More Argentine firms become unicorns as tech industry shines

There are now 11 startup companies founded by Argentines that have ascended to 1bn-dollar stock valuations, putting them in the category of unicorns, after another three joined them in the last week alone.

Bitfarms, Ualá and TiendaNube have been added to a prestigious list that was first reached by companies such as MercadoLibre, Globant and OLX.

The online travel agency Despegar was a unicorn, but dipped out of the category due to the reduction in tourism after the pandemic.

However, Argentina's entrepreneurial market has undergone good development in recent times and the pandemic has boosted the technology market.

A report by Argentine software industry association Cessi showed that total sales in the sector grew by 2.9% more than inflation in 2020, while employment was up 2.4%.

For this year, Cessi forecasts nominal growth of 36.7% in total sales and 16.8% in foreign revenues (in dollars).

FOREIGN INVESTMENT

An Eclac report on foreign direct investment (FDI) highlights that Argentina suffered serious negative consequences from the health crisis.

In 2020, FDI totaled US$4.02bn, some 39.7% lower than in 2019, with 66% of these investments being reinvestments of profits and 29% capital contributions.

“The digital expansion seems not to be affected by the problems that afflict the economy. On the contrary, due to the effects of the pandemic, which led to the privileging of the use of virtual media and automation and robotics tools, digital development, far from stagnating, is accelerating,” says the same report on the situation in Latin America. 

An example of this is MercadoLibre, which is currently ranked as having the second highest market value in the region.

Eclac notes that a novel element of the Latin American digital economy is the increasing importance of venture capital investment. "As a result of the lower relative maturity of the digital sector in the region, investment in companies in the digital economy is increasingly taking place through venture capital," the report states.

Most of the venture capital invested goes to fintech companies, followed by e-commerce, superapps, and digital technology for real estate and logistics.

Argentina attracts around 5% of the venture capital invested in the region. And it is no surprise that the last two unicorns operate in the markets that are garnering the most attention: finance (Ualá) and e-commerce (TiendaNube).

THE UNICORNS

MercadoLibre, which was worth around US$100bn on Wall Street in in January, Despegar (with a current market value of approximately US$813mn) and Globant (US$12bn) were the first companies founded by Argentines to reach the category of unicorns.

Auth0, an identity management platform that this year was sold for US$65bn, joined the list in 2019.

This year six other companies also joined the group of unicorns. The first was Vercel, a front-end software company. It was followed by digital advertising company Aleph and Mural, a virtual whiteboard company.

In the past week, bitcoin mining company Bitfarms also reached unicorn status with a valuation of just over US$1bn.

Fintech Ualá, which recently launched in Mexico, received an investment of US$350mn and its market value soared to US$2.45bn.

The last company to become a unicorn was TiendaNube, an online sales platform for entrepreneurs that grew exponentially during the pandemic. The company reached a market value of US$3.1bn this week after attracting an investment of US$500mn.