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Overview

Argentina has a vibrant technology sector, especially in the software, fintech, agtech and primary services areas. In the past few years, Argentina has seen remarkable growth in the private capital (venture capital, private capital and corporate venture) sector, which went from a total amount invested of US$220 million in 2016 to US$1.1 billion in 2021. Most of this private capital investment went to technology companies.2 Twelve Argentine technology companies have reached the stage of unicorn (MercadoLibre, Despegar, Globant, OLX, Auth0, Aleph, Mural, Tiendanube, Bitfarms, Technisys, Ualá and Vercel), and there are many Argentine technology companies on the verge of achieving the same status.

The approval of the Entrepreneurs Law in 2017 helped bootstrap start-up companies in the technology sector providing both tax incentives to investors and a simplified legal entity for companies conducting their business (as further discussed below). Additionally, several regulatory changes between 2016 and 2019 fostered the growth of a relevant fintech ecosystem.

Argentina also has sophisticated human resources dedicated to the technology sector, which, because of the exchange rate of the Argentine peso in relation to foreign currency, is more cost friendly than other countries, and has created a cross-border technology services industry focused on the development of software.

On account of Argentina having a very small capital market, the most common exit available to investors in technology companies is an M&A transaction where a local business is acquired by larger global technology companies. The most prominent example is the acquisition of Auth0 by Okta in May 2021. The three Argentine unicorns that went public (MercadoLibre, Despegar and Globant) conducted their initial public offerings in New York rather than on the Buenos Aires Exchange.

During 2021, Argentina's economic crisis did not prevent Argentina from following the global trend and making 2021 a record year in venture capital transactions. One of the verticals that has shown a significant growth is blockchain, as Argentina hosts a cluster of world-leading entrepreneurs in this industry.

Year in review

During 2021, the main M&A transactions in the technology sector were the:

  1. acquisition of Auth0 (Argentine unicorn) by Okta at a valuation of US$6.5 billion
  2. acquisition of Sesocio by Blockchain.com for a price of US$100 million;
  3. acquisition of ABC Capital (Mexican fintech) by Uala (Argentine fintech) for a price of US$150 million;
  4. acquisition of real estate proptech business Zonaprop by Quintoandar for an undisclosed amount;
  5. acquisition of GoSchool (edtech) by Colegium for an undisclosed amount;
  6. acquisition of SimTlix (software developer) by Intive for an undisclosed amount;
  7. acquisition of AtixLabs (blockchain services) by Globant for an undisclosed amount;
  8. acquisition of Acamica by Digital House (both Argentine coding schools) for an undisclosed amount;
  9. acquisition of Summa Solutions (e-commerce solutions) by Infracommerce for a price of US$9 million;
  10. acquisition of Wilobank by Ualá (both Argentine fintechs) for an undisclosed amount;
  11. acquisition of Agrosmart (agtech) by Booster Agro (Brazilian fintech) for an undisclosed amount; and
  12. acquisition of Wolox (cloud services) by Accenture for an undisclosed amount.

During 2021, the main venture capital investment was Tiendanube's (software-commerce platform) Series E for US$500 million.