The venture capital scene in Latin America has changed rapidly in recent years. While funding levels have dropped from the record highs of 2021, the investment market remains robust, reaching $4.2 billion in 2024 — a 27% increase compared to the previous year. This offers plenty of opportunities for LatAm startups, but founders must be strategic to secure funding and grow effectively.

Here’s a breakdown of the key trends shaping LatAm’s venture capital market, the challenges startups face, and how to succeed in this dynamic space.

Trends Shaping LatAm’s Venture Capital Market

The rise of digitization has been a game-changer for businesses globally, and Latin America is no exception. The fintech sector, in particular, has seen remarkable growth. With a large unbanked population and economies that rely on cash, fintech solutions became essential when physical banking became more difficult. Between 2018 and 2021, the number of fintech startups in the region doubled, attracting more than $6 billion in venture capital in 2021 alone.

As artificial intelligence (AI) gained traction in 2023, it became a leading sector for investment in 2024, accounting for 34% of all investment rounds in Latin America.

Other factors have also contributed to the growth of LatAm’s VC market. The shift away from reliance on China and the U.S. offers Latin America a unique advantage. With similar time zones, shorter supply chains, and reduced logistical complexity, the region is becoming an attractive destination for U.S. investors, who accounted for 33% of total investment in 2023. Additionally, Spain has played a key role in supporting the region, investing 11% of the total funding and promoting initiatives like ICEX-Invest in Spain and IDB Lab.

Challenges for LatAm Startups Seeking VC Funding

One of the biggest hurdles for LatAm startups is the diversity within the region. Each country in Latin America has its own set of regulations, operational requirements, and cultural nuances, making scaling and attracting investment more challenging.

For instance, in Brazil, startups must navigate various legal processes to incorporate in different states. Even for businesses with national potential, country-specific regulations, such as Brazil’s Pix payment system, can be difficult to navigate. To use Pix, businesses must have Brazilian bank accounts and be registered as legal entities, adding complexity for international startups. In Mexico, companies need to comply with the Comprobante Fiscal Digital por Internet (CFDI) system for tax compliance — a process that can be a barrier to foreign businesses without local partners.

How LatAm Startups Can Secure Strategic Partnerships

Securing strategic partnerships is key for LatAm startups looking for funding. Startup accelerators can play a vital role in this process. One of the top accelerators in the region, 500 Startups LatAm, offers up to $300,000 for a 10% equity stake. Platanus Ventures offers $200,000 for 5.5% equity. These partnerships help startups get the capital they need to grow while maintaining an attractive equity structure for future rounds of investment.

Startups seeking U.S. investment should consider establishing a Delaware C-Corporation or a similar entity. This structure allows them to tap into the U.S. venture capital ecosystem, access USD funding, and avoid currency volatility issues. It also simplifies exit opportunities, such as U.S. acquisitions or IPOs.

Building relationships is essential for LatAm startups seeking venture capital. Attending networking events like the Annual VC Latam Summit 2025 or Mexico Tech Week provides valuable opportunities to connect with accelerators and investors. Strategic networking also offers insight into investor expectations and priorities, helping founders craft pitch materials that resonate with funding decision-makers.

A common mistake that many entrepreneurs make is seeking funding too early. It’s crucial to prove the business model and develop a viable product or service before reaching out to investors. Bootstrapping in the early stages provides the data and validation needed to attract funding.

The venture capital story in Latin America has shifted from potential to momentum. With continued global investment and growing local support systems, the next wave of LatAm startups is likely already in the making.