The core topics in Part 1 involved Mexico’s dominance, fintech’s grip on the top deals, and the early-stage drought running quietly underneath the encouraging surface data.

In Part 2 we will get into what’s driving those trends. The causes are harder to track, and involve working through a couple of hypotheses, while providing some insight into what comes next.

The SF migration is draining the early-stage pipeline

I published a deep dive on this a few months ago, and the conclusion held up: the SF pilgrimage is real, the satisfaction among those who go is high, and the right next question is what “worth it” actually means for the ecosystem they leave behind.

Taking this a bit further, and drawing from the formation gap at early-stage we highlighted in Part 1, one of the drivers behind the gap is that a meaningful portion of Latam’s most ambitious founders are choosing to build from San Francisco rather than from Mexico City, São Paulo, or Buenos Aires. As a result, these companies do not necessarily show up in Latam’s venture numbers.

A recent report by Latitud, “Latin America Goes Global,” highlights how Latam-born founders have increased their focus on building global companies, from 3.6% in 2021 to 46.1% in H2 2025.

This report also highlights how the current AI era has concentrated capital, and as a result opportunity, to San Francisco. Entrepreneurs, not only from Latam, see launching from SF as a strategy that increases their chances of success. Per data from Stanford cited in the report, Israeli startups that moved to the US were 9x more likely to achieve unicorn status than those that stayed home. Indian startups saw a 6.5x advantage.

It’s also worth noting that the US captures roughly 80% of all global AI funding. In 2025, the Bay Area raised 60% alone, more than the rest of the world combined.

This whole dynamic generates a key question:

What is a Latam startup?

Is a Latam team deciding to relocate to the US to launch a global solution a Latam startup? I believe it is.

Is a startup launching in the US, with a Latam founder along with founders from other regions, a Latam startup? I don’t think that is the case.

(This is a topic that likely merits its own post to be fair.)

This is not a moral argument. It is no doubt fantastic to have Latam talent involved in the best startups and tech companies in the world. Founders should go where they can build the best company.

Trying to understand why angel-seed and early-stage investment in Latam is at its lowest levels in years, the SF migration is part of the answer. The pipeline is thinner in part because some of the best founders in the region are not building in the region. How to account for these startups, and which should be considered Latam vs non-Latam, is a question the ecosystem will have to figure out.

The implication for Latam funds is significant. A deal they would have led two years ago is now a US fund’s deal, priced at US multiples, with a cap table that has no room for Latam capital. That is why Latam funds are beginning to set up a presence in SF.

But is that enough?

Unless the startup is catering to Latam from the start, and global solutions don’t tend to initially focus on Latam, why would founders choose a Latam firm over a US or global one?

Proximity alone is not a value proposition.

The fund landscape is getting thinner

I’ve highlighted before the need to see new VC funds close in Spanish-Speaking Latam. While Brazilian funds have been able to announce new closes in recent years, the story is very different elsewhere. A significant number of Spanish-Speaking Latam funds are currently between vehicles. Some are 12, 18, even 24 months past their target close dates. First closes are slipping. LPs are taking longer to commit.

Whitepaper recently published a study on the Mexican venture capital industry, and the facts are very telling. No new commitments during Q1 2026. Between 2024 and 2025, committed capital grew just 1.6%. New fund formation is stagnant, and managers are running out of dry powder to fund new startups.

The main concern LPs have around Latam VC is liquidity. Paper returns may look promising, but when LPs have been in a fund for 8, 10, 12 or more years, they expect to see those returns in their bank accounts. I highlighted this dynamic in a recent post on IRR.

On the topic of exits, Whitepaper shared an AMEXCAP survey that is very telling about the reality of exits in the Mexican venture capital industry. Bottom line: exits are far from where they should be, and this dynamic limits new LP entry.

When funds are out of the market, early-stage deal flow does not pause politely and wait for them to return. Founders keep building, rounds keep happening, and the capital that would have come from a regional fund gets replaced by US or global players, or in some cases, not replaced at all.

The result is a double compression on early-stage. Fewer founders are building locally because the best ones are going to SF, in part realizing their local VC industry has been stagnant for a few years. And for the ones who do stay, there is less active capital from regional funds to back them at the earliest stages.

Neither of these trends is irreversible. But six months of data suggests they are real, and the early-stage numbers in Part 1 are the output.

Vertical AI is the play. Brazil delivered first.

Here is where the conversation needs to shift.

The discussion in Latam VC for the last several years has been dominated by fintech. Understandably so. The opportunity is still enormous, the exits were real, and the category produced some of the region’s most significant companies. Mexico in particular has become exceptionally good at funding credit infrastructure plays: Clip, Plata, Kavak’s financing arm. Global investors understand that playbook, and they are backing it.

A recent AMEXCAP survey highlighted that 75% of Mexican General Partners consider fintech should be the main target of capital in the ecosystem.

But while Mexico has been deepening its fintech dominance, Brazil quietly did something different.

Enter, the Brazilian legaltech startup, raised $100M at a $1.2B valuation in 2026. It is the first Vertical AI unicorn in Latam. And it matters not because of the valuation, but because of what it represents: a Latam company that found a vertical where AI fundamentally changes the product, built a defensible position in that vertical, and attracted the attention of the most selective US investors in the world.

I wrote about this in my 2025 year-end review, Vertical AI is the opportunity the region should be focused on. Founders and funds need to ask whether a given AI company is solving a truly unique Latam complexity large enough to support a multibillion-dollar outcome, and whether the solution provides optionality to expand globally.

Mexico is playing checkers. Brazil is playing chess.

The checkers game is not bad. It is producing the largest rounds in the region’s history and generating real returns. But it is a game with known rules and known players.

The chess game Brazil is playing is built for what comes next. Vertical AI applied to professional services (legal, finance, healthcare, HR) is a category where the winners are not yet determined globally, let alone in Latam. A Latam company that establishes a dominant position in a vertical AI category does not compete just with Latam peers. It competes with, and can beat, global players.

Brazil found that template first. The question is whether the rest of the ecosystem is paying attention.

And despite the fact that Brazil only landed one of the top 10 deals in the first half of 2026, it may have been the most significant. It shows the blueprint of things to come.

What the ecosystem does with this

The Latam VC conversation in H2 2026 will continue to be dominated by Mexico’s growth numbers, the next fintech megaround, and whoever leads the next large credit infrastructure deal. That conversation is not wrong. It is just incomplete.

The more important question is whether the region is producing the next Enter. Not another fintech unicorn, but a company that uses AI to redefine a vertical that global capital finds interesting, built by founders who chose to build in Latam.

If the SF migration continues, if regional funds keep struggling to close, and if the ecosystem remains focused on deepening existing categories rather than discovering new ones, the early-stage drought in Part 1 will not be a temporary data anomaly. It will be the leading indicator of a structural shift.

Brazil found the next category. The rest of the region has to decide if it is going to follow.

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The expectations coming into 2026 were mixed. Unlike 2025, where there was a lot of optimism, apart from AI it was difficult to figure out what 2026 would look like. Let’s review what has happened, and what to expect during the second half of the year.

Mexico's growth scene has taken over

If you’ve been around this newsletter for a while, you might remember the July 2025 Monthly Download, where we highlighted how for the first time since the second quarter of 2012, Mexico surpassed Brazil in venture dollars. That implied over 13 years where Brazil had dominated quarter after quarter. At the time, I highlighted my expectation that Brazil would continue to dominate, albeit Mexico might be able to win a quarter every once in a while.

Boy was I a bit off.

2026 has been all Mexico. It has led the region during the first two quarters of the year, driven by growth rounds from some of its most distinguished startups: Clip, Plata, Kavak, to name a few.

To put things in perspective, venture funding in the region for the first half of 2026 has hit roughly $2.5B USD. That is a significant improvement when compared with the same time frame in 2025, when funding reached approximately $1.8B USD.

Shifting back to Mexico's dominance, the difference has been so stark during the first six months of the year that it has even pushed some Brazilian VCs to speak up on the topic. Below, a recent post by Rodrigo Baer, Partner at 14B Venture Capital.

As I commented on his post, I agree with the overall message from Rodrigo. I still believe Brazil is in a better overall position than Mexico. However, the distance between both markets has shrunk, and global investors are clearly seeing something they like in Mexico, and acting on it.

All this to say: we need to get used to seeing Mexico taking the quarterly lead more frequently than it did during the previous 15 years. And that is very healthy for the region.

Given Mexico’s lead, I have a tough time seeing Brazil catching up. We should expect 2026 to be the year Mexico leads Latam in total venture investment.

It's not just growth, it's fintech

Mexico’s dominance isn’t just about volume. The type of capital flowing into the country matters as much as the amount.

Last year I published an analysis on how Latam VC could be reduced to Brazil and/or Fintech. When you look at the unicorns at the time, most of them had at least one of those characteristics.

Looking at the largest deals in Latam in the first half of the year, one could argue it’s now Mexico and/or Fintech. Six out of the top 10 deals are fintech or fintech-adjacent. While only three deals are Mexican companies, they are the top three deals and account for roughly $1.2B USD, while the remaining seven deals account for about half of that.

Mexico + Growth + Fintech seems to be the winning strategy these days.

Part of the explanation is structural. Mexico has a large underbanked population, a growing middle class, and a regulatory environment that has been increasingly friendly to fintech innovation. Global investors understand that playbook well. It is the same one that worked in Brazil a decade ago, and they are betting it plays out again in Mexico.

Worth highlighting: ARQ is an interesting case. Its founders are Argentine, and their presence in Mexico started from the beginning, making it difficult to pin down to a specific country of origin.

Argentina’s story deserves more attention than the Mexico narrative is giving it. Three of the top 10 deals in H1 2026 are Argentine companies, Ualá, Humand, and Pomelo, and all three have significant operations in Mexico. That is not a coincidence. Argentine founders have shown a consistent ability to build regionally from day one, and the capital they are attracting reflects that. In a half-year dominated by Mexican megarounds, Argentina is quietly having a strong vintage.

On the Brazil front, they only landed one deal in the top 10 through Enter. That is surprising. It may also signal things to come in the region.

Brazil has historically led Latam by producing companies that attract global capital at scale. One deal in the top 10 for the first half of the year suggests that pipeline may be thinner than usual right now. Whether that is temporary or structural is the question worth watching in H2.

Early stage is a concern

Having a boom in growth and late-stage is great, and it has dominated the headlines for the last few months. However, it’s worth digging deeper, as this has come at the expense of angel-seed and early-stage deals.

During 2026, over 70% of investment has been focused in late-stage and growth deals.

This makes sense in a way. Massive rounds are likely to skew numbers. As long as early-stage and angel-seed deals remain healthy, it shouldn’t be an issue. The reality is that the first two quarters of this year have had the lowest investment in these categories in quite some time.

We are basically asking a smaller number of companies to deliver. Or else.

If this trend continues, it could imply significant consequences as we move forward. The size of the cohort of investable companies at the late and growth stage will shrink as these vintages mature.

Let’s use Mexico as a case study during Q2 2026. The country raised $944M during the quarter, but strip out Clip and Plata and only $39M is left for the rest of the ecosystem. That works out to less than $500K per day in early-stage investment for the entire quarter.

I’ve written before about the bar getting higher: higher concentration of money into fewer deals. What these numbers seem to imply is that there is less money for fewer deals. Improvement is likely as there is usually a reporting delay on new deals, but I doubt the recovery will be significant.

If Q3 2026 shows a meaningful recovery, this becomes an anecdote. Right now, it doesn’t look like one. Six months of data now suggest the volume of early-stage deals in Latam is lower than anything we’ve seen in the last three years.

