Latin American startup funding is a fascinating area to explore right now, with exciting innovations from both an investment and a development perspective. 

After a brief slump in venture capital (VC) funding in 2023, there’s every reason to expect investment to bounce back as we near the end of 2024. 

With fintech hogging the headlines, many smaller enterprises are looking for bridge financing to make waves in food tech, real estate innovations, energy, and health. 

In this article, we’ll explore the current funding environment in Latin America, highlight recent success stories, and discuss how you can navigate these challenges to secure the capital you need.

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Current LatAm startup funding environment

The stand-out statistic for the current LatAm startup funding environment is that VC hit a five-year low in 2023–an 81.7% drop from record levels in 2021. This is in line with global trends, but that’s no comfort to ambitious companies on the hunt for capital. 

The lack of market confidence means venture capitalists are more cautious, with 2023 showing a shift away from mega-rounds to seed-stage startups. In this slower-moving economy, investors are focusing more on supporting companies that are already funded, rather than supporting new startups with capital. 

However, smaller startup loan options have moved in to fill the gap. 

Solutions to the drop in VC confidence

Players like A55 in Brazil are pioneering revenue-based financing (RBF) in Latin America, offering startups in Brazil a new way to secure growth capital without the need for collateral or equity dilution. Since 2017, A55 has supported more than 1,000 companies with over $90 million. 

In the current climate, it’s a win-win. Startups get non-dilutive capital without losing any equity, while RBF financiers can make a return on investment. Revenue-based financing is gaining traction in LatAm and beyond, as startups seek alternatives to traditional loans. The trend is sure to continue, with the industry’s projected compound annual growth rate (CAGR) at 64% through 2033, forecast to hit $41.81 billion worldwide. 

Looking to access revenue-based financing for your LatAm startup? Efficient Capital Labs (ECL) provides non-dilutive growth capital to B2B SaaS companies across the globe. You can access revenue-based financing of up to 65% of your startup’s projected annual recurring revenue, with transparent, flat fees between 10-12% (USD) or 12-15% (INR). 

ECL's seamless application process and quick turnaround times mean startups can access funding within 72 hours–so you can scale without giving up control or equity. With a 75% + repeat customer rate, the benefits for founders are evident.  

Learn more about ECL

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LatAm startup funding trends 

Fintech projects remain strong against a drop in funding

Despite a notable drop in overall startup funding in Latin America, fintech remains a resilient sector in the region. While the total venture capital investment across all sectors has decreased due to economic uncertainties and a more cautious approach from international investors, fintech continues to attract significant capital. 

This sustained interest is driven by the region's unique financial challenges, including a large unbanked population, limited access to traditional banking services, and a strong demand for digital financial solutions. Digital banking, mobile payments, and alternative lending solutions all cater to underserved populations, tapping into a large market. 

Source 

Nearshoring opens up new opportunities for LatAm suppliers

The global shift toward nearshoring–relocating production and supply chains closer to home markets–is presenting new opportunities for Latin American suppliers. As companies in North America seek to mitigate supply chain risks, reduce costs, and enhance flexibility, Latin America is emerging as an attractive destination for nearshoring. 

Countries like Mexico and Brazil are already seeing an influx of interest from companies in sectors such as automotive, electronics, and apparel. Halfway through 2023, Mexico overtook China as the United States’ main trading partner, so startups in Mexico can export to the north while investment flows in the opposite direction. 

Lower interest rates in the USA and LatAm signal a return to form later in 2024

Recent signs of lower interest rates in both the United States and Latin America suggest that the region's startup funding landscape could see a resurgence later in 2024. As central banks respond to declining inflation rates and economic pressures, easing monetary policies could lead to cheaper borrowing costs and improved access to capital for startups. This shift is expected to stimulate investor confidence, encouraging local and international venture capital firms to pour more capital into Latin America.

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Most valuable LatAm startups & startups to watch

With their enormous populations, it’s little surprise that the two regional powerhouses, Brazil and Mexico, are streets ahead of their neighbors in terms of the number of unicorns headquartered there. 

But the rest are holding their own.

Chile, Colombia, and Argentina, for example, are home to unicorns and plenty of other startups on their way to a billion-dollar valuation. Here, we’re going to look at companies that have already made it and other exciting prospects that are just around the corner. 

Mexico startups

• Kavak is a Mexico-based online marketplace for buying and selling pre-owned cars. The company leverages tech to guarantee and certify used cars for a transparent, safe, and efficient car-buying experience. Originally aiming to tackle the challenges of the informal used car market in Mexico, Kavak has now launched in Brazil, Argentina, Chile, and even Turkey, UAE, Oman, and Saudi Arabia. None of this would have been possible without funding rounds ranging from $3.3 million in 2016 to $810 million in 2022. 
• Nexu is a Mexican fintech offering instant loans to buy cars. The company has experienced rapid growth, with a 31% increase in staff over the last year as it expands its footprint in the automotive financing market. In January 2022, Nexu raised $50 million, demonstrating strong investor confidence in its ability to make car ownership more accessible and affordable for Mexican consumers.
• Talisis is revolutionizing the education and workforce training sectors in Latin America with tech-driven learning solutions. By making traditional education models digital, Talisis provides flexible, accessible education opportunities tailored to the evolving needs of businesses and individuals. The startup is backed by $55 million in funding and is positioned to expand even further.

