Peru's startups are looking for a spark

By Greg Mitchell

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About the author of this op-ed

Greg Mitchell is the managing partner at AVP Ventures, a Peru-based, LATAM-focused VC. He is also a board member at PECAP, Peru’s venture capital association. 

Greg holds an MBA from the Wharton School at the University of Pennsylvania.

A Peruvian winter

Peru’s nascent startup ecosystem was on the cusp of breaking out prior to the global funding downturn. VC investments in the country reached a record $124M in 2021 and the country’s resourceful, resilient founders were demonstrating their ability to grow and raise capital across Latin America. 

Funding subsequently fell 30% in 2022, and, in an ecosystem where over 80% of startup investments arrive from abroad, international factors have exacerbated the already gloomy investor sentiment.

Many of the foreign funds investing in Peru are self-proclaimed regional funds. They have Peru on their fundraising deck but are generally based in larger markets, such as Mexico. While these funds made opportunistic Peruvian investments when the sector was hot, they rarely had any physical presence in the country. As the funding climate tightened, Peru quickly became an afterthought as they refocused on their core markets.

A byproduct of Peru’s young ecosystem is the heavy involvement of DFIs, such as the Inter-American Development Bank (IDB), which has been a key investor in Peruvian funds and startups. DFIs have traditionally poured impact money into the Andean region, pursuing specific thematics such as financial inclusion.