What’s next

The first half of 2026 has a headline story and a quieter one running underneath it. The headline story is encouraging: Mexico is asserting itself as a regional leader, global capital is flowing into Latam growth companies, and fintech continues to produce outcomes that get noticed beyond the region. The quieter story is harder to ignore: the foundation is thinning.

Both are true at the same time.

In Part 2, I’ll cover what the SF migration means for the ecosystem, the structural challenges facing the fund landscape in the region, and what the Vertical AI trend (and Enter specifically) tells us about where the real opportunity lies.

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For those of you who recently joined the Newsletter: the first Friday of each month I publish the Monthly Download for the previous month, where I share my highlights and use them as an excuse to discuss a couple of topics.

In this edition:

1. Quarterly Trends

2. The Megarounds (outside of Brazil and Mexico)

3. Big News of the Month

4. Coffee Break

Quarterly Trends

I’ve developed a habit of spending some time reviewing the Quarterly Latam Overview Crunchbase publishes. It is a succinct and powerful summary, which allows us to keep a pulse on the region. As I’ve done in the past, here are the 3 things that stood out:

1. Mexico’s late-stage engine keeps running, and the gap over the rest of the region keeps widening.

I’ve said before I was hesitant on whether Mexico could continue leading Latam in dollars fundraised. Well, Mexico did it again and made the margin bigger.

As I’ve highlighted before, the devil is in the details, and two deals were key this quarter: Clip’s $500M USD raise and Plata’s $405M USD raise. If global investors continue to find Mexico’s growth market attractive, we may have to get used to this new regional leadership trend.

2. Angel-Seed and Early-Stage emerge as the structural weakness in the region.

While there was a minor improvement Q2 vs Q1 ($366M vs $354M USD), this is the second worst quarter in this cohort since 2023, only slightly better than last quarter. Mexico is an interesting case study, as the country raised $944M USD this quarter, but considering the Clip and Plata deals, that only leaves $39M USD for the rest.

This is not a minor issue, and understanding the drivers behind this trend could be very telling. Two main options come to mind:

A. Many funds in Mexico are out of the market, leaving entrepreneurs struggling to find active early-stage investors.

B. The talent pool is choosing not to start new companies, possibly finding better opportunities inside larger companies, likely the same ones fundraising massive rounds.

If the answer is option B, several funds expected to close in the near future will find themselves in a complicated position. Most of these cover Spanish-speaking Latam, and Mexico should be their largest market. Worth tracking closely.

3. Latam talent and capital keep flowing to SF.

This is a topic I recently deep-dived into, as a portion of Latam talent is deciding to relocate to SF to build companies with a US or global outset. I’ll highlight my main conclusion from a couple of months ago: “the SF pilgrimage is real, the satisfaction is high among those who go, and the right next question is what ‘worth it’ actually means in practice.”

Interestingly enough, the migration to SF may be one of the drivers pushing Angel-Seed and Early-Stage numbers down in the region. While that can be framed as a positive for founders, it raises the bar for Latam managers competing for the same rounds.

The Megarounds (outside of Brazil and Mexico)

Colombia, Venezuela and El Salvador leading the way for the region is awesome. Too much Mexico and Brazil lately, so happy to see startups in these countries land massive deals. Let’s take a quick look. Spoiler: don’t be surprised if it’s all fintech deals.

1. Venezuela’s Cashea Raises $100M in Funding

Cashea, the Venezuela-based provider of a buy-now, pay-later (BNPL) fintech platform, announced it raised $100M in funding, through a combination of equity and debt investments the company recently structured. For a country that has been through so much recently, including the devastating earthquake that hit just weeks ago, this announcement was a genuine bright spot.

2. Addi Announces $85 Million Series D

The Colombian BNPL fintech Addi raised an $85M Series D round led by Citius and BTG Pactual (seems like this was also a big month for BNPL in the region). Addi will use the Series D proceeds to continue growing the credit platform, strengthen technology infrastructure, and expand the portfolio of financial products for consumers and merchants across Colombia.

3. Duppla raises $60M to expand alternative home financing in Colombia

Colombian proptech Duppla raised $60M in a mix of debt and equity. The round was led by a fund managed by Patria Investments. The new capital will increase Duppla’s financing capacity, expand its residential investment platform, and support its expansion across Colombia, starting with Medellín.

4. Abaco secures $53M to expand SME lending in Central America

The Salvadoran fintech secured $53M through a warehouse facility and a Seed round. Abaco will use the funds to originate more than $350M in loans over the next 24 months, serve more than 10,000 SMEs, and expand operations in El Salvador, Guatemala, and Costa Rica.

Big News of the Month

Mexico’s headlines were dominated by a handful of debt-heavy deals worth highlighting:

1. Aviva raises $18M Series A led by Valor Capital. The Mexican fintech provides loans ranging from $100 to $1,000 to individuals and small businesses. Customers apply through physical kiosks using an AI-powered bot over video calls.

2. Nexu secured a $143M credit line from HSBC. The company provides AI-powered automotive financing with a focus on consumers with limited credit histories. Nexu expects to finance more than 10,000 vehicles through its partner automakers.

3. Digitt Secures $50M financing facility. The company secured the financing facility from Victory Park Capital to expand its credit card refinancing platform for prime borrowers in Mexico, replacing high-interest debt with fixed-rate loans.

Also, the Plata and Nu rivalry is quietly becoming one of the most interesting stories in Latam fintech given recent developments.

Banco Plata receives authorization to operate in Colombia

Plata received authorization from Colombia’s financial regulator to begin operations as a financing company, marking its first international expansion beyond Mexico. The move into Colombia represents the first step in the Mexican fintech’s broader regional expansion strategy.

Nu Is Officially a Bank in Mexico

Nu received final authorization from Mexico’s CNBV to operate as a bank, completing its transition from a Sofipo seven years after entering the country. With 15M+ customers and $5.9B in deposits, the banking license will allow Nu to expand its product offering, including payroll accounts, as it deepens its long-term bet on Mexico.

Coffee Break

House of Coffee (CDMX) - Fantastic coffee shop outside of the Condesa/Roma/Polanco area in Mexico City. This small shop in the southern part of the city has fantastic coffee and several matcha options. Definitely worth the visit if you happen to be in the area.

That’s it for the July 2026 download!

As always, feel free to drop your comments and share your own highlights.

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We talk a lot about VC in this newsletter. Fund sizes, geographic splits, Brazil vs SSL, to name a few of my favorite topics. And let’s be honest, the asset class is sexy. Unicorns, mega rounds, founder profiles, big exits, massive failures by Forbes 30 Under 30… you get the idea. It generates more attention per dollar deployed than probably any other corner of finance.

But the reason VC actually matters has very little to do with what makes it sexy. It matters because of what it builds, and the impact of what it builds is wildly disproportionate to how small the asset class actually is.

I’ve been aiming at this text for a while, because I think the conversation in Latam often gets stuck on the surface level. We celebrate the unicorns, we lament the down rounds, we argue about valuations. We rarely zoom out and ask why we’re even trying to build this thing in the first place.

So let me try to lay that out.

VC Is Tiny. The Impact Is Not.

Start with the size of the asset class. Global VC assets under management (AUM) sits around $3.5 trillion. That sounds like a lot until you compare it to private equity, which is roughly 4x that, or public equities, which trade in the hundreds of trillions. Less than 0.1% of new businesses ever receive a dollar of venture funding.

By any volume metric, VC is a rounding error.

Now look at the output. Here’s what stood out to me from the WEF report:

• 7 of the 10 largest companies in the world by market cap were VC-backed in their early stages (Amazon, Apple, Alphabet, Meta, Microsoft, NVIDIA, Tesla)

• Among US public companies founded in the past 50 years, VC-backed firms are 47% by count and 77% by value

• VC-backed companies account for 42% of total US public market cap

• They account for 64% of all public company R&D spending

• And here’s the one that really jumped off the page: 94% of R&D spending among US public companies founded in the past 50 years comes from companies that were once VC-backed

Yup, I had to double check that last bullet. Of every dollar that publicly traded American companies founded since 1975 spend on R&D, ninety four cents come from companies a VC once wrote a check into.

A tiny share of companies, funded by a tiny share of global capital, produce almost all of the technological progress that ends up in public markets.

Why It Works (And Why Banks and Public Markets Can’t Replace It)

It’s structural, and it’s worth understanding because it explains why you can’t just substitute another type of capital and expect the same outcome.

Banks lend against collateral and expect predictable repayment. A company with no revenue, no assets, and a 75% probability of failure is not a bankable risk. Public markets demand quarterly earnings and punish volatility. A company that needs to burn cash for years before it has a viable product can’t survive that scrutiny.

VC is built for exactly that kind of company. It tolerates failure (3 out of 4 venture-backed companies either die or fail to return capital). It accepts long time horizons (companies now stay private for 12+ years on average before going public). It pairs capital with active partnership (board seats, hiring help, network access). And it concentrates conviction in outliers, knowing returns come from the few breakout winners, not from averaging across the portfolio.

No other pool of capital is structured to do this. If VC didn’t exist, the companies it funds would have a really tough time finding capital. Most wouldn’t get funded at all. Those that do would probably have less capital than they need.

Public markets and PE don’t replace VC. They sit downstream of it.

The US Didn’t Stumble Into This

Here’s the part that should be most interesting for anyone thinking about Latam.

The US venture industry as we know it didn’t exist before the 1970s. The pre-1980 fraction of new US public companies that were VC-backed was effectively 0%. Their share of US market cap was 1%.

What changed was a regulatory tweak. The 1974 Employee Retirement Income Security Act, and a 1979 clarification of the “prudent man” rule, allowed US pension funds to allocate to alternative assets including VC for the first time. Before that, pension capital was legally locked out of the asset class.

After that change:

• VC-backed companies went from 0% of new US IPOs to 38% post-2000

• Their share of US market cap went from 1% to 41%

The most important VC ecosystem in the world was built, in significant part, by a regulatory change that unlocked institutional capital.

This isn’t a story about America being great or Silicon Valley culture. It’s a story about developing capital pools, regulatory frameworks, exit pathways, and talent recycling. The countries that build the infrastructure have the ecosystem.

There is a lesson here for anyone building an ecosystem: the fundamentals are policy choices, not accidents of culture.

Where Latam Sits in This Picture

Now let me ground this in our reality, because the gap is not subtle.

• Latam holds about 8% of the world’s population and roughly 6% of global GDP

• Of the $3.36 trillion in global VC AUM, Latam holds $34 billion. Roughly 1%

• Of the 1,920 privately held unicorns globally, 43 are Latam-based. About 2.2%

• The US and China alone hold 82% of total unicorn value

The conversion rate is the part that hurts the most. In North America and Asia, roughly 1 in 60 VC-backed companies eventually becomes a unicorn (I actually found this hit rate impressive, the first time I looked at it). The WEF data doesn’t give a Latam specific ratio, but given that the region holds 1% of AUM and 2.2% of unicorns, the funnel is clearly narrower.

The question isn’t whether Latam can produce great companies. It already does. Look at the founders, the operators, the startups being built across Brazil, Mexico, Colombia, Argentina, Chile. The question is whether the ecosystem around those founders can convert their talent into the kind of compounding machine the US built. Right now, the data says we’re not there yet.

Why We Need to Figure This Out

If you accept the WEF numbers, then VC is not a financial product.

It’s industrial policy. It’s development policy.