Brazil startups 

• Nubank is a neobank that has been around for some time, reaching one million customers in 2016 and a valuation of $30 before its IPO in 2021. Now with 65 million customers in Brazil, Mexico, and Colombia, its popularity is largely based on its no-fee credit card that upset the apple cart in a market where traditional banks were happy to charge extortionate fees. It’s fair to say that Nubank has now graduated from the startup label and is now a fully-fledged institution in the financial services industry.
• QuintoAndar is the highest-value Brazilian company that can still realistically be called a startup. It has a similar mission to Nubank–cutting out unnecessary steps and excessive charges–but operates in the real estate market. After bootstrapping for a few years, QuintoAndar’s investment came from Brazilian angel investors, before moving on to VC from Chinese and US investors. 
• Mecanizou is riding the wave of digital transformation to improve supply chains, connecting mechanic shops and resellers directly with suppliers. Since its launch in 2020, Mecanizou has achieved a 10x increase in revenue and 70% monthly customer growth, fueled by its innovative approach to the sector. In March, the company raised $14 million, marking a significant step in its expansion plans.

Chile startups

• Betterfly is an insurtech startup based in Santiago and is the first Chilean company to reach unicorn status. It’s a unique digital platform that combines wellness incentives with life insurance. For every healthy habit a user maintains, Betterfly converts it into life insurance coverage at no additional cost. This innovative approach has caught the attention of investors and companies, raising a total of $202 million over five rounds.
• NotCo is using AI-powered technology to create plant-based alternatives to traditional animal products. Collaborating with major brands like Starbucks and Burger King, NotCo has positioned itself as a leader in the fast-growing vegan and sustainable food market. The company has attracted significant investment, including a $70 million Series D round, enabling it to scale its operations globally. 
• Fracttal is a pioneer in leveraging the Internet of Things (IoT) and SaaS to optimize asset management and maintenance. Over its funding journey, Fracttal has raised $7.44 million across four rounds, backed by investors such as Seaya Ventures, Start-Up Chile, GoHub, and Scale Capital. This support has enabled Fracttal to expand its reach and innovate further, solidifying its position as a key player in the smart asset management space.

Other LatAm startups

• Rappi is a leading on-demand delivery service headquartered in Bogotá, Colombia. It offers services from food delivery and groceries to financial services and ride-hailing. Rappi's ability to diversify its offerings has made it a dominant player in the LatAm market, particularly in Colombia, Brazil, and Mexico. With continued investments from global giants like SoftBank, Rappi is already valued at $5.25 million and is poised to maintain its status as one of the most valuable startups in the region.
• Ualá is Argentina's contribution to the fintech unicorn group. The company links a mobile app to a prepaid card so users can make payments, transfer money, and manage their finances entirely online. Ualá has secured $258 million in funding across seven rounds, with backing from prominent investors such as SoftBank, Goldman Sachs, General Catalyst, Tencent, and Ribbit Capital.
• Kushki, is yet another fintech, this time from Ecuador. It has expanded rapidly since it was founded in 2017 and now covers credit cards, bank transfers, and digital wallets. In 2022, it got $86 million, followed by a $100 million extension, making it Ecuador’s first unicorn. 

Recent LatAm startups that have raised funding

Even with VC investors reluctant to part with their capital, some notable startups have successfully closed funding rounds in 2024. This does come with the qualifier that most investment is going to fintech businesses.

• Celcoin, a Brazilian provider of banking tools for businesses, raised $120 million in Series C financing in June 2024
• Clip, a Mexico City-based fintech that enables merchants to accept digital payments, secured $100 million this yearin its first equity round since 2021. 
• CRMBonus, a Brazil-based startup offering loyalty and promotion tools for retailers, raised $74 million in May, led by Bond, to further develop its platform and expand its customer base.
• Aplazo, another Mexico City-based startup, raised $70 million in equity funding in May. Led by QED Investors, the company aims to allow merchants to offer installment plans, a financing model growing in popularity among Latin American consumers.

These recent funding successes highlight the huge venture capital opportunities for fintech and payment platforms in Latin America. 

But it also begs the question: How do LatAm startups get funding when VC is out of reach?

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Get financing for your LatAm startup

The current funding environment may seem challenging, but there are still plenty of ways to propel your startup forward. Even if venture capital feels out of reach, there are alternatives to help your business grow and thrive. 

Efficient Capital Labs (ECL) specializes in providing dynamic, non-equity financing solutions that enable you to scale without giving up control or equity. With a data-driven approach and global risk model, you receive the best rates and terms in the market.

Don’t let the limitations of traditional funding hold you back–send a request today and learn how to partner with us to grow your business!