In mid-2024, Mike Packer, a partner at QED Investors, a fintech-focused firm, predicted that Latin American fintech funding had hit its lowest point and was poised for a rebound. While the recovery hasn't been entirely linear, current data suggests his forecast was accurate.
Venture capital investments in LatAm fintechs have already surpassed 2023 levels with a month still remaining in 2024. According to PitchBook, $2.6 billion has been invested across 174 deals this year, compared to $1.5 billion across 241 deals in 2023. While this marks a 73% growth in funding volume, it remains far from the highs of $7.5 billion in 2021 and $4.3 billion in 2022. Nonetheless, these figures indicate a gradual market recovery.
Packer had previously stated at a May conference that LatAm fintech funding had likely bottomed out. He cited a strong deal pipeline as evidence that the sector was starting to bounce back. This recovery is reflected not only in the data but also in notable deals throughout the year.
For instance, São Paulo-based Conta Simples secured $41.5 million in Series B funding in January, led by Base10, to support its expense management and corporate card software. In May, Félix Pago raised $15.5 million to aid Latino workers in sending remittances back to the region. Similarly, Brazilian AI fintech Magie received $4 million in a round led by Lux Capital, marking the firm's first Brazilian investment.
The resurgence in funding can be attributed to two main factors, Packer noted. Some fintechs that raised funds during the 2021 boom are now seeking additional capital, while others in QED’s portfolio are achieving milestones that make them ripe for growth-stage investments. “Some companies are becoming profitable and reaching meaningful scale, which has increased both the quality and quantity of deals,” Packer explained.
Nicolas Szekasy, co-founder and managing partner at Kaszek Ventures, observed that while the fintech market in LatAm hasn’t drastically changed compared to previous years, the quality of startups raising capital has improved. He noted a shift from consumer-focused fintechs to infrastructure-oriented businesses led by experienced entrepreneurs. This evolution is crucial given LatAm’s need for innovation in financial services, which remain underdeveloped compared to markets like the U.S. or Europe.
Despite the growing momentum, challenges persist. The region has seen few significant exits, with Nubank’s 2021 IPO standing out as the most notable, valuing the company at $41 billion. Since then, there have been no major exits, and even Mexico, one of the region’s more developed ecosystems, lacks a sizable success story.
Moreover, funding remains heavily reliant on local or region-focused investors. Although the number of local funds is increasing, this dependency limits the capital available for startups. Packer emphasized the need for more global investors to view LatAm as a significant opportunity and for entrepreneurs to believe in their potential to drive transformative change.
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