The countries that have functioning venture ecosystems produce 94% of their public company R&D from companies that didn’t exist 50 years ago. They build the firms that dominate global market cap. They create the founder factories that seed the next generation, the operators who become angels who become GPs who become LPs who fund the next wave.

The countries that don’t, import the output and pay rent on the underlying technology forever.

This is why I think the Latam VC conversation is more important than it sometimes feels. We’re not just trying to generate fund returns or back the next regional unicorn. We’re trying to build the only mechanism humans have figured out for converting ideas into globally significant companies at scale.

When we argue about fund sizes, or Brazil vs SSL allocation, or the lack of Series A capital in the region, we’re not having niche industry debates. We’re arguing about whether Latam ends up on the producing side or the consuming side.

I know where I would like to see Latam.

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Here’s a quick overview of the article:

• 86 unicorns minted in H1 2026

• ~14 per month average pace

• Overwhelmingly US-based

• Zero Latam unicorns identified

• Dominated by AI across virtually every subcategory

The breakdown by industry:

• AI Foundation Models & Research Labs: 11 companies

• AI Infrastructure / Chips / Hardware: 8 companies

• AI Applications / Tools: 10 companies

• Healthcare / Biotech / MedTech: 10 companies

• Defense / Aerospace / Space: 9 companies

• Robotics / Automation: 5 companies

• Fintech / Crypto / Banking: 7 companies

• Cybersecurity: 3 companies

• Enterprise / Cloud / Infrastructure: 5 companies

• Consumer / Other: 7 companies

From a Latam perspective, three takeaways worth unpacking.

1. Latam is a rounding error at this scale

There has been one Latam unicorn minted in 2026: Enter. The Brazilian legaltech startup raised $100M, reaching a $1.2B valuation. Enter allows legal teams to manage their full litigation portfolio supported by AI agents. The round was led by Founders Fund and included Ribbit, Sequoia, Atlantico and Kaszek. I shared a detailed point of view in May’s Monthly Download.

Enter didn’t make it into the TechCrunch list. It’s a miss by TechCrunch, but I understand why. Producing one unicorn in six months is a rounding error at their scale of coverage. That’s the harder truth to sit with.

To put a bit of perspective on the numbers this article presents, the unicorns produced globally in these 6 months represent roughly 2x the unicorns Latam has produced since the term was coined.

It’s uncomfortable to accept, but we need more wins that hit the US and global scene. That was the case a few years ago. The last couple of years feel like we took a step back.

2. Latam is not playing in most of the categories producing winners

Latam has minimal output in the industries generating the most unicorns globally. AI Foundation Models, AI Infrastructure, Defense, and Robotics represent roughly 38% of the list. These are not areas where Latam has meaningful presence.

AI Applications, Healthcare and Cybersecurity feel like emerging categories in Latam. I’ve argued before that AI Applications is where Latam can produce interesting companies, especially when we go vertical. Enter is a case-in-point. Healthcare seems to be having a moment recently, with a handful of companies emerging, backed by US investors. Cybersecurity efforts have been around for some time but are still limited.

Fintech, Enterprise and Consumer are the areas where Latam has been producing winners for some time. Especially Fintech, as I’ve highlighted in recent Monthly Downloads. These represent only 22% of the list.

The fact of the matter is, Latam has no real presence, or is just beginning to develop it, in roughly 80% of the industries attracting the most dollars globally.

3. The AI dominance is overwhelming, and developed markets are playing a different game

Most of the companies in the list are AI native or AI adjacent. No surprises there.

But taking this a step further, the U.S. is operating at a valuation regime we can’t match. Prometheus at $41B without a public product. Hark at $6B pre-launch. This is peak animal spirits. Contrast that with Latam companies that need real revenue to reach a fraction of these valuations.

One additional note worth flagging: Founders Fund, a16z and Khosla concentration is remarkable. These three names appear in dozens of the deals as investors.

Where this leaves us

The path forward for Latam isn’t chasing the same categories where the U.S. is producing unicorns. It’s finding the verticals that are attractive for US and global investors where we can produce winners that reach US-scale valuations, and doing it consistently enough that we stop being a rounding error.

Enter is proof it’s possible. We need more.

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First closes are slipping. Some funds are 12, 18, 24+ months past their target. LPs are taking longer to commit. Emerging managers who thought they’d have a first close in 2025 are now hoping for one by end of 2026. Established managers who expected a straightforward re-up commitment from existing LPs are getting more questions than they used to.

That’s not the problem I want to write about. Fundraising is hard for everyone in this market. The macro is what it is. Rate cycles, LP fatigue with venture, the reset of 2021 valuations still playing out on balance sheets. GPs cannot control most of these variables.

The problem is what some of these GPs do with the founders in their pipeline while they wait for their own vehicle to close.

Two patterns

I’ve been watching two patterns play out over the last twelve months.

Firm A keeps founders warm with implied commitments. A close is “weeks away.” The meetings continue. Diligence requests are sent. Updates get asked for. The tone of every conversation suggests the fund is genuinely close to leading. Months pass. The founder builds a fundraising narrative around a check that was never close, because the fund does not have capital to deploy, at least for now.

Firm B handles the same situation differently. When a founder in their pipeline reaches out, the GP is upfront: “We’re not in a position to lead until Q4. But here’s an honest read on your round, two LPs I think you should be talking to, and a founder in the portfolio you should meet.” No commitment to invest. Real value delivered in the moment. Honesty about the timeline that lets the founder make actual decisions.

Firm A is more common than Firm B in Latam right now.

That is worth naming because it does real damage to founders, and because the incentive structure that produces Firm A behavior is understandable but not defensible.

Before I go further, I should say: I’ve caught myself drifting toward Firm A behavior in earlier moments of my career. It’s easier than you’d think. Most GPs aren’t purely one or the other. The question is where you drift when capital is scarce.

Why Firm A exists

I don’t want to write a moralistic piece pretending Firm A behavior is just about bad character. It usually isn’t. It’s about incentives.

A GP who is 12 months into a stalled fundraise has a rational fear: “If I tell founders I’m not in the market, my deal flow will dry up. When I eventually close, restarting the pipeline will be painful.”

There is also a psychological factor. Admitting that your fundraise is stalled feels like admitting failure. GPs are salespeople by nature. The idea of walking into a founder meeting and saying “I’m not sure when I’ll have capital” cuts against every instinct built up over years of positioning.

So Firm A stays vague. Keeps taking meetings. Keeps signaling interest without commitment. Buys time by keeping the pipeline warm.

The problem is that the founder does not know they’re in a Firm A scenario. From their perspective, they’re in an active conversation with a fund that seems close to leading. They allocate calendar time to it. They shape their pitch to match what the GP seems to want. They tell other firms “we have serious interest from X” as a positive signal. They build cash runway assumptions around a check that will not arrive.

Then the check doesn’t come. The firm goes quiet, or the timeline keeps slipping, or the terms get worse than what was implied. The founder loses months. In a market where 12 to 18 months of runway is what most seed and Series A companies have, losing 3 to 4 months to a Firm A scenario is not a small cost.

What Firm B is actually doing

Firm B is not noble or naive. Firm B is making a different bet about how reputation compounds.

First, founders talk to each other. A founder who was strung along by a firm tells other founders. In an ecosystem as small as Latam, this word gets around faster than most GPs realize. The reputational hit from Firm A behavior is real, just delayed and hard to measure.

Second, LPs are watching. Not always explicitly, but they hear things. When a GP is raising a next vehicle and references from founders come back mixed, it matters. LPs know that how a GP behaves in tough moments predicts how they’ll behave in easy ones. A GP who mishandles founder relationships when capital is scarce is likely to mishandle them in other ways too.

Third, being upfront actually preserves the relationship better than pretending. A founder who is told “we’re not in the market until Q4, but here’s how I can help you” comes away with a different feeling about that GP than one who feels strung along. The first founder respects the honesty and stays open to a future conversation. The second founder feels used and remembers it.

Firm B is not being generous. Firm B is playing a longer game where reputation compounds and honesty about limitations is a competitive advantage.

What honest looks like in practice

Being Firm B is not just about saying “we’re not in the market.” That’s the start, but it’s not enough. The value comes from what you do next.

The best version of Firm B behavior includes:

Direct honesty about the timeline. “I expect to be able to lead by Q4, but I could be wrong. If you need capital before then, I would look at other alternatives.”

An honest read on the founder’s round, without positioning. “Your metrics support a $6M round, not the $10M you’re targeting. Here are the two gaps I’d address before you go to market.”

Concrete help that costs the GP something. Introductions to two LPs who might invest directly. Introductions to another GP in the region who might lead. An introduction to a founder in the portfolio who can share what they learned raising in this market.

Follow-through when the founder acts on the help. If the GP made an introduction, they follow up on it. If the founder took the advice, the GP asks how it went.

Firm A behavior signals interest without cost. Firm B behavior delivers value without commitment.

For founders navigating this

If you’re a founder currently fundraising in Latam, you should assume that a meaningful percentage of the funds you’re talking to are in Firm A mode. This does not mean they’re bad actors. It does mean their signals are less reliable than they appear.

The specific question worth asking in the first conversation with every firm:

“Do you have an active fund? And if not, what’s your LP commitment status right now?”

Specific answers are compatible with real timelines. Vague answers are compatible with anything, including nothing.

This is not a trick question. Legitimate GPs won’t take offense. They may be evasive if they’re in Firm A mode, but that evasion is exactly the information you need.

For LPs evaluating Latam GPs

The way a GP behaves with founders during a stalled fundraise is a signal worth incorporating into your diligence. LPs typically ask GPs for founder references, but the references given are curated.

The interesting references are the ones GPs would not give voluntarily. Founders who passed on capital, founders who were strung along, founders who worked with the GP briefly and did not continue.

I understand these are hard references to source. But the information they provide about GP character and reputation is often more accurate than the curated version.

For the ecosystem

Latam VC is still a young market. Norms are still being set. The behavior of GPs during this cycle will shape how the next generation of founders and LPs think about the ecosystem.

If Firm A behavior becomes the default, founders will trust GPs less. LPs will price in more risk. The best founders will look elsewhere for capital. The ecosystem will slowly move toward the worst version of itself.

If Firm B behavior becomes more common, the opposite happens. Founders build relationships that last across funding cycles. LPs see the region as a functional market with real professional norms. The best founders stay in the ecosystem because they trust the people funding it.

This is not a moral argument. It’s a coordination argument. Every GP acts in their own interest, but the aggregate of those actions determines what kind of ecosystem we have.

Be Firm B.

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For those of you who recently joined the Newsletter: the first Friday of each month I publish the Monthly Download for the previous month, where I share my highlights and use them as an excuse to discuss a couple of topics.

In this edition:

1. The Megaround

2. Big News of the Month

3. Best Content of the Month

4. World Cup 2026

The Megaround

Clip Launches Mi Clip Wallet, Secures US$500 Million

Mexican fintech Clip launched “Mi Clip,” a comprehensive digital wallet ecosystem designed to accelerate digital payment adoption, expand merchant acceptance, and broaden access to formal financial services across Mexico.

It should be highlighted that the wallet was developed in strategic partnership with Ant International, Mastercard, and Televisa-Univision. The company also announced it secured a US$500 million investment from undisclosed investors, raising Clip’s valuation above US$2.5 billion. The capital injection ranks among the largest startup funding rounds in Latin America.

Let’s unpack what is happening here.

First off, the trend continues. Category winners capturing massive funding rounds to expand their dominance. Mi Clip should significantly expand the reach the company has in the Mexican market.

