31. March 2025
Latin America Booms As Startups Lure 42 Billion In Global Venture Capital
The Fundraising Landscape in Latin America: A Guide for Startups
Latin America has emerged as a vibrant and dynamic region for startups, with a thriving venture capital (VC) scene that has attracted significant investment from global players. The VC market in Latin America hit $4.2 billion in 2024, up 27% from the previous year. This surge in funding presents opportunities for founders to secure the necessary capital to scale their businesses effectively.
However, navigating the Latin American VC landscape can be complex, with varying regulatory environments, cultural differences, and operational complexities that can hinder a startup’s growth. To understand what is shaping the region’s VC market, it is essential to delve into the key factors driving this growth.
Digitization has been a significant driving force behind the growth of the Latin American VC market. The COVID-19 pandemic has accelerated the adoption of digital technologies across the region, with fintech being a notable exception. Fintech startups have seen significant growth in recent years, driven by the need for financial inclusion and the desire for more efficient payment systems.
The number of fintech startups in Latin America doubled between 2018 and 2021, attracting record VC investment of over $6 billion in 2021. The region’s large unbanked population and cash-dependent economies have created a fertile ground for fintech solutions, which have become essential tools for financial inclusion. AI has also emerged as a sector for investment, with AI accounting for 34% of total investment rounds in 2024.
The growing interest of US investors in nearshoring has also played a significant role in shaping the Latin American VC market. With similar time zones and reduced logistical complexity, Latin America offers a strategic location for companies looking to expand their operations in the region. The US has remained the largest investor in Latin America, contributing 33% of total investment in 2023.
Despite the growth of the Latin American VC market, there are several key barriers that startups face when trying to secure funding. One of the main challenges is the need for compliance with country-specific regulations and laws. Unlike the US, where a company can incorporate in one state and operate nationwide, a startup in Latin America looking to expand faces multiple incorporation processes to operate in other countries.
For example, in Brazil, the instant payment system Pix represented 29% of transfers in the country in 2022, making it an essential tool for national and foreign startups. However, users needed Brazilian bank accounts and to be registered as legal entities to benefit from the low transaction fees. Country-specific employment laws and varying tax reporting requirements further complicate expansion.
To overcome these barriers, Latin American startups must build strategic partnerships with accelerators and investors. Accelerators like 500 Startups LatAm and Platanus Ventures offer founders valuable resources, including funding, mentorship, and networking opportunities. Networking events like the Annual VC Latam Summit 2025 and Mexico Tech Week are also crucial opportunities for startups to connect with accelerators and investors.
Strategic partnerships can provide crucial insights into investor priorities and expectations, helping startups create pitch materials they know will resonate with funding decision-makers. However, entrepreneurs must avoid applying for funding too soon. A business must prove its thesis first and build a minimum viable product (MVP) to demonstrate its potential.
Roberto Peñacastro, co-founder and CEO of Leadsales, leads an innovative startup focused on providing a specialized CRM for WhatsApp and social media, with a direct impact on tripling sales. Originally from Querétaro, Peñacastro is a passionate and visionary entrepreneur with an outstanding career in the industry.
The momentum building in Latin America’s VC market suggests that the next generation of Latin American unicorns is likely already taking shape. With its growing VC market, digital economy, and strategic location, Latin America is poised to become an increasingly attractive destination for investors and entrepreneurs alike. By understanding the trends shaping the region’s VC market and building strategic partnerships, startups can position themselves for success in this exciting and dynamic landscape.
Latin America presents a wealth of opportunities for startups looking to scale their businesses effectively. Its growing VC market, digital economy, and strategic location make it an increasingly attractive destination for investors and entrepreneurs alike. By navigating the complexities of the Latin American VC market and building strategic partnerships, startups can position themselves for success in this dynamic landscape.