Since the Nasdaq market crash in March this year only one Latin American internet company, AOL Latin America, has managed to go public.
It is one of the few firms with a record of good performance, granted by its market-leading parent, AOL. Even that deal barely succeeded and the vendor and lead banks had to reduce the initial offer price of the shares by half. The feeling persists that if they cannot do it, who can?
Without a feasible exit strategy, venture capital, too, is hard to find these days for Latin American internet plays. Private placements of equity are the last resort, since valuations there also came down by up to 80%, in line with public equity values. The lucky few will be able to sell themselves to industry buyers. But many more start-ups will burn through their cash before any chance of raising new funds arises.