Second, this is not the first time we see Ant Financial execute a strategic investment in the Mexican fintech ecosystem. We highlighted in the Monthly Download of October of last year, the strategic investment Ant made in R2. The partnership with Clip allows Ant to provide infrastructure designed to scale digital wallet operations. The collaboration integrates Mi Clip into Alipay+, a global cross-border payment network connecting 50 digital wallets representing approximately 2 billion user accounts across 150 million merchants worldwide, including 10 national QR payment schemes.

During its initial phase, the integration will allow international travelers to make purchases at Clip-affiliated merchants using their domestic e-wallets. A later phase will enable Mi Clip users in Mexico to conduct international transactions through the Alipay+ network.

Call me crazy, but it sounds like the Asian giant has some real interest in the Mexican market, and they are willing to make the necessary investments to materialize their intent.

Third, what about Mastercard and Televisa-Univision? Mastercard supports the ecosystem by providing global payment network capabilities, interoperability standards, and secure acceptance infrastructure across both card-based and digital wallet transactions. Televisa-Univision will leverage its nationwide media to encourage consumer adoption and improve financial literacy.

It’ll be interesting to see how this partnership unfolds. All the pieces are in place. Can they work together? Will Ant acquire Clip in the near future? Will we see additional moves by Ant or competitors? Time will tell.

Big News of the Month

Plata secures $300M debt facility from Oaktree, Macquarie, Fasanara and Banco Covalto

Big month for fintech. We highlighted Plata’s recent equity fundraise a couple of months ago. Now they announce they secured $300M in new debt financing from a group of global institutional lenders including Oaktree, Macquarie Group, Fasanara Capital, and Banco Covalto. The capital will be used to strengthen Plata’s funding base as it scales operations in Mexico.

This makes a lot of sense. Plata received its banking license in December 2024 and recently closed a $405M equity round. This new $300M debt facility signals a shift toward a more diversified capital structure spanning equity, deposits, and institutional debt.

Further, Plata’s funding becomes more sophisticated, as it will not only be dependent on venture capital. The fact that global institutions are participating in this debt financing is also a positive signal, as these players have interest in the Mexican and Latam markets.

Betterfly acquires Mexico’s Minu in a $100M deal

Chilean insurance and health unicorn Betterfly acquired Minu, a corporate financial wellness startup, in a deal valued at approximately $100M. Minu provides employee benefits through a B2B2C model, including earned wage access, telemedicine, and financial wellness tools, and has landed top-tier logos in Mexico, including Grupo Modelo, Liverpool, Televisa-Univision and Coppel.

This deal makes sense as the acquisition adds financial wellness to Betterfly’s platform, which has focused on physical, mental, and emotional well-being. It also reinforces its position in Mexico, one of its largest markets.

Exits are always positive, I’ve stated this numerous times. While no details were shared, and given Minu’s total fundraise to date of roughly ~$50M, the returns for investors were probably limited, assuming the deal included some cash. It should also be highlighted that Betterfly and Minu share some key investors, so this might be a deal that makes a lot of sense for these funds.

SpaceX IPO

This isn’t usually where I discuss public markets, but the SpaceX IPO matters for topics we’ll be discussing here soon.

Let me start by stating the obvious: this IPO was massive. We have never seen something like this. The following chart by Axios does a great job landing this point.

As a result, the windfall of returns for investors will be significant and will materialize in the upcoming months. Why does this matter for Latam? As LPs have access to significant liquidity, they will look for opportunities to invest that capital. One can assume they will likely continue investing with managers involved with this transaction. However, it is likely that as many LPs have liquidity, they will need to expand beyond their core managers and strategy. The question here is whether any of these will take a look at Latam. If some of this liquidity, even if it seems tiny, is directed towards Latam, it could be great for our ecosystem.

Building on that train of thought, IF (and it is a massive if) we have similar outcomes with public offerings in companies like Anthropic and OpenAI, the liquidity may be so significant that Latam may become an attractive opportunity for certain investors.

Quick pulse on where you stand regarding SpaceX:

Curious to see how this newsletter's audience is positioning around it. Results in a future edition.

PayPal Ventures shutters as company restructuring continues

It’s been a rough time for Corporate Venture, both in Latam and globally. Those who know me closely understand that I’ve seen it up close. I haven’t shared details about my experience because it didn’t feel right, and it still doesn’t. The time will come.

When I saw the news on PayPal Ventures it felt like a gut punch, but also a validation of a truth I keep learning: corporate venture is tough, and doing it right is tougher. PayPal Ventures has invested in a handful of Latam startups, so it’s terrible news to lose another investor in the region.

Per the official statement, PayPal Ventures will be winding down operations and has a few employees supporting its portfolio of startups. However, it has paused new investment activity, at least for now. It seems they are doing a proper sunset: being upfront, communicating, and maintaining support for their portfolio. Those who’ve lived it will understand why this matters.

Best Content of the Month

Are Mega-Funds Taking Over Seed?

This recent article by Pavel Prata is worth the read, and continues on the theme of the Mega Fund Era we’ve highlighted in the past. Prata argues that mega-funds are no longer occasional participants in Seed investing, they have made it a core part of their strategy. Analyzing more than 20 of the largest VC firms across the SaaS, ZIRP, and AI eras, most mega funds are deploying more capital into Seed than ever before, with many doubling or tripling their early-stage activity. At the same time, the “typical” Seed deal involving a mega-fund remains in the $5-8 million range, despite the headlines generated by $50-100 million mega-seed rounds. Those outsized financings are real but represent the tail of the distribution rather than the norm.

The more important shift is not simply that mega funds are investing earlier, but that many are increasingly leading Seed rounds and setting pricing, terms, and syndicate composition. The research suggests that competition for emerging managers is strongest in traditional Seed, as firms like a16z, General Catalyst, Lightspeed Venture Partners, and Accel have significantly expanded their presence. The result is a bifurcated early-stage market: one ecosystem of highly selective mega seeds and another where mega funds and specialist Seed investors increasingly compete for the same companies.

Murph Capital

Are Mega-Funds Taking Over Seed?

A month ago I posted a tweet with a pretty simple question: are mega-funds actually taking over Seed or does it just feel that way? 65,000+ impressions and a few hundred DMs later, it was clear the question had hit a nerve…

Read more

2 months ago · 17 likes · 6 comments · Pavel Prata

Latam AI Reports

If you’ve been around this newsletter long enough, you know I’ve highlighted the need for Latam proprietary data. This month, Canary and Hi Ventures delivered exactly that.

Canary’s The State of AI in LatAm Startups maps how Latam founders are actually adopting AI, with insights into implementation, challenges, and where AI is creating the most impact. Hi Ventures’ The State of AI in Latin America 2026 gives the annual overview of funding trends, technology breakthroughs, and competitive dynamics shaping the industry. Both worth reading.

Worth highlighting the following graph on AI from my 2026 Latam Entrepreneurs expectations survey I shared at the beginning of the year.

World Cup 2026

I couldn't let this Download go without mentioning the World Cup, especially with Mexico, the US, and Canada hosting. I tried to find some good content around it, and the following chart by Prof G made an impact. It could be said the World Cup Final is the SpaceX IPO of sporting events, its reach is massive.

Estimates indicate three-quarters of the world’s population will engage with the tournament. Huge.

Also, kudos to Santiago Arau for this legendary photo of the World Cup inauguration ceremony in Estadio Azteca (yep, not Mexico City Stadium).

Vamos Mexico! Vamos Latam!

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This is Part 5 of a series I started in March 2025 on the common mistakes I see Latam founders make when raising capital. It’s been over a year since the last installment, but it feels right to reboot this series. For new readers, the previous installments are linked at the bottom.

The “Positive PR = Success” Fallacy

LinkedIn feeds get flooded every year with posts about entrepreneurs making the Forbes 30 Under 30 list or startups being named “most promising” in some country or industry. There’s nothing inherently bad about those lists. They sell magazines, generate clicks, and can be exciting milestones. I have good friends who’ve made them. Some even landed the cover. It’s a cool moment, and family, friends, and colleagues will understandably celebrate it.

It’s also worth noting that some of these lists allow for (or require) paid inclusion. That doesn’t make them less useful, just something to be aware of. For some startups, this type of exposure has helped with enterprise sales or brand visibility. I can think of several startups that have leveraged these lists.

But at the end of the day, these mentions say very little about a company’s long-term success. These lists aren’t designed to validate a business model or traction. They’re curated based on what the publication believes will spark attention.

Including “we made this list” in a pitch deck is a poor use of space. It doesn’t move the needle for serious investors. In most cases, it belongs in a commercial or sales deck, if at all.

The AI hype cycle has made this dynamic worse. The new version of the 30 Under 30 slide is “we were named to TechCrunch’s AI Disruptors 60” or some similar list. Same dynamic, different outlet.

If you make it onto one of these lists, enjoy it, leverage it for sales and brand. But know that most investors will gloss over any slide that highlights it in your pitch.

The “Winning a Startup Competition = Success” Fallacy

The same logic applies to startup competitions. Many events, universities, and accelerators host them. I’ve been a judge at a few. There’s real value in participating: networking, mentorship, exposure, feedback. Some are so well-executed they’ve become a solid source of deal flow.

But just like with PR, including “we won Competition X” in a pitch deck rarely strengthens the case. Winners are often chosen based on the slickest deck, the most charismatic presenter, or the trendiest market. Not necessarily the most compelling investment.

There are exceptions. If a competition includes a meaningful investment backed by real diligence, that can be a useful signal. But more often than not, winning a conference’s startup contest is a nice anecdote, not something that needs to be in your pitch materials.

What It Signals to Investors

When a pitch deck highlights awards, PR shoutouts, or competition wins as key accomplishments, it raises an unspoken question for most investors:

Was there nothing stronger to showcase?

These milestones aren’t meaningless. They can reflect momentum, hustle, or storytelling strength. But they’re not a substitute for fundamentals: traction, engagement, retention, or signs of product-market fit.

If those signals are missing, or buried beneath headlines and logos, it can give the impression that the focus is more on perception than performance. That’s not always fair, but it’s often how it reads.

In short: if you have the metrics, lead with the metrics. If you don’t have them yet, focus on telling a compelling story about the progress you’re making, and be mindful about what each slide is really communicating.

Previous installments of this series:

• Common Fundraising Mistakes Part 1: NDAs, bankers, and valuation consultants (March 2025)

• Common Fundraising Mistakes Part 2: Speaking poorly about other founders (March 2025)

• Common Fundraising Mistakes Part 3: “We have no competition” (May 2025)

• Common Fundraising Mistakes Part 4: The anecdotal evidence trap (November 2025)

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It’s a phrase you hear constantly from managers. I know I have argued the point in the past. The logic goes something like this: under the following scenario, LPs prioritize higher Multiple on Invested Capital (MOIC) over higher IRR.

• Fund 1: 23% IRR, 3x MOIC

• Fund 2: 26% IRR, 2.6x MOIC

If you ask how a fund with a higher MOIC can have a lower IRR, it's important to understand how IRR works. IRR is the time-weighted return of the fund. It measures not just how much you made, but how quickly. Two things drive it: the size of the cash flows, and when they happen. This includes both directions, the capital calls from LPs into the fund and the distributions from the fund back to LPs. The timing of every flow matters. A dollar distributed in Year 7 contributes much more to IRR than the same dollar distributed in Year 10, even if the MOIC ends up identical.

