Buying a used car, renting an apartment, or opening a bank account – all recurring nightmares in Latin America, due to piles of paperwork, lethargic bureaucracy, and legal pitfalls.
New companies created to tackle problems like these are propelling the region to the forefront of the emerging market tech boom. Last year, $ 4.1 billion of venture capital investment flowed into Latin America, topping Southeast Asia’s $ 3.3 billion and outpacing Africa, the Middle East, and Central and Eastern Europe combined, according to the Global Private Equity Association.
In the first half of this year, Latin America raised $ 6.5 billion of venture capital, not far short of India’s $ 8.3 billion.
“We started in this industry in 1999 when there was almost no Internet, almost all connections were dial-up, and Internet penetration was 3%,” said Hernán Kazah, co-founder of Kazhek Ventures, the largest start-up fund in Latin America. with more than $ 2 billion of capital raised to date. “Today, Latin America finally has a critical mass in almost all markets.”
Nubank exemplifies the new generation of Latin American startups. Co-founded in 2013 by Colombian businessman David Vélez after it took him six months to open a bank account when he moved to São Paulo, it has grown exponentially and now has more clients than any other independent digital bank in the world.
An upcoming IPO could value the Brazilian fintech at more than $ 50 billion, according to recent reports. That compares with Mercado Libre’s $ 79 billion value, the region’s response to Amazon and the most valuable company in Latin America, founded in 1999 in a first wave of tech activity.
The latest crop of Latin American startups has attracted the attention of some of the world’s most technologically resourceful investors. Marcelo Claure, the Bolivian-born director of operations for SoftBank, announced last month a second technology fund dedicated to Latin America, committing $ 3 billion in addition to the $ 5 billion allocated to the first fund in 2019.
“We have been incredibly surprised by the quality and quantity of large companies that were starved for capital, so we started making investments,” Claure told the Financial Times. “There is a lot of room to improve the lives of people in LatAm, because all the systems are inefficient and riddled with bureaucracy. . . huge opportunities for technology to change. “
Mexico’s first unicorn, Kavak, is one of those disruptors. Valued at $ 8.7 billion In a financing round last month, the company aims to enhance the often dangerous experience of buying a used car. It offers buyers a mechanical check, a three-month warranty, fast online credit, and home delivery.
Brazil-based Quinto Andar is simplifying the challenge of renting a flat by eliminating brokers and offering their own insurance to screened tenants, eliminating the need for large deposits, guarantors or expensive insurance.
Chilean start-up NotCo has deployed innovative AI to develop unusual combinations of plants to mimic the taste and texture of milk, mayonnaise, ice cream and meat. Worth $ 1.5 billion in a funding round in July, NotCo has now expanded to the US and Canada.
Kavak, Quinto Andar and Nubank highlight how the most successful startups in Latin America are dedicated to tackling the region’s problems.
“This story of bringing Silicon Valley in and trying to tropicalize it didn’t work out,” said Ivonne Cuello, former executive director of the region’s private equity association LAVCA. “The role models that began to be successful were those that said: ‘There are structural problems in the region that can be solved by new companies. . . designed exclusively for the needs of the region ”.
Kazhek’s Kazah said Latin America’s innovators now inspired envy. “You see companies outside the region that say ‘I want to be the Nubank of Germany.’ That didn’t used to happen. “
Financial services has dominated the Latin American startup scene, with about 40 percent of private funding through last year going to fintechs, according to LAVCA data.
Before the pandemic, more than half of the citizens of the region did not use a bank. In just a few months from May to September last year, 40 million people opened a bank account, according to mastercard inquiry.
Fintech startups like Nubank and Argentina’s Ualá played a key role in facilitating the expansion. In Brazil, the central bank launched Pix, a fast money transfer system through mobile phones that has 110 million registered users.
“It has some of the most profitable banks in the world in Brazil and Mexico, so it’s an obvious first success,” said Claure of SoftBank. “These banks are very inefficient, many branches, long lines and all that. . . so we started with fintech. “
As in other regions, the pandemic has accelerated digital change. Latin America has some of the highest per capita coronavirus death rates in the world and some of its worst recessions, but Covid-19 also forced much more economic activity online.
