How Latin American Startups Are Shifting Gears Amid a Sustained Decrease in VC Funding

The two years that followed the peak of the COVID-19 pandemic (2020 and 2021) were some of the best in technology startup history. At a global level, startups raised $643 billion in 2021 compared to $335 billion in 2020, according to data from Crunchbase.

Latin America was no exception. In 2021, investment in Latin American startups grew 300% year-over-year, reaching $19.6 billion.

By 2023, however, the global VC space had cooled significantly, with Latin America witnessing one of the greatest contractions of startup investment in the world. Total investment into South and Central American startups reached $2.9 billion in 2023, an 84% drop from its 2021 peak.

"In the tech realm, basically, many investors are waiting," Michael Puscar, an entrepreneur and investor based in Colombia, told The Latin Times. "They are waiting to see what happens with interest rates in the federal banks, among other issues."

The tides could be shifting, however. This month, Bloomberg reported that venture capitalists in the region are sitting on billions of dollars in "dry powder" -- extra cash waiting to be deployed into startups in the region -- and they're becoming more "aggressive" in how they invest it.

Leave a Comment