This is why timing within the fund’s life matters so much. Funds take several years to build a portfolio. If you first invest in your best-performing company (your “fundmaker”) in Year 1 vs Year 4, the IRR having invested in Year 1 will look better than if you invested in Year 4, even when the multiple at exit is the same. MOIC, on the other hand, is not influenced by time. It is determined as exits accumulate in the fund and the fund finally closes. As a result, what really counts is MOIC at exit.

A further argument is that funds that obsess over IRR are either marking up too aggressively or playing optics with their carrying values.

The inspiration for this post was a recent chart Peter Walker from Carta shared on IRR percentiles by vintage for 2,276 US venture funds. I included the chart in my most recent Monthly Download. Here it is again:

What the data shows is that IRR dispersion in early years is wild. Top quartile funds from the 2021 vintage are sitting at 15.2% net IRR. Median is 1.3%. Bottom quartile? -4.3%. None of those numbers tell you much about what those funds will ultimately return. Vintage 2021 might “shape up to be a tough one,” as Carta itself notes, but five years in, the IRR signal is mostly noise.

So in this sense, “IRR doesn’t matter” is right.

That has been the orthodox view for years. But the framing is starting to break down, and the reason matters for anyone allocating to or raising venture capital today.

An important shift

Companies are staying private longer than they used to. In the US, the data shows companies remain private roughly 10 to 12 years now vs. ~7 years a decade ago. Worth flagging that this data point isn’t directly applicable to Latam, where companies rarely go public at all. That’s not a footnote. It’s part of the problem we’ll get to.

What we should keep in mind is that funds generally promise a 10-year horizon, but we are now realistically looking at 13 to 15 years to full liquidation. The math of “wait long enough and MOIC reveals itself” works fine when the wait is 8 years. It works much worse when the wait is 13, 14, or 15 years.

In that world, IRR becomes significnatly more relevant for LPs, especially when they measure whether the wait was worth it.

Consider two funds, both returning 3x MOIC to their LPs:

• Fund A returns 3x over 8 years. Net IRR: roughly 22%.

• Fund B returns 3x over 14 years. Net IRR: roughly 11%.

Fund A is a strong vintage. Fund B is barely beating public market returns, and that’s before accounting for the illiquidity LPs accepted to be in the asset class. Same MOIC, fundamentally different outcomes.

Sophisticated LPs already understand this. The “IRR doesn’t matter” frame is convenient when everyone is in the early years of a fund, but it loses its appeal when an LP has been waiting 12 years. Unless, of course, you can deliver a 5, 7, or 10x fund. Under that scenario LPs are likely happy to wait and the IRR should still be able to hold up nicely.

The Latam compounding problem

This is where things get harder for Latam VCs specifically, and where the IRR conversation becomes urgent rather than academic.

Latam GPs face two compounding pressures that US GPs don’t, and they hit IRR from both directions: longer time to liquidity, and lower realized value when it finally arrives.

Reason 1: Exits are structurally scarcer

Exits in Latam are structurally scarcer than in the US. The reasons:

• Strategic M&A in Latam is thin. The universe of strategic acquirers willing to pay venture-scale multiples for Latam tech is small, and growing slowly.

• The IPO window for Latam companies on US exchanges has been mostly closed since 2022. Companies that would have IPOed in 2021 are sitting in the portfolio still.

• The secondary market for Latam VC positions is underdeveloped. GPs can’t easily sell positions for liquidity the way US peers can through structured secondaries.

The result: even great Latam companies sit in portfolios longer than equivalent US companies. The denominator in your IRR calculation keeps growing.

Reason 2: When liquidity comes, it comes at a discount

When liquidity finally does come, it often comes at a discount that US-trained investors underestimate.

• Local public markets trade Latam tech below US comps. Bovespa and BMV list Latam tech at multiples meaningfully lower than their US peers, when they list at all. Going public locally is often worse than staying private.

• Strategic buyers price in country risk and FX risk. A deal that would clear at 8x revenue in the US clears at 5x for a Latam asset.

• Secondary buyers demand steeper haircuts on Latam positions because the underlying liquidity options are weaker.

Put both sides together and you get the compounding effect: longer time to liquidity multiplied by smaller realized value when it comes equals an IRR significantly worse than the headline MOIC suggests.

A Latam fund that shows a 3x carrying value across its portfolio in year 7 might realistically deliver a 2.2x to 2.5x MOIC over 14 years. That’s a net IRR somewhere around 5 to 7%, before management fees and carry.

Compare that to public market returns over the same period. The premium for taking venture risk in Latam disappears.

What this means for VCs and founders

The “IRR doesn’t matter” frame works in environments where capital recycles quickly and exits clear at fair value. Latam isn’t that environment right now, and pretending otherwise is going to cause real damage when current vintages mature.

For VCs: the right questions are no longer just about portfolio quality and MOIC potential. They’re about realistic time to liquidity, expected realization discount, and what IRR math you are actually solving for. A fund that wants to defend a 3x MOIC target should be able to walk through a 10-year IRR scenario, a 14-year scenario, and an 18-year scenario. If you can’t, the next fundraise is going to be uncomfortable.

For founders: when your VC pushes you on growth, on capital efficiency, on M&A optionality, this is often the math driving them. They are not being unreasonable. They are doing the IRR calculation on a 14-year hold and trying to make it work. Understanding that math makes you a better partner to your investor, and a better operator of your own company.

All of this to say: “IRR doesn’t matter, until it does.”

In Latam, it does now. The combination of longer holds and steeper realization discounts means that fund managers who ignore IRR are setting themselves up to deliver returns that look bad relative to less risky asset classes.

The next generation of Latam funds will be defined by the GPs who internalize this. The ones who don’t will struggle to raise the next vehicle.

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For a few months now, a trend of entrepreneurs (and VCs) spending meaningful time in SF appears to be a thing. Driven by the AI craze we’ve experienced for the last couple of years, it seemed more Latam founders than I could remember were spending meaningful time in San Francisco (or at least that’s what their LinkedIn posts and casual conversations indicated). Not as tourists. As founders trying to plug into the AI moment, looking for capital, talent, or just the sense that they were in the right room.

The cynic in me had doubts. Was this really a thing, or was the LinkedIn algorithm playing tricks on me? And if it was real, was it actually worth it?

The patterns that worried me were familiar. Founders going because other founders are going. Investors pushing them to go. The ambient pressure of “you need to be here” without much clarity on what “here” actually delivers.

So I decided to run a small poll on LinkedIn to test that instinct against my network.

The question was simple, and was targeted to Latam founders: have you spent meaningful time in SF in the last 12 months?

28 responses came in. The breakdown was more revealing than I expected:

Most of the ecosystem is in motion

If you combine the people who have already gone and the people planning to go, that is 75% of respondents actively participating in or moving toward the SF pilgrimage. This is not a loud minority. Whatever you think of it, it is the dominant pattern in the Latam founder ecosystem right now.

The 25% who are sitting it out are a real minority, but a minority nonetheless. The defaults of the ecosystem have shifted. The question for most founders is no longer “should I go?” but “when do I go and what do I do there?”

The experience seems to be worth it

Of the 15 respondents who had been to SF, 12 said it was worth it. That is an 80% satisfaction rate, which honestly surprised me. I had expected something closer to 50%, with the other half quietly admitting the trip had not delivered much.

The data does not support the “Latam founders are wasting their time in SF” narrative. At least not in my sample. The people making the trip are mostly returning with the conviction that it served them.

This matters because it complicates the cynical reading. If founders were going to SF and getting nothing back, the pattern would not be sustainable. People would stop going. The data suggests the opposite is happening.

But there is a problem with what the data does not say. The 80% satisfaction rate comes with a sampling problem worth naming.

People who invested time and money in a trip to SF have a psychological incentive to say it was worth it. The mind tends to find value in retrospect even when the trip was mediocre, because the alternative is admitting waste.

This is not a critique of anyone who responded. It is just how humans evaluate sunk costs.

A note on the broader sample: 28 responses is not a representative snapshot of the Latam ecosystem. It is a slice of my LinkedIn network. Take the percentages directionally, not literally.

What this means for founders considering the trip

If you are a Latam founder thinking about spending time in SF, the data offers some encouragement. The trip works for most people who take it, and the satisfaction rate suggests the value is there for most who make it.

But the data still leaves you with the harder question. Before booking the flight, you should be able to answer specifically what you are going to do that you cannot do from where you are. Hiring a senior AI engineer the local talent pool cannot support. Closing a US fund that requires meeting in person. Validating a US enterprise wedge that needs face time with design partners.

If you have a clear answer to that question, go. Your trip will likely fall in the 80% that say it was worth it.

If your answer is vague, the data still says you will probably come back saying it was worth it. But you should ask yourself whether that report would survive scrutiny if someone asked you to be specific about what you got.

For investors encouraging their founders

The data also has something to say to the investors who are routinely telling their portfolio founders to spend time in SF. The encouragement is mostly landing on receptive ears. Founders are going. They are mostly returning satisfied.

But the investor encouragement comes with responsibility. A founder going because their investor suggested it without a clear thesis will likely return saying it was worth it, because the social and psychological pressure to validate the trip is strong. That does not mean the trip actually served the company.

If you are pushing founders to go, push them to be specific about why. The number one favor you can do for a portfolio founder is help them sharpen the reason for the trip before they take it, not validate the trip after the fact.

The bottom line

What I am more confident about is the directional signal: the SF pilgrimage is real, the satisfaction is high among those who go, and the right next question is what “worth it” actually means in practice.

If you have a strong opinion on that question, I want to hear it. Leave a comment or DM me on LinkedIn. The best Latam VC writing I do is when you talk back to me.

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For those of you who recently joined the Newsletter: the first Friday of each month I publish the Monthly Download for the previous month, where I share my highlights and use them as an excuse to discuss a couple of topics.

In this edition:

1. New Latam Unicorn Alert!

2. In the Room

3. Big News of the Month

4. Best Content of the Month

5. Coffee Break

New Unicorn Alert!

Enter raises $100M round and reaches unicorn status

It’s been quite some time since I had to update my Latam unicorn database. To be specific, September of last year when Kapital achieved the status. Fantastic news for the region to learn Enter has achieved unicorn status. It’s also worth highlighting that Enter is the first Latam AI-native company to achieve this milestone.

The Brazilian legaltech startup raised $100M, reaching a $1.2B valuation. Enter allows legal teams to manage their full litigation portfolio supported by AI agents. The result is higher win rates and billions of dollars in savings for their clients. The round was led by Founders Fund and included Ribbit, Sequoia, Atlantico and Kaszek. The company shared that since their Series A, revenue has grown 10x, the client base has tripled, and over 300k lawsuits per year are running through EnterOS. Some of the company’s clients include Nubank, Mercado Libre, LATAM Airlines, and Bradesco.

This is great news, and continues the trend we've been seeing: megarounds happening in the region every month (Plata, Kavak, ARQ...). Enter also continues a trend I’ve highlighted in the past: unicorns in the region are skewed toward two categories, Brazilian and/or Fintech.

In my yearly wrap-up of 2025, I actually mentioned Enter as the best example of the approach Latam startups should target within AI: enterprise vertical applications, where regional specificity matters and which are often complex spaces for global players to address. This is specifically what I said about Enter in December of last year:

“A great example is Enter: its AI agents support lawyers across the full lifecycle of a lawsuit and already deliver measurable savings for large enterprises in Latin America. Brazil alone is one of the world’s largest and most complex legal ecosystems. What Enter is building will ultimately travel, but critically, it began with a massive local opportunity. This is the type of playbook I expect more LatAm founders to follow.”

I can only emphasize: this feels like the right playbook. There are multiple opportunities in the region, but finding one that allows for a massive outcome is key.