“For many years, Latin America, a region that represents a large percentage of world GDP because they are middle-income countries, has been underinvested in technology,” said Pierpaolo Barbieri, who founded Ualá in 2017. “What we are seeing now is a General catch-up where everyone rushes to see what the opportunities are. ”
In some areas, the region is still lagging behind. “Seventy percent of commerce in China is done online, almost 50 percent in the United States and. . . It is still 20 percent in Latin America, so the economic digitization process still has a long way to go, ”added Barbieri.
Julio Vasconcellos, co-founder of Atlantico, a Latin American venture capital fund, has compared the total market capitalization of technology companies in the region as a proportion of GDP with the same proportion in Asia.
“When you look at the evolution of the US market, the evolution of the Chinese market and now Latin America, the curve tends to look very similar over time,” he said. “It’s slow and gradual until it finally hits a tipping point and really starts to pick up speed.
“Latin America is going through this tipping point about 10 years after the United States and about seven to eight years after China.”
The total capitalization of Latin America’s technology market is 3.4 percent of GDP, he said, compared with 30 percent in China and 14 percent in India. If Latin America were to reach Chinese levels of technological participation in the economy, “we are talking about the equivalent of creating more than a trillion dollars of market value.”
It’s unclear how long that could take. Francisco Alvarez-Demalde, co-founder of US-based Riverwood Capital, has been investing in Latin American technology since 2008. While he agrees that the region is experiencing “a lot of excitement” and that growth from Revenue in the tech sector Be strong, signal that funding ebbs and flows.
“There is a significant increase in the availability of capital in the region, which has accelerated in recent years at a very rapid rate,” he said. “It is difficult to say where we are in the cycle [ . . .] we should be prepared for volatility on that front. “
The region faces other challenges. As a major exporter of raw materials, it is prone to economic booms and busts and its News Primer are volatile. An ongoing electoral cycle is generating a wave of anti-establishment candidates and demands for greater state intervention in the economy.
There are also practical problems. Except in Brazil, software engineers are in short supply and universities are not producing enough tech-savvy graduates. Fixed broadband connections are lacking in many areas.
Meanwhile, SoftBank’s Claure is comfortable raising his tech bets. “Today the Latin American fund has more than 100% of the IRR [internal rate of return] in local currency and it’s probably the best performing fund we have today from an IRR perspective. “
Three successful ventures in Latin America

© Jakub Porzycki / NurPhoto via Reuters
Nubank has the claim to be the most successful story of the Brazilian start-up scene. Since launching a credit card with no annual fees in 2014, the fintech has amassed more than 40 million clients in its home country, Mexico and Colombia.
A funding round this year gave the unicorn a valuation of $ 30 billion and it is now considering an initial public offering in the US With a focus on technology and customer service, the São Paulo-led group has challenged a Brazilian banking industry known for high office and bureaucracy.
Through its smartphone application, Nubank also offers personal and business accounts, loans, insurance, and investment products.
The used car online platform Kavak was founded in Mexico in 2016 by Venezuelan entrepreneurs. The company recently raised $ 700 million in a financing round that valued it at $ 8.7 billion, one of the highest in Latin America. Investors include General Catalyst, SoftBank, and others.
Customers can buy or sell their used cars on-site, with the company acting as an intermediary and conducting vehicle inspections, as well as offering financing, warranties and home delivery. The company now operates in Brazil and Argentina and has its sights on further expansion.

© Joaquin Sarmiento / AFP via Getty
Rappi is the outstanding success of the Colombian start-up. Local entrepreneurs started the company in 2015 to deliver groceries, but it has since branched out into areas such as financial services. Having expanded to nine countries and more than 200 cities, it aims to become the “superpp” of Latin America.
Among Rappi’s innovations is the Turbo Fresh service, which aims to deliver the most requested products to customers in 10 minutes, using sophisticated “last mile” logistics. The company name is a pun on “fast”, the Spanish word for “fast.”