A Look At What's in Store for Latin America's Venture Capital Landscape in 2026

Venture capital investment in Latin America, like elsewhere in the world, was riding an all-time high in 2021, hitting $16 billion.

In the years that followed, the market has corrected. And albeit painful, investment levels are hovering right around pre-COVID levels. In 2024, VCs invested $4.5 billion across 751 deals in the region. Last year that number dropped slightly: it clocked in at $4.1 billion across 681 rounds.

With a 13.8% jump in capital deployed, but the fewest deals since 2017, the landscape seems to be outlining a clear message: investors are writing bigger checks to fewer companies.

Investors and analysts claim that the market is wary of whether early gains by regional AI startups are sustainable, Moreover, other persistent barriers, both structural and cultural, continue to bedevil VC activity in the region.

AI investment in LatAm

Since the launch of OpenAI's ChatGPT in 2022, the AI race kicked into full swing, fueled by billions of dollars of venture capital investment.

While Latin America remains many steps behind countries like the United States and China, recent developments, including Mexico's Coatlicue supercomputer project, and Chile's Latam GPT – the region's first large language model (LLM) – have made headlines regionally and sparked an interest in developing the technology locally.

Enterprise investments are also helping Latin America to catch up with other regions. For example, Ness Digital Engineering opened a high-impact, nearshore Center of Excellence for AI-driven Intelligent Engineering in Guadalajara, Mexico, at the end of 2025.

"By investing in Latin America's vibrant tech ecosystem, we're creating a future where proximity fuels partnership, collaboration and scale meet ingenuity," said Amit Srivastava, Vice President, Engineering at Ness.

Ana María Prieto Peña, an investment associate at B Venture Capital (BVC), which invests in early-stage B2B startups in Peru, Colombia, and Brazil, said some investors are cautiously observing AI startups making returns not normally seen in early-stage companies in the region.

"What I've seen with AI is that lately, companies are reaching revenues in six months that they never used to reach," she told Latin Times. "Before, startups that were six months in and generating $25,000 had a hard time getting past that. Now you see companies that are barely a year old already hitting $100,000 in revenue."

The rise of 'seedstrapping' means that these revenue figures are also being achieved with smaller teams, as is the case of startup Myuser.

Early monetization may be a doubled-edged sword for startups, as investors worry about whether the growth is sustainable long term.

"Things are happening too fast," Prieto Peña said. "You have to be more cautious about what they're really building, and whether it's going to be replaceable."

Early-stage continues to take a hit

Financial technology has fueled LatAm's startup ecosystem in recent years. The industry grew 340% from 2017 to 2024, according to the Inter American Development Bank.

Last year, the sector represented 29% of all deals, but captured a massive 61% of total funding, according to Cuantico VP, a research and analysis firm specializing in the region. Much of the capital came from later-stage rounds for Mexican fintechs like Plata and Klar.

For early stage fintechs – and smaller startups in other verticals – capital is harder to come by.

Cuantico VP warned that the funnel for later stage funding rounds could be drying up as pre-seed funding fell 40% in capital and 39% in number of deals in 2025. It is the lowest pre-seed activity since 2018, the firm added.

For Juan Diego Ramirez, co-founder of Rayros Servicios Financieros, a startup that provides microcredit for motorcycle purchases in Colombia, raising venture capital has been tougher than expected.

"What I've perceived is that right now, everyone is very focused on the AI trend," Ramirez told Latin Times. "Fintech was a big thing during the pandemic, but it's not being seen as that interesting anymore, because what funds are looking for are those top companies, the unicorns, the ones that will give them those big returns."

Ramirez's company has financed over 1,000 motorcycles for underserved Colombians in the agricultural, mining and services sector.

He said that venture debt, rather than raising capital, "has been easier for us, because the capital goes directly into originating more loans, growing the portfolio." Ramirez also acknowledges that other LatAm countries, like Mexico, Chile and Panama, have been more receptive.

"In Colombia, it's been difficult to find funds," he said. "Mexico has many more debt and equity funds. The ecosystem is more developed there."

According to The Startup VC, which monitors investment activity in LatAm, a decrease in early-stage activity from previously hyper-active funds like SoftBank and Tiger Global, coupled with higher global interest rates, has spelled trouble for early-stage companies seeking capital.

Prieto Peña also argues that development banks – which serve as limited partners (LPs) in many early-stage regional funds – are redirecting investment from fintech specifically because they think the market is saturated.

"When you talk to the development banks, they want to redirect the focus away from fintech because it seems like that problem is already being solved," she said. "The access-to-capital problem may be solved, but there are still problems around savings, around helping people invest. There are many things still missing."

Despite the decrease in activity from the likes of Softbank, other international funds are still exploring collaborative opportunities.

"By bridging Silicon Valley innovation with the fast-growing ecosystems of regional and international markets, we are seeking to build the next generation of AI," said 'Tonton' Ali Diallo, founder of Aurion Capital.

Innovative investment vehicles hit regulatory snags

As traditional VC is retracting from the regional startup scene, other ecosystem players are working on new models to attract capital. They are also running into some legal headaches.

"Colombia's ecosystem is very advanced, but the legal framework is always a few steps behind and is designed for traditional industry," Amalia Escobar Restrepo, a legal partner at Zetta Ventures, an angel investor syndicate based in Medellín, told Latin Times.

The company allows individuals to co-invest in early-stage startups with smaller tickets. She said making the model work in the country requires some creative legal engineering.

"If you're investing at very early stages where you need tickets of $10,000, and your administrative costs eat up a big chunk of that, the formal structures just don't work. So we had to design contracts that let us do what we needed without a formal vehicle. That comes with a whole set of compliance issues," she said.

And it's not just Colombia that is experiencing issues. Escobar said: "All of Latin America has regulatory limitations, but they're not the same limitations. Mexico is hyper-regulated but doesn't have capital-gathering restrictions, for example. If you want contracts with large entities in Mexico, they'll require you to be incorporated there as a Mexican company; that doesn't happen in Colombia. Chile and Peru have their own barriers. We share the same culture, but not the same limitations."

In this context, the flexibility of the crowdfunding model has positioned it as an alternative to traditional VC across the region.

Prominent syndicates include Angel Ventures from Mexico which has facilitated investment for more than 440 members, with $33 million invested, one unicorn, two IPOs, and eight acquisitions produced. In Argentina, NXTP Ventures has backed over 130 startups from which six unicorns and 32 exits were produced through their syndicate. Brazil's EqSeed has channeled over $15 million, allowing investors to participate with tickets starting as low as $950.

Despite these gains, Escobar said more ecosystem players must organize to collectively advocate for regulatory changes.

"If I go alone to knock on the regulator's door ... they shut the door," she said. "But if a large organized group goes with their pain points, it's much easier to achieve regulatory impact."

Governments in the region are starting to respond. Mexico's Senator Camarillo proposed a Federal Entrepreneurship Law looking to provide more support and certainty for startups. On the other end of the region, Chile with its Fintech Act Law and Colombia with its regulatory sandbox, have taken steps to provide structured spaces for safe financial experimentation.