In the Room

Perspectives

I was once again invited to attend Perspectives by my good friends at Collective. For those of you who haven’t heard of Collective, they are a key partner for organizations looking to develop their talent and prepare them for the future. This edition of Perspectives focused on how organizations should execute the adoption of AI.

The event included a keynote from Christina Wallace, senior entrepreneurship lecturer at Harvard Business School, author of The Portfolio Life, and angel investor. Christina highlighted how our competitive advantage is built through the intersection of our unique knowledge, experiences, and perspectives. The tools we use (ChatGPT, Claude, Copilot, etc.) are in no way the source of our unique advantage.

To wrap up the event, James Wang took the stage. We’ve highlighted James before for his Substack Weighty Thoughts. James is also General Partner of Creative Ventures and author of What You Need to Know About AI (one of my favorite books of 2025). During his fireside chat, James highlighted how only 6% of companies have captured real economic value through AI. The issue is not the adoption of technology in an organization, it’s the culture and the systems in place that enable the adoption of AI, and how organizations can leverage their unique data, which no other competitor can replicate.

As I highlighted last year, we need more of these events in Mexico and Latam. They allow for in-depth conversations and new perspectives. Kudos to everyone involved for bringing many of the leading executives, entrepreneurs, and investors in the region together to share an afternoon focused on the complex issue we are all tackling.

Big News of the Month

Vertex acquires Brinta, Klar acquires Yave

Two meaningful acquisitions during the month worth highlighting.

Vertex, the public US tax compliance software company, acquired Brinta, the Uruguayan startup which provides tax determination, electronic invoicing, and automated compliance filing for tax returns in the region. The acquisition will allow Vertex to expand its services throughout Latin America.

Klar, the Mexican neobank, announced the acquisition of Yave, the Mexican digital mortgage platform, which will allow Klar to expand its credit value proposition beyond credit cards, investments, and personal loans. The company highlighted that this acquisition will enhance their product ecosystem and allow the company to expand into new products like car financing.

Terms were not disclosed in either transaction, and these are likely deals on the moderate side, possibly even acquihires. Regardless, to the extent that they generate liquidity for early investors and founders, they should be celebrated. It’s healthy to have acquisitions in our ecosystem, and a great signal that a US public company is looking at Latam to enhance their value proposition.

BBVA teams up with Nasdaq Private Market (NPM) to facilitate liquidity opportunities for high-growth private companies in Latam

This announcement flew under the radar. Having the largest bank in Mexico sign an agreement that enables startups to access NPM (an independent U.S.-regulated entity) to explore liquidity solutions, including structured tender offers and private secondaries, is meaningful news.

Per the announcement:

“This initiative aims to address the growing demand for liquidity among founders, employees, and early investors in the Latin American tech ecosystem.”

Hopefully we hear about concrete examples of this collaboration in the near future. In an ecosystem desperate for liquidity, this may become a fantastic lever for Latam.

Best Content of the Month

3 charts to catch up on the OpenAI-Anthropic rivalry

As the battle between OpenAI and Anthropic heats up, this article by Pitchbook is a great summary of where we stand.

Anthropic has quietly emerged as OpenAI’s strongest rival, surpassing it in valuation while raising significantly less capital. The company has gained meaningful traction in enterprise software, particularly among developers, where Claude has become a credible alternative to ChatGPT.

It’s worth highlighting that the market is beginning to reward capital efficiency and enterprise monetization, not just technical leadership. For years, OpenAI appeared to be the clear winner. Today, Anthropic is demonstrating that in frontier AI, distribution, pricing power, and enterprise adoption can matter just as much as having the most famous model. As both companies scale toward potential IPOs, commercial execution may prove just as important as technical leadership.

Scott Galloway had the audience. Here’s what he came for.

I’ve followed Scott Galloway’s content for some time now. Through podcasts and his newsletter, Prof G has consistently provided insightful content worth consuming. His recent move to Substack felt meaningful. I bet on Substack a couple of years ago when I started this newsletter. It wasn’t the obvious option, but I bet on it being a platform that would quickly rise to prominence and the value of having more control over my audience.

In this interview, Scott deep-dives into the rationale behind his move to Substack, which was less about audience growth and more about building a more valuable business.

Net IRR means very little for years

Peter Walker from Carta shared a chart on Net IRR percentiles by vintage for US VC funds. Most VCs will tell you IRR is not relevant, focus on TVPI or MOIC. I’ve been that person. And while the argument still holds, especially early on in the vintage, as time passes it becomes a more relevant metric.

I’ll probably be deep-diving on the topic soon, stay tuned.

Coffee Break

Busy month on the coffee front. A couple of shops worth highlighting.

Groundwork (Los Angeles) — Took a few days off in LA with my wife earlier in the month, which allowed us to try several coffee shops. One of our favorites was Groundwork. Digging a bit into the history, the company is a pioneer in the specialty coffee industry, known for being one of the first certified organic coffee roasters in California. It was founded in 1990 in Venice, California.

The quality of the coffee is clearly superb and it shows.

Cucurucho Cafe (CDMX) — Probably one of the coolest and most complex coffee cups I’ve documented to date. Cucurucho takes their craft very seriously and it shows in every detail. Their coffee was a bit acidic for my taste, but definitely worth the visit if you happen to stumble into one of their locations in Mexico City.

That’s it for the May 2026 download!

As always, feel free to drop your comments and share your own highlights.

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A year later, with some new data and quite a few conversations on the topic under my belt, I wanted to revisit it. Where are we now, what has changed, what hasn’t, and what it means for founders.

The short summary: the headline numbers look better. The reality on the ground is a bit more complex.

What the New Data Says

Looking at the Carta data in the U.S., the quarterly graduation rates from Seed to Series A for the 2024 cohorts are the highest we’ve seen since the 2021 vintage. The data signals a bottoming out in the 2022 cohorts, a marginal improvement in 2023, and a significant improvement in 2024.

As an example, here are the graduation rates for Q1 seed cohorts, two years after the seed round:

• 2021: 32.4% (these were the good days!)

• 2022: 15.7% (ouch!)

• 2023: 15.7% (not a typo, same rate as 2022)

• 2024: 21.0% (clear sign of recovery)

At the two-year mark, the 21.0% graduation rate of the Q1 2024 cohort beats the previous nine quarterly cohorts.

What About Latam Data

According to data from the recent report by Cuantico VP & Startuplinks, Series A funding in the region had a slight improvement: from $707M in 2024 to $773M in 2025. However, the deal count decreased from 87 to 72. As a result, the average Series A deal size jumped from ~$8.1M to ~$10.7M, a significant increase of +30%.

These numbers are aligned with a trend we’ve been discussing for the past few months: deals are happening, but investors are being very selective. If you’re able to clear the bar as a startup, chances are you’ll capture a significant check that gives you a clear advantage under current market conditions. It’s also possible that one of the recent megarounds was labeled a Series A, skewing the average upward.

There is (a bit) more money. There are fewer winners.

What Still Holds True From a Year Ago

Re-reading the original, most of the core thesis holds up. Here’s what I’d reaffirm with another year of evidence.

1. Series A is still the ultimate filter. If anything, the data confirms it. The bar didn’t go down. Capital just concentrated around fewer companies that are able to clear it. That also means more companies getting squeezed out.

2. Brazil really is a few years ahead. PicPay’s Nasdaq IPO in early 2026 was the first Brazilian tech IPO in nearly four years. Brazilian Series A activity remains the most consistent in the region, and the early signs of liquidity returning are mostly happening there first.

The asymmetry I wrote about in Two Maps of LatAm VC is just the structural version of this same observation. On top of that, we’ve seen a handful of Brazilian funds announce closings in the past 12 months, which is huge. The region urgently needs the dry powder.

3. Founders had to get creative, and many did. Bridge rounds, insider-led extensions, debt + equity hybrids, profitability-led narratives. The “classic” Series A path remains the exception, not the rule. The founders who treated this as the new normal found a way to extend their runway.

4. Global investors have no appetite for Series A in Latam. To a certain extent, this point not only still holds, it has been reinforced. The emergence of mega funds has created a dynamic where foreign investors are interested in deploying large checks in the region, but they’re looking for companies that can absorb huge checks. Latam Series A companies generally don’t fit that profile.

What This Means for Founders

The 2025 advice mostly still applies. But here’s how I’d refine it:

1. Stop benchmarking yourself to the median. Benchmark to the funded. Reach out to founders who have cleared the Series A hurdle. Understand what they did right, how their metrics compare to yours, what levers they activated. The median experience for a Latam founder raising Series A is still very tough and will take longer than expected. Plan for that, not for the headlines.

2. Take the bridge seriously. Last year I mentioned bridges as a fallback. There’s a cohort of founders I’ve seen skip the classic Series A entirely via an insider-led extension, or raise a small priced round to buy 18 to 24 months of runway and a real Series B story. Maybe even attract a mega fund. If you can pull it off, the math works incredibly well.

3. If you’re not in Brazil or Mexico, plan for it. 78.5% of capital is concentrated in these two markets (through all stages). That’s not a typo. If you’re a Colombian, Chilean, Argentine, or Peruvian founder raising Series A in 2026, your strategy can’t pretend that geography is neutral. It’s not. You either need to be in the 21.5% with a compelling reason why, or you need a structural plan for how Brazil or Mexico fits into your story: customers, expansion, holding company, etc.

4. Pay attention to the pre-seed signal. This one will get really interesting, and it’s a trend to follow closely. Pre-seed funding in Latam dropped ~40% in 2025 ($66M, down from $110M in 2024), which means the cohort feeding Series A in 2027 is going to be thinner. If you’re an investor, that’s a problem. If you’re a founder, it’s leverage.

The bridge strategy I mentioned above could give you the oxygen to raise a meaningful Series A in 12 to 24 months. Investors will have limited alternatives, and if funds start closing soon, they’ll be in full deployment mode.

More broadly, the companies that did raise pre-seed in 2025 will face less competition for Series A capital in 18 to 24 months than the current cohort does. Counterintuitively, this is one of the best times in a decade to start a company in Latam, assuming you can fund the first 18 months.

Final Thoughts

Last year I wrote that the goal wasn’t to paint a bleak picture. It was to be honest about where we were. A year later, here’s where we are:

The squeeze isn’t over, but now we have more angles to understand how to approach it.

The companies clearly in the top decile have more capital available than they did a year ago, on better terms, from more sources. The companies in the wide middle have it just as hard, maybe harder, given how much the conversation has shifted toward “category winners.” And the companies that should have shut down two years ago are starting to. That’s painful but healthy.

The founders raising right now are doing it in a market where, if you do break through, there is real capital on the other side. That wasn’t true in mid-2024. It’s true now.

The road is still hard. But it’s a different kind of hard. And one more year of evidence makes me more convinced of what I wrote last April: building a startup in Latin America has always been very hard, but founders are figuring it out, and those who make it through this phase will capture huge upside.

If you found this useful, I’d love to hear from you in the comments. What’s matching your reality, what’s not? I plan to keep doing these one-year revisits on the posts that hold up. Series A is too important to write about only once.

Related reading from the archive:

• The Series A Squeeze in Latin America, the original (April 2025)

• The Uncomfortable Truth About Fund Size in LATAM, why local Series A capital is so scarce (March 2026)

• Two Maps of LatAm VC, One Glaring Asymmetry, the Brazil/SSL asymmetry behind the squeeze (May 2026)

• The Hard Conversation About Early-Stage Valuations, how valuation choices upstream make Series A harder (January 2026)

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Further, it seemed to me that Brazilian based VC firms are steadily increasing their presence in SSL. Some have established an office and have actual boots on the ground, while others are consistently jumping on a plane and understanding market dynamics in Mexico, Colombia, Argentina or Chile. So it seems a bit counter intuitive that the SSL firms don’t have a similar approach with regards to Brazil.

