While significantly more venture capital deals were made in Latin America, the total investment volume is similar to those with fewer deals. Per the LAVCA report, at least 2 in 5 (42%) venture capital deals made in Latin America in 2023 were for early-stage ventures, which tend to have lower valuations as they lack proof of profitability.

While Latin American countries have some of the highest interest rates worldwide, there has been a mass shift to reducing rates. Mexico, with the second-largest economy in Latin America, became the latest in the region to do so when it changed the interest rate from 25 to 11 in March 2024, per the Financial Times. Reduced interest rates empower those seeking to capitalize on their investments, enhancing the region's allure for prospective stakeholders.

Adding to the region's growing appeal to investors is the rise of its middle class. In addition to signifying more potential consumers, this means there is more disposable income and thus increased demand for banking services.

In Latin America, banks are typically only used by the affluent, as they impose strict credit requirements. Per a Silicon Valley Bank report, between 30% and 50% of Latin Americans are underbanked, which limits their access to mainstream financial offerings. This has left a tremendous need in the region for accessible, innovative banking services—a prime opportunity for prospective financial service startups. As a result, fintech companies captured a significant number of investor dollars in 2023, constituting 19% of total investment volume.

Additionally, the talent pool in Latin America is rapidly growing and improving in tandem with the emergence of high-tech industries. As the workforce diversifies in skillsets and expertise, there is potential for more innovation and productivity. It also allows investors to tap into an emerging market in its infancy. According to a report by Latam Republic, several foreign investors have launched initiatives to support Latin American entrepreneurs amid the rise in its venture capital marketplace.

Story editing by Shannon Luders-Manuel. Copy editing by Paris Close.