Despite the challenges and against all odds, 2024 marked a recovery in venture capital (VC) funding figures for Latin American startups.
According to Crunchbase’s report, the fourth quarter of the year yielded the highest investments into startups in the region, being key to close the year on a more hopeful note compared to 2023 figures.
Overall, funding in Latin American startups reached $4.2 billion in 2024, including all stages. This represents a 27% increase over the previous year.
Most local ecosystems experienced year-on-year growth in funding, with Brazil being the country where startups raised the most capital, contributing nearly half of regional funding, followed by Mexico, Argentina, Colombia and Chile.
The importance of Fintechs in Latin America
What is most striking about last year’s funding figures is the role of Fintech startups in Latin America, being a bastion for regional entrepreneurship.
In the last quarter of 2024 Argentina’s Ualá closed the year with a $300 million Series E round; while Brazil’s Asaas raised $148 million in its Series C.
The role of fintechs has been really valuable in helping to close that financial gap.
“In Latin America, the financial sector has been the epicenter of the biggest technological disruption of the last decade. More than a trend, the rise of fintech represents a structural transformation that is solving real problems and generating unprecedented opportunities for investors,” Andrés Cano, CEO of Pygma, an accelerator focused on boosting Latin-led startups in the sector, told Contxto.
Historically, LatAm has been a region with low rates of financial inclusion and the lack of access to traditional banking has been a challenge to overcome. In Bolivia (39%), Mexico (38%) and Peru (36%), four out of 10 citizens have a low level of financial inclusion, while Chile surpassed Panama as the country with the best financial inclusion index according to Credicorp’s latest IIF report.
Despite the fact that more than 50% of the population still lacks access to formal financial services, “this massive problem makes fintech the most attractive vertical for investors,” explains Cano. “Founders are not only developing access solutions, but also moving towards financial stability, the next big challenge for the sector.”
Fortunately, that picture has been changing in recent years. According to Mastercard, between 2020 and 2023 more than 100 million Latin Americans could access digital financial services for the first time.
According to Finnovista, the number of fintech startups went from 703 to 1,069 between 2017 and 2023, which represented a 340% increase in six years.
The region represents 18% of the global fintech ecosystem, which is evidence of why this sector is consolidating its position among the most attractive for investors.
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