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After a quarter in which Mexico overtook Brazil in venture financing for the first time in more than a decade, the story took another turn. Brazil not only regained the lead, but did so in force, marking a significant shake-up of the ecosystem in the region.
According to Crunchbase data, Brazil-based startups raised US$692 million in the third quarter of the year, a massive 92% jump from the previous quarter. Mexico, meanwhile, fell to US$126 million, a 71% decline from its previous peak. In total, Latin American startups raised US$1 billion in the quarter, up 21% from the same period last year.
The return of late-stage capital
The recovery was not led by seed capital, but by a clear revival of late and growth rounds, suggesting that investors are regaining an appetite for scaling businesses rather than early experiments.
Late- and growth-stage transactions in Latin America totaled US$477 million in the third quarter, up 176% year-over-year. Although slightly down from US$565 million in the second quarter, this activity reveals that global funds are re-engaging with Latin American technology, albeit more selectively.
Meanwhile, seed and angel funding totaled US$105 million, up 34% from the previous quarter after months of moderate activity, though still down 47% from last year. This suggests that early-stage capital is returning drop by drop, but investors remain selective.
Overall, the largest round of the quarter came from Omie, a São Paulo-based software firm that helps small and medium-sized companies manage their operations. Its US$160 million Series D, led by Partners Group, valued the company at US$700 million. It was one of several nine-figure rounds in the region, along with Canopy’s US$100 million round in Brazil and Kapital’s in Mexico.
Fintech and AI drive Brazilian rebound
Fintech remains the dominant investment category in the region, and this quarter made clear how technology trends are converging around it. “Fintech remains the number one sector in funding because trust, access and agency remain the biggest issues for consumers and businesses,” explains Diana Narvaez of Flourish Ventures.
Several Brazilian startups are now integrating AI-powered tools for fraud prevention, credit assessment and security in response to growing risks within the country’s financial sector.
This is not surprising given that the Brazilian financial sector reported fraud losses of R$10.1 billion (approximately US$1.88 billion) last year. The result is a fintech ecosystem that is becoming smarter and more regulated at the same time, a combination that is attracting institutional investors back.
Flourish Ventures’ recent bets in Brazil tell that story clearly. The fund co-led rounds for Akua, which is modernizing payments acquiring in Latin America, and Kamino, a São Paulo startup that merges financial management tools, a native bank account and a corporate card for midsize companies. It also backed Liquid, another São Paulo company that builds infrastructure for real estate lending.
Stablecoins take center stage
While fintech and AI grabbed the most attention, investors are also taking a closer look at stablecoins (stable cryptocurrencies). These digital currencies are proving especially useful in a region where cross-border payments and currency volatility are constant challenges.
As Dileep Thazhmon, CEO of Jeeves pointed out in an interview with Contxto, stablecoins are emerging as the “star use case” for cryptocurrencies in Latin America, offering faster and cheaper transfers. With Brazil moving towards clearer regulations and the rise of locally denominated, yield-generating stablecoins, this space could open up new avenues for financial inclusion.
For much of 2024, venture activity in Latin America was defined by caution. Third-quarter data suggests that mood is changing. Brazil’s return to the top reflects renewed investor confidence in the region’s growth-stage companies, particularly those that combine financial services, regulation and technology in a practical way.
If the second quarter was about Mexico’s progress, the third quarter was about Brazil’s confidence – in its startups, its technology and its staying power in an increasingly competitive market.
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