Latin America’s startup ecosystem has come a long way. While the funding frenzy of 2021 has cooled, venture capital is still flowing steadily. In fact, 2024 saw $4.2 billion in investment across the region — a 27% jump from the previous year.
For startup founders, this signals a clear message: the opportunities are real, but competition is stiff. To stand out, founders need more than ambition — they need a strategic approach to secure funding and scale efficiently.
Here’s a breakdown of what’s shaping the venture capital scene in Latin America, the common challenges startups face, and actionable tips on how to attract investors and thrive.
Why Venture Capital is Booming in Latin America
The region’s tech scene has matured quickly in the wake of the pandemic, with digitization accelerating across sectors. Fintech, in particular, has become a hotbed for innovation. Latin America’s large unbanked population and reliance on cash transactions created fertile ground for digital financial services when traditional banking methods fell short.
Between 2018 and 2021, the number of fintech startups in the region doubled. VC interest followed fast, peaking at over $6 billion in 2021.
Now, AI is taking the spotlight. As artificial intelligence gained traction globally, LatAm followed suit. In 2024 alone, AI-focused startups attracted 34% of all VC investment rounds in the region — making it the leading sector for the year.
Another driving force behind LatAm’s investment momentum is nearshoring. With growing geopolitical tension between the U.S. and China, U.S. investors are eyeing regions with closer time zones and smoother logistics. Latin America fits the bill. In 2023, U.S. investors made up 33% of all VC funding in the region.
Spain is also playing a bigger role, providing 11% of venture capital and supporting cross-border initiatives like ICEX-Invest in Spain and the IDB Lab. These programs aim to bridge startups in Latin America and the Caribbean with opportunities across Europe.
Biggest Challenges Facing Startups in the Region
Despite growing interest, startups in Latin America still face several barriers when trying to attract funding and scale.
One major hurdle is the fragmented nature of the region. Unlike in the U.S., where one incorporation allows a company to operate nationwide, startups in LatAm must often incorporate separately in each country they want to enter. That means extra paperwork, compliance costs, and time.
Take Brazil, for example. Its instant payment system, Pix, handled nearly 29% of all transfers in 2022. But to benefit from it, businesses need a Brazilian bank account and must be registered locally — something that complicates entry for foreign startups or regional expansions.
Tax and employment regulations also vary widely across countries. In Mexico, companies are required to use CFDI (Comprobante Fiscal Digital por Internet) for tax reporting. For foreign startups, this adds a technical and financial barrier. However, partnering with local entities can help navigate these roadblocks more efficiently.
Tapping Into Strategic Partnerships and Accelerators
To overcome these hurdles, founders don’t need to go it alone. Startup accelerators offer support, funding, and a network of mentors and investors who know the regional terrain.
Top accelerators like 500 Startups LatAm provide $300,000 in funding for a 10% equity stake. Meanwhile, Platanus Ventures offers $200,000 for 5.5%. These deals are designed to give startups the capital they need while preserving equity for future rounds — an important consideration when planning long-term growth.
For founders aiming to tap into U.S. investors, forming a Delaware C-Corp is often the smartest move. It opens the door to the world’s largest venture capital ecosystem, simplifies dollar-based investments, and avoids issues tied to currency volatility. It also makes future exits through IPOs or acquisitions easier.
Build Relationships Before You Raise Money
Funding isn’t just about pitch decks — it’s about relationships. That’s why it’s critical for founders to attend high-impact events like the VC Latam Summit or Mexico Tech Week. These platforms offer valuable facetime with investors, potential co-founders, and other startups, helping founders better understand what VCs are actually looking for.
Beyond exposure, these interactions provide direct insights into investor priorities — helping startups refine their product messaging, build better pitch decks, and raise capital more effectively.
One key tip: don’t rush into fundraising. Many early-stage founders make the mistake of approaching investors too soon. It’s essential to first validate your business model, build a working product, and gain traction through bootstrapping. This early progress acts as proof of concept — and that’s what convinces investors to bet on your startup.
Latin America’s VC Scene Is Gaining Momentum
The narrative around Latin America’s venture scene is shifting — from untapped potential to active, tangible momentum. Global investors are watching closely. Local ecosystems are strengthening. Support networks and funding opportunities are expanding fast.
The next wave of Latin American unicorns is likely already in motion. For founders ready to take the leap, the region offers a rare mix of market demand, capital availability, and ecosystem support. The only question left is: are you ready to seize the opportunity?
