Even for those of us optimistic about Latin America’s (LATAM) business prospects, the path ahead isn’t without challenges. Political tensions persist. Several major economies in the region continue to seek balance and stability. True, the World Bank’s latest estimates did forecast a regional GDP expansion of 1.6% by year’s end, and further growth of an additional 2.7% next year. Skeptical observers may be forgiven for asking what may drive the region to real, sustainable, and impactful growth. The answer to that question is fairly simple—it lies in the brewing tech ecosystem unfolding across the region.
LATAM’s tech ecosystem surge by the numbers
In the last decade, internet penetration in LATAM skyrocketed from 43% to 78%, even surpassing fast-growing China. This, along with education and government-supported education initiatives, led to a surge in skilled IT professionals. By 2023, Brazil had around 500,000 software developers, with Mexico adding another 220,000. Those two countries spearhead LATAM’s talent growth, while the region’s estimates indicate around one million software developers.
These highly skilled professionals seized market and financial opportunities to launch tech-driven companies, propelling the region’s tech boom and outpacing other regions. The 2023 Global Startup Ecosystem Index highlighted 77 rising cities across 11 countries. It revealed that Brazil, Mexico, Chile, Colombia, and Argentina are now outperforming more established Western tech hubs. Despite a tough 2022, venture capital in 2023 surpassed pre-pandemic levels, with 770 deals totaling $4 billion.
However, the numbers alone don’t tell the whole story. To understand why the future of tech startups in LATAM is promising, you’d have to look at a few other factors.
A rich sector and geographic diversity
One of the key drivers is sector diversity. LATAM unicorns represent a wide range of industries, and the list keeps growing. Mexico’s Kavak, valued at $8.7 billion, even a few years back, is a marketplace for used cars. Brazil’s Quintoandar, valued at $5.1 billion, is the most important proptech in the country. Chile’s Betterfly, with a valuation just over $1 billion, focuses on health and well-being.
While certain sectors, like fintech, have stronger representation—Uruguayan unicorn DLocal, with a market cap of $1.9 billion, or Brazil’s Nubank, valued at over $65 billion—tech is growing across LATAM because it addresses a wide range of needs in multiple countries. This organic growth is poised to keep transforming how people in the region do everything, from buying cars to seeking medical care.
Geographic diversity is just as strong. LATAM’s tech startups are spread across the region, with São Paulo leading at $108 billion and 12 unicorns. Mexico City follows, valued at $30 billion with eight unicorns. Bogota, Santiago, and Buenos Aires are thriving too. This widespread growth shows LATAM isn’t dependent on a few isolated hubs; it’s experiencing stable, sustainable growth throughout the region.
The language of business and other cultural factors
While the region’s diverse enterprises are commendable, their bright future is built on several factors. One of them is the growing English proficiency across LATAM. In a global marketplace where English is the lingua franca for investors, board members, and analysts, mastering it to compete and collaborate is crucial.
Beyond language, a broader cultural shift is also driving transformation. LATAM is embracing entrepreneurship, taking risks, and adopting digital solutions for innovation. This shift, along with the rise of incubators, accelerators, and increasing foreign investment, is unlocking the region’s potential. LATAM’s overlapping time zones with the U.S. also provide a strategic advantage, easing collaboration compared to regions like Asia. Together, these factors are positioning LATAM as a strong player in the global tech scene.
There are more incentives driving this growth. Government investments in tech are a growing success factor. The so-called “signaling effect” also plays a part, where young entrepreneurs are inspired by slightly older trailblazers to take risks and start new companies. The region also benefits from a high rate of digital transition across various sectors, from banking to IT, and a culture that celebrates creativity and boldness.
Of course, this doesn’t mean success is guaranteed or constant. The region is still very much a work in progress, with much-needed efforts in education, government initiatives, and continued investments. But as we approach the end of the business year, there’s plenty to be optimistic about. LATAM tech is growing, and its growth is strengthening societies—making them healthier and wealthier. And that is very good news.
Nacho De Marco is CEO and cofounder at BairesDev.
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