Latin America may not spring to mind as an obvious venture capital hub. But the volatile political and economic history that has often deterred investors, has an upside. Potential is vast, innovation is buzzing, and now growth is flourishing as money floods into the region.

Latin America is the fastest growing region for venture capital funding.

Figures from start-up database Crunchbase show that almost US$20bn flowed into Latin America in 2021, making it the fastest growing region for venture capital funding. That sum was more than three times the equivalent figure for 2020, with most of the capital going towards late-stage start-ups.

Sling Hub (another data platform focused on LatAm start-ups) has described the pace of development as ‘astonishing’. In 2017 there were only two unicorn companies (privately-held start-ups worth over US$1bn) in Latin America. Nine more broke through in 2018, followed by six in 2019, four in 2020 despite the pandemic, and a record 18 in 2021.

Of those companies, eight are fintech – a segment of the market that has enjoyed massive growth with the rise of digitalization. An April study from the Inter-American Development Bank reveals that Latin America was home to 2,482 fintech companies by the end of 2021, accounting for more than one-fifth of the world’s total. The sector attracted 39% of all the venture capital invested in the region last year.

Market capitalization of technology companies as a share of GDP in Latin America is around 4%.

The pace of development is unlikely to abate. The market capitalization of technology companies as a share of GDP in Latin America is around 4% – as compared to around 14% in emerging-market India and close to 40% in the US. Governments throughout Latin America are supporting digital initiatives and smoothing the way for entrepreneurs, as well as for foreign-owned companies to expand there.

Investors remain confident, amid mounting valuations and the surge in late-stage investments last year – meaning more capital is likely to flow towards early-stage outfits. It’s a good time to be an innovator in Latin America.