersecurity and biotech, most startups in the LAC region do not meet the criteria for deep tech.
According to Surfing Tsunamis’ estimation based on a previous report, tech companies constitute only about 10% of the regional startup ecosystem.
Venture capital investments in LAC deep tech ventures represent a minuscule portion of the overall VC landscape in the region.
Nonetheless, there has been a notable increase, both in absolute figures and proportionally, from $96 million (0.59% of total VC investments) in 2020 to $172 million (2.2% of total VC investments) in 2022.
The recipients of this venture capital funding exhibit a diverse range of sectors and countries of origin, highlighting the region’s potential for innovation and growth.