In order to get a pulse on whether these observations were in fact correct and what other implications could be derived I decided to build a quick database. I analyzed 57 active VC firms in Latam, capturing each one’s HQ, latest fund size (in USD millions), and an estimated split between Brazil and SSL deployment.

The dataset isn’t exhaustive, but it covers the funds you’d realistically encounter in a Pre-Seed to Series A raise across the region: from $1-2M micro-funds to $500+M regional anchors. The Brazil/SSL split is my best read based on portfolio composition, stated thesis and experience knowing and working with these funds, as most don’t publish this explicitly, so consider these directional or educated guesses rather than precise.

The chart below plots each fund as a dot. The vertical axis is fund size; the horizontal axis is geographic focus, with 100% Brazil on the far left and 100% SSL on the far right. A fund deploying 50/50 lands in the middle. Brazil-HQ funds are green; SSL-region funds are red. There are a couple of funds that have their stated HQ in the US, for the sake of simplicity I’ve included them in the SSL bucket.

A few things jump out immediately. The middle of the chart is almost empty, only three funds sit at a true 50/50 split, and notably they’re some of the largest in the dataset. This makes sense, regardless of your HQ and knowledge or strength in a market or sub-region, once you’ve raised 200M, 300M, or 500M you need to have a scope that encompasses the whole region.

A couple of additional trends seem to be emerging from this chart.

Brazilian funds tend to venture into SSL as they grow in size. Smaller funds are Brazilian centric for the most part, and probably opportunistic in SSL. But once fund size increases there seems to be a clear shift toward an increased exposure in SSL.

SSL funds cluster in the 100% line and for the most part have no interest in dealing with Brazil. Interestingly enough, the few that have decided to venture into Brazil with some significance are smaller funds. One could assume they want to find deals that might be attractive for the larger Brazilian based funds once the companies gain traction.

The linear view also makes the size asymmetry obvious: the top of the chart is sparse, while the bottom is crowded. Most funds in the region are sub-$100M, and the small-fund cluster gets visually compressed.

To see what’s actually happening across the size spectrum, it helps to switch to a logarithmic scale, where each unit of vertical distance represents a multiplicative jump rather than an absolute one.

The log view is where the picture becomes clear. First, let’s look at the Brazilian (green) column. As you move down from the largest funds, the green dots progressively shift left toward the pure-Brazil axis. The pattern is consistent: Brazilian funds tend to start as Brazil-only, and as they scale they expand into SSL. Brazil is the home market, and regional ambition is something they grow into.

The SSL column tells a very different story. Almost every red dot sits at or near the 100% SSL line, regardless of size, once we get rid of the cluster in the linear view. SSL funds, even at $100M+, generally don’t venture into Brazil. The largest pure-play SSL funds all stay essentially 100% SSL. SSL funds aren’t graduating into a strategy that includes Brazil. Further, for the most part, those SSL funds that have dipped their toes in Brazil, seem to have only done one-off deals. Probably a founder they already knew or a business model they feel very comfortable with.

Now, at the end of the day, SSL funds need to deal with several markets at once, which adds complexity. These funds may be expanding, opening an office or hiring a team member in a non-HQ market which involves a challenge. For a Chilean fund to open an office in Mexico is no small task, same thing for a Mexican fund expanding its team footprint to Colombia.

There’s also a structural gap worth flagging on the SSL side. Below $50M, SSL is densely populated. Above $100M, there’s a handful of established players. But in the $50–80M range, SSL is notably thin. This is arguably the ideal size for a regionally diversified SSL fund: large enough to lead Series A rounds and follow-on, small enough to maintain discipline. Yet very few funds occupy this slot. (Yes, I’ve made this point before)

The reason this matters becomes clearer when you look at where capital actually gets deployed and where exits actually happen. Brazil-based startups raised $2.1 billion in 2025, while Mexico-based startups brought in $1.1 billion, and Mexico is the largest SSL market by a wide margin. Brazil and Mexico together captured 78.5% of regional VC investment, but Brazil alone is roughly twice the size of Mexico in deployed capital, and substantially more in exit value.

The implication for fund strategy is clear: at scale, you cannot run a serious LatAm fund without Brazil. The market is too large, too institutionally mature, and too dominant in liquidity events to ignore.

What this means for founders

For founders raising in the region, there are clear implications. If you’re Brazilian-focused, the market seems to be well established, and there is strong fund presence across the pre-seed to Series A spectrum. To be fair I am probably missing a good number of micro funds in Brazil as I am not as embedded in the market. If your play is regional and will include Brazil you are also in a good spot, both Brazilian and SSL funds will be available.

Where it gets tricky is if your target market doesn’t involve Brazil, at Series A level your options dwindle in SSL, and while Brazilian funds are showing some interest, to an extent they seem to be opportunistic at this stage. I will expect this to change in the future, as more funds have a formal presence in Mexico or another SSL market, but for the time being, it is what it is.

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Every new business seems to carry the label, and somewhere along the way it lost part of its meaning. A local restaurant opening a second location is not a startup. A consulting firm launched by two former partners is not a startup. And increasingly, some of the most celebrated “startups” in the world don’t quite fit the definition either. So let’s go back to basics, and then question them.

A Startup Is Not Just a Small Business

The most important distinction in early stage entrepreneurship is the one between an SMB and a startup, and they are fundamentally different animals.

A small business is built to be sustainable. It serves a local or defined market, grows organically, and its ambition is profitability and stability. There is nothing wrong with that. Most of the world’s businesses and employment fall into this category, and building a good small business is genuinely hard.

A startup is built to scale. Not to grow steadily, but to grow exponentially. It is a temporary organization designed to search for a repeatable and scalable business model, a definition popularized by Steve Blank that still holds up. The underlying assumption is that the startup doesn’t yet know exactly what it is building or for whom, and the early years are spent finding that answer as fast as possible, usually with outside capital fueling the search.

The other key difference is risk and return. A small business operates within known parameters. A startup bets on an uncertain future, which is why venture capital exists in the first place. Investors accept high failure rates because the potential upside of the ones that work is large enough to justify it.

That model worked remarkably well for decades. And then something started shifting.

The New Playbook Nobody Officially Announced

A recent megaround in Latin America got me thinking about something I touched on in my last monthly download. We are no longer just talking about startups raising tens of millions. We are talking about companies raising hundreds of millions at valuations in the billions, sometimes before they have fully proven their model in the traditional sense. This is a different game entirely.

What separates these companies from the classic startup story is what I would call structural unfair advantages, and they come in a few distinct forms.

The first is access to capital. Some founding teams arrive with relationships and track records that open doors most entrepreneurs will never reach. The fundraising process that takes others two years gets compressed into months. The starting line is simply not the same.

The second is a unique and rare skill set. We are seeing founders who have operated at the highest levels of their industries, who have built and scaled similar products before, and who bring a level of execution certainty that dramatically reduces the perceived risk for investors. These are not people searching for a business model. They arrive knowing what they are building and how to build it.

The third, and perhaps most consequential right now, is timing and the emergence of a transformational technology. AI has created a new category of companies that can reach scale at a speed and capital efficiency that was simply not possible five years ago. The technology itself becomes an unfair advantage, and the founders closest to it start with a head start that compounds quickly.

But none of this happens in isolation. On the other side of the table, the venture capital industry has its own structural shift underway. Mega funds have emerged with hundreds of billions of dollars in assets under management, and those funds have a fundamental problem: they need to deploy large amounts of capital. A $10 billion fund cannot afford to make only small bets. It needs to write big checks into companies that can absorb them and deliver returns at scale. This creates a natural pull toward exactly the kind of companies described above, founders with unfair advantages, operating in large markets, raising massive rounds at ambitious valuations.

The result is a flywheel. Large funds need large rounds. Large rounds go to founders with structural advantages. Those founders can deliver the kind of outcomes large funds need. And the cycle reinforces itself.

This is not a criticism. Capital flowing to high conviction bets with strong founding teams is not a bad thing. But it does reshape what we mean when we say startup. The scrappy team searching for product market fit from scratch is still out there, and still worth celebrating. It is just increasingly one path among several, and arguably no longer the dominant one at the top end of the market.

Understanding this shift matters, especially for ecosystems like Latin America that are still building the conditions for these kinds of companies to emerge locally. The question is not whether this new playbook is good or bad. The question is how we build ecosystems that can produce founders with those unfair advantages, and how we make sure we don’t leave behind the ones who are still figuring it out from scratch.

What This Means for Latin America

Let’s be honest about where the region stands. On all three unfair advantages, access to capital, deep operator talent and proximity to transformational technology, Latin America is structurally behind. That is not a pessimistic take, it is the starting point for an honest conversation.

Access to capital remains concentrated. The local fund ecosystem is thin, dry powder is running low and the mega funds that are writing the largest checks globally are selective about where they deploy in the region. When they do show up, it tends to be for category winners in proven verticals. First time founders building in nascent categories rarely make that list.

The operator talent gap is real but closing. A first generation of founders has now built, scaled and in some cases exited meaningful companies across the region. That experience doesn’t disappear, it recirculates. We are starting to see former operators from Nu, Rappi, Mercado Libre and others launch new ventures, and they arrive with exactly the kind of unfair advantages the new playbook rewards. This is one of the most underappreciated dynamics in Latam tech right now.

On technology, the region faces a proximity problem. The founders closest to AI are concentrated in San Francisco for the most part. Latin America has strong engineering talent but is not yet producing the density of AI native founders that would allow the region to compete at the frontier. That gap will take time and deliberate investment to close.

That said, there are reasons to be optimistic. The emergence of repeat founders is the most encouraging signal. Regional funds are beginning to back operators with track records rather than just ideas. And a small but growing number of Latam founders are spending time embedded in global tech hubs before returning to build locally, bringing back networks and perspectives that didn’t exist a decade ago.

What the ecosystem needs to prioritize is not complicated, even if it is hard. Funds need to close and deploy, because without local capital the region will always be dependent on global players who treat Latam as an afterthought. Corporates and universities need to invest in producing technical talent that is AI literate from day one. And the founders who have already won need to reinvest their time, capital and networks into the next generation, because that recirculation of experience is how ecosystems compound over time.

The new startup playbook is being written whether Latin America participates or not. The encouraging sign is that the region has enough momentum, enough talent and enough hard won experience to write some of those pages itself. But it will require the ecosystem to operate with the same sense of urgency that the best founders in it already do.

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In this edition:

1. Quarterly Trends

2. The Megaround

3. Big News of the Month

4. Best Content of the Month

5. Books Worth Your Time

Quarterly Trends

I’ve mentioned the Crunchbase quarterly Latam VC article a few times now in the Monthly Download. It’s a fantastic overview of where we stand as a region, and as always, a few trends from Q1 are worth highlighting.

1. Mexico led the region in capital raised last quarter, driven by Kavak’s $300M Series F.

Having Mexico outperform Brazil every once in a while is a positive sign. If you’ve been following these downloads, you’ll know I’ve highlighted this recent trend before.

But the devil is in the details. Mexican startups raised $404M vs. Brazil’s $240M. Remove the Kavak outlier and Brazil holds a meaningful edge. The question moving forward is how many more massive rounds Mexican startups can realistically produce in the near future. Spoiler: we’ll highlight a new one in this edition.

