Start-up Investing In Latin America Is Entering A New Era

Start-up Investing In Latin America Is Entering A New Era

Financial technology start-ups are disrupting different industries, but the main sector of Latin America that sees major changes is the traditional banking industry.

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Investors outside the Latin American region find it challenging to invest in local start-ups. Still, the time to fund an early-stage start-up on the continent has never been better, as Tech Crunch`s contributor Nathan Lustig opinionated.

Who are the pioneers?

The Argentinian start-up accelerator NXTP Labs and the first certified impact investing fund in Brazil, Vox Capital, are among the VC companies that paved the way for others. Despite the challenges, the flow of doing early-stage start-up deals improved considerably. Thus, the start-up ecosystem in Latin America evolved.

Silicon Valley venture firms made their first investments in Brazil five years ago in 2011, helping to spur an important cycle of venture capital activity across Latin America.”, according to the report named “Latin America Venture Capital: Five-Year Trends” that is available at lavca.org.

“Since that time, the venture and entrepreneurial ecosystem has evolved not only in Brazil, but also in Argentina, Mexico, Chile, and Colombia.”, stated the report.

On the whole, the research shows that investors in the region have closed deals worth $2.3 billion, as techcrunch.com noted.

Fintechs attract investments

Financial technology start-ups are disrupting different industries, but the main sector of Latin America that sees major changes is the traditional banking industry. Fintech start-ups are finding opportunities in the largely unbanked population on the continent.

As Finnovista (finnovista.com) pointed out, the number of fintech start-ups in Latin America is more than 1000. The latter are reportedly working across the field of financial services, from payments, lending and crowdfunding to management tools and wealth management, to name but a few.

“Latin America has now a “perfect storm”: a fully operational technological startup ecosystem with a critical size, young and expert talent in financial services and digital technologies, national and international venture capitalists both committed with the region, cheap and ubiquitous digital technologies available to the vast majority of the population, governments eager to see how innovation reaches the unserved population, a young and growing middle class and innovative solutions that are not constrained by the legal frame.”, as the article noted.

The promise of disruption is already there. Time will show how it will be realized in practice.

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