José Luis Silva
Managing Partner
Dux Capital
Startup Contributor

The Venture Capital Revolution in Latam

By José Luis Silva | Mon, 10/04/2021 - 09:08

As I watch the keys on my keyboard moving as I type while creating annoying red worms from my grammatical errors, unicorns, soonicorns and minicorns pop into my mind. These magical words are among the latest words that were not even understood or heard of in Latam 10 years ago. They are so mystical in fact, they have recently been flying out of people’s mouths within the venture capital and entrepreneurial ecosystem in our region. Today, they are part of our lives, especially if you are a tech entrepreneur who is hustling his or her way up the great VC ladder and, of course, some fund managers who have seen their portfolios grow exponentially by having invested in one of these examples.

To understand their origin, it is important to note that our US$6 trillion Latam economy is home to more than 650 million people across 33 countries. Mexico is the second-largest country in the region, second only to Brazil. Mexico has a population of 130 million people with a GDP of approximately US$1.3 trillion. High potential countries, like Colombia and Chile, have more than 50 million and 19 million people respectively. They have also reached a significant economic scale: while Colombia has an approximate US$300 billion in GDP, Chile has a US$280 billion GDP, making both countries prime opportunities for investing.

According to the World Bank, more than 90 percent of companies in Latin America correspond to the small and medium-size category. These businesses are responsible for creating more than 50 percent of jobs and economic sustainability in almost every Latin American country, yet, as many as 75 percent of them fail within the first two years because of mismanagement, lack of funding, entry barriers, regulation and lack of product market fit, among others.  

The Latin revolution in venture capital and entrepreneurship is imminent. The game has already started as local, regional and global VCs have invested around US$9 billion in more than 410 startups in Latam throughout 2021. This figure is very important as it represents a little bit more than the combined invested capital in 2020 and 2019. 

Depending on what metric you use to measure it, there are more than 25 unicorns in the Latam region, hundreds of soonicorns and thousands of microcorns; but before you start crunching numbers, it is useful to understand the difference between these three. First, and the most popular: unicorns. This mythological creation is a privately held startup that has a value of more than US$1 billion and has the potential to continue growing exponentially, to continue innovating and which is well on its path toward becoming an industry leader. Soonicorns are much more recent and rare, as they are a startup on its path toward becoming a unicorn. They are one or two rounds away from becoming a unicorn. Last but not least, are microcorns, a term I coined. These would be startups that have grown incredibly fast, have raised US$1 million, have surpassed their seed rounds and will have a priced round in the near future (i.e. series A).

Having explained these three, it is important to note that in Latam, especially in the Pacific Alliance and Central America, there are great opportunities in amazing startups but also a big opportunity to have more local VC funds that could back them. Nonetheless, the industry has seen global VC funds that have been very active in the region, making up for the lack of local investment. Great examples have attracted the attention of global markets that have put Latam in the brightest spotlight in our industry. Some of these examples are:


  • Kavak, a Mexican online platform that offers insight into buying and selling used cars. Has received more US$1.3 billion with a current US$4 billion valuation and with investors such as SoftBank, QED Investors, KASZEK, Greenoaks Capital Management, General Atlantic, DST Global, Ribbit Capital, Founders Fund, D1 Capital Partners and BOND.
  • DLocal, a Uruguayan cross-border payment processor that connects global merchants to emerging markets. It has raised more than US$357 million from VCs and US$617 million in their June 21 IPO. The last valuation came in at US$9 billion with successful exits for VCs.
  • Notco, a US$1.2 billion Chilean food technology company that produces plant-based meat and dairy substitutes. It has raised more than US$360 million with investors such as The Craftory, SOSV, MAYA Capital, L Catterton, KASZEK, Humboldt Capital, General Catalyst, Future Positive, Endeavor Global and Bezos Expeditions.


  • La Haus, a hospitality company that provides travelers with premium accommodations, locally sourced designs, and smart home technology. It has raised more than US$158 million and is the first Colombian startup to partner with Jeff Bezos and received VC backing from investors sush as NFX, KASZEK, IMO Ventures, Beresford Ventures, aCrew, Hometeam Ventures and Greenspring Associates.
  • Kushki, an Ecuadorian startup that offers clients an integrated payment platform and omnichannel solutions for e-commerce, m-commerce, and physical stores. They have raised US$94 million, with a US$600 million valuation and investors such as SoftBank, Magma Partners, KASZEK, GED Capital, DILA Capital and Clocktower Technology Ventures.
  • Minu, a Mexican insurtech that revolutionizes the financial health of Mexican employees, offering them access to their already worked salary when they need it. They have raised more than US$26 million, with a last valuation of above US$100 million and investors such as FinTech Collective, Vostok Emerging Finance, XYZ Venture Capital, FJ Labs, QED Investors, Next Billion Ventures, Village Global and Banco Sabadell Mexico.


  • Mozper, the first digital bank designed for kids and parents in Latin America. It has raised more than US$3 million with investors such as Y Combinator, Dux Capital, Secocha Ventures, Hetz Ventures, F-Prime, Foundation Capital and Angel Ventures.
  • Cubbo, a Colombian and Mexican startup that fulfills e-commerce orders for direct-to-consumer brands. They repurpose real estate assets and turn them into urban distribution spaces for e-commerce businesses. They have raised US$3 million with investors such as Dux Capital, Graph Ventures and Arrebol Capital.
  • Bamba, a Mexican platform that distributes tailored and market-based financial products to low income and financially excluded workers through embedded insurance. One of the first startups to receive a grant from the Bill & Melinda Gates Foundation, they have raised more than US$2 million with investors such as Dux Capital, Catalyst Fund, Tadium, Gentera and Soldiers Field Angels.

Latin American startups still hold a unique advantage when it comes to delivering impact alongside financial returns. Although Latin American entrepreneurs are known to be resilient, they still face a lack of local investors, complicated regulations, difficult access to international markets and reduced support from our governments.

The investors who took advantage of propitious opportunities within Latin America are now being rewarded with profitable results. In 2020 only, investors were able to cash out at a record-high US$11 billion worth of exits from 105 deals, which include private equity acquisitions and initial public offerings. Exit activity and M&A ticked up during the pandemic, driven by corporate acquirers. Additionally, 2020 was also a record year for exits in the region caused by public market activity (especially in the Brazilian B3 stock exchange). 

More than ever, our Latam entrepreneurs will need the constant support of VCs, private equity, governments, development banks and others to continue growing our economies together and boost the great talent that we see in young Latinx entrepreneurs.

Photo by:   José Luis Silva