2. The growth in Late Stage and Growth rounds is impressive, up 158% vs. Q1 2025. The numbers for Angel, Seed and Early Stage are brutal, one of the weakest quarters in quite some time.

Two dynamics stand out. Capital is concentrating in mega funds, and global players are increasingly cherry picking category winners in the region. At the same time, local funds are running out of dry powder for new deals. We urgently need new funds to close in the region, especially in Spanish speaking markets.

3. Top tier funds continue to show up in the largest rounds.

Andreessen Horowitz, Founders Fund, Sequoia Capital and Insight Partners all participated in at least one Latam deal last quarter.

The Megaround

January 2026: Pomelo $55M & Fractal $35M. February 2026: Kavak $300M & Humand $66M. March 2026: ARQ $70M…

…April 2026: Plata $405M!!!

While not all growth rounds are made equally, there is now a clear trend. We’re becoming accustomed to massive rounds happening each month, and they deserve their own section in this download.

Plata announced the closing of its $405 million Series C at a $5B valuation, making it Latin America’s most valuable privately held digital bank. The round was led by Bicycle Capital with new investors Qatar Investment Authority (QIA), BTG Pactual and Valor Capital Group, along with existing investors. One interesting detail: the round included three U.S. university endowments. It’s rare to find endowments investing in Latam startups.

The company’s growth has been impressive. In three years of operation, Plata has surpassed 3.5 million active credit card customers, reached over $600 million in annualized revenue, and built an $800 million loan portfolio. The raise follows Plata’s launch of full banking operations as Banco Plata in Mexico in March 2026.

The Plata case raises a couple of questions:

Should we really consider it a startup? The company was launched in 2023 by former Tinkoff employees, the first Russian digital bank, and has had access to substantial funding from the start. Call me a romantic, but Plata’s trajectory hasn’t followed the classic startup playbook. That said, that’s probably the takeaway here: there is a new playbook. Regardless of how a company is built, investors care about returns, not whether a funding round follows a certain mold. This is a case study worth analyzing closely, especially for emerging Latam entrepreneurs.

Did someone say IPO? These rounds and these investors are expecting liquidity sooner rather than later, and at a $5B valuation I have a hard time finding a potential buyer that would make sense. For years we’ve been waiting for the Rappi or Clip IPO, maybe some of these newer players will leapfrog them to the public markets. And it’s not only Plata; Stori, Kapital and Klar seem to be on a similar trajectory. 2027 might be a pivotal year on that front.

Big News of the Month

Somos Internet raises $40M Series B

The Colombian telecom startup raised a $40M Series B co-led by Bracket Capital and Ribbit Capital, another significant round worth highlighting in the region.

The company plans to use the funds to triple its coverage in Colombia and expand into Mexico. As of March, Somos Internet had over 80,000 customers and was adding around 6,000 new users each month.

It’s interesting to see an infrastructure play raise such a round in the middle of the AI era. At the end of the day, tackling a clear and real need is a winning value proposition, something worth keeping in mind.

Instacart acquires Instaleap to expand its enterprise platform internationally

Having a public U.S. based tech company look to Latin America as a market to acquire technology to fuel its international expansion is a very positive signal. Kudos to the Instaleap team.

No financial terms were disclosed, and given the details shared, the structure of the deal may lean toward an acquihire model. Regardless of these details, the positive signal in the headline shouldn’t be overlooked.

Mercado Libre makes a strategic investment in Gradient Ventures’ Fund 5 to accelerate AI innovation in Latin America

This one has a lot of layers. I’m surprised it didn’t receive more media coverage. Having one of Latam’s leading tech companies invest in a U.S. VC fund feels significant and, from what I can gather, its a unique move for Meli. It’s also worth noting that Gradient was fully funded by Google up until 2025, when a spin off was announced.

Gradient has been active in the region before, investing in companies like R2, Toku and Niva. Does Meli’s investment signal a renewed double down on Latam? Hopefully yes, time will tell. And the deeper question remains: why did Meli choose Gradient as its partner to access AI innovation? I don’t have that answer, but it’s one many regional managers would like to understand.

Best Content of the Month

Jamie Dimon’s Letter to Shareholders

The annual letter from the JPMorgan Chase Chairman and CEO is always a must read, regardless of your investment focus.

In his latest letter, Dimon flags a growing tension in private equity: while the industry has benefited from years of cheap capital, today’s higher rate environment is exposing weaker underwriting, inflated entry multiples and delayed exits. He points out that marks may not fully reflect reality yet, suggesting potential valuation adjustments ahead, especially for assets that haven’t been stress tested through a true liquidity cycle.

The implication is not that the asset class is broken, but that returns may normalize downward and dispersion will increase meaningfully between top tier managers and the rest.

AI Adoption by the Numbers

This post by a16z feels very relevant to the startup trends we’re currently seeing, particularly the surge of B2B enterprise startups. The key takeaway: AI has already crossed into the enterprise much faster than previous tech cycles. Roughly 29% of the Fortune 500 are not just experimenting, they are already paying customers of AI startups.

What stands out is how AI is reshaping the traditional go to market motion. Instead of starting with smaller customers and moving upmarket over time, many companies are landing enterprise clients from day one. It helps explain the momentum we’re seeing around enterprise focused models. The demand is there early, and the willingness to pay is very real.

a16z

AI Adoption by the Numbers

America | Tech | Opinion | Culture | Charts…

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5 months ago · 249 likes · 9 comments · Kimberly Tan

Commitments Are Not Optional: Rethinking LP Defaults in a Complex Market

In her latest post, Luisa tackles an emerging issue Latam managers are increasingly facing.

LP commitments are no longer a formality. They are a core execution risk, and when they fail, the impact cascades across funds and portfolio companies. What stands out is how “edge cases” like LP defaults are becoming part of day to day fund management, a clear signal that the market environment has structurally shifted.

For Latam VC, this is a reminder that the most valuable content focuses on the underlying realities of our region, which many times don’t align with the realities of Silicon Valley.

Books Worth Your Time

Apple in China: The Capture of the World’s Greatest Company - Patrick McGee

This book highlights how Apple built its dominance by deeply embedding itself in China’s manufacturing ecosystem, gaining unmatched scale and efficiency. In doing so, it also helped accelerate China’s technological capabilities, creating a long term dependency that is difficult to unwind. The core tension and insight: the same strategy that made Apple successful now exposes it to rising geopolitical and operational risk.

That’s it for this download!

As always, feel free to drop your comments and share your own highlights.

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Now let’s talk about the money. Where is it coming from, where is it going, and what’s keeping founders up at night?

The Funding Paradox

Here’s the most interesting tension in the entire survey:

70% of founders perceive the funding environment as difficult or very difficult.

Yet 53% plan to raise capital in 2026.

Let that sink in for a moment. The majority of founders acknowledge the market is tough, and more than half are stepping into it anyway. Another 20% are unsure, likely watching the market before making a move. Only 27% have decided not to raise. I would be confident betting that if market conditions improve, we would see a significant uptick in the percentage planning to fundraise.

At the end of the day, it’s pragmatism. Founders know capital is scarce, but many are at stages where external funding is necessary to unlock the next phase of growth. The difference between now and 2021 is that they’re walking into fundraising conversations with traction, unit economics, and in many cases, profitability. They’re raising because they need to, not because they can.

As one seed-stage founder from Mexico put it:

“Los fondos deben prestar más atención a los fundamentales.”

(Funds need to pay more attention to fundamentals.)

That sentiment runs both ways. Founders want investors who value substance over hype, and they believe they have the fundamentals to back it up.

Where the Capital Is Coming From

For the founders planning to raise, venture capital remains the dominant path.

58% are targeting VC. 21% are going the angel investor route. 16% are looking at debt. And a few are mixing instruments.

The VC dominance isn’t surprising for an early-stage cohort (73% are Pre-Seed or Seed, as we covered in Part 1). But the 16% pursuing debt is worth noting. Debt financing signals companies with predictable revenue streams, a sign of maturity in an ecosystem that has historically been equity-dependent.

There’s also an interesting dynamic at play in the broader VC landscape. As one seed-stage founder from Mexico shared:

“Entiendo que muchos VCs de Latam harán el primer cierre de sus fondos a mediados de 2026, después de cuyo punto puede haber una aceleración en el crecimiento de startups en la región.”

(I understand that many LATAM VCs will make the first close of their funds around mid-2026, after which there could be an acceleration in startup growth in the region.)

If that timeline holds, the second half of 2026 could see a meaningful uptick in deal activity. Founders raising now might be doing so in the tightest window, with better conditions ahead.

Where the Money Is Going

Whether funded externally or from revenue, where are founders investing their dollars?

Two areas dominate: Tech & Product (37%) and Marketing & Sales (33%). Together, they account for 70% of primary investment focus.

This split is telling. The tech-first cohort is doubling down on product, likely leveraging AI to build faster and more efficiently. The marketing-first cohort has product-market fit and is now focused on distribution and growth. Both are valid strategies depending on stage.

The remaining 30% is spread across expansion to new markets (13%), infrastructure (7%), and talent (3%). Only 7% said they don’t plan to invest significantly, which reinforces the picture from Part 2: this is not an ecosystem in hibernation.

The Twin Pressures: Funding and Retention

Now let’s get into what’s keeping founders up at night.

The top two challenges are tied at 43% each: access to funding and customer retention.

This is a revealing combination. Access to funding is expected in an ecosystem navigating a constrained capital market. Customer retention tying for the top spot was surprising. It suggests that even as founders are focused on growth, holding onto existing customers is proving to be just as difficult as acquiring new ones. In a B2B-heavy ecosystem, this likely reflects longer sales cycles, price sensitivity, and the constant pressure of proving ROI to clients.

Right behind them:

• International expansion at 37%, which aligns with the data from Part 2 showing 77% planning to expand

• Economic uncertainty at 33%, consistent with the cautious optimism we saw in the economic outlook

• Qualified talent at 27%, a persistent challenge in LATAM where the supply of experienced startup operators remains thin

• Technology and digitalization at 23%, which likely reflects the pressure of keeping up with the pace of AI

• Inflation & costs at 17%, along with competition at 17%

• Regulations at 7%

One founder from Mexico captured the funding landscape’s structural challenge:

“Existen muy pocos exits para los VCs en Latinoamérica. No siento que haya muchos startups que puedan mantener o cumplir con las exigencias de un tipo de crecimiento de este nivel, a menos que en sus planes existan operaciones regionales y que incluyan Estados Unidos.”

(There are very few exits for VCs in Latin America. I don’t feel there are many startups that can sustain the growth requirements at this level, unless their plans include regional operations and the United States.)

That's a structural observation worth reflecting on. The LATAM VC model needs exits to sustain itself, and those exits require companies that scale regionally and beyond. It connects back to why 77% of founders are expanding: going regional isn't just a growth strategy, it's what the ecosystem demands.

AI: Not a Plan, a Reality

One last data point that puts everything in perspective.

90% of founders are already using AI. Not planning to. Not evaluating. Already using it.

Only 7% are still evaluating, and 3% are unsure.

This is a settled question. AI is embedded in how LATAM startups operate, from product development to sales to operations. The competitive advantage now isn’t whether you use AI, it’s how deeply you integrate it and what proprietary data or workflows you build around it.

As one founder shared in Part 1:

“El software no va a ser diferencial sino el tipo de acceso a información valiosa que permita a una IA crecer y funcionar.”

(Software won’t be the differentiator, but rather the type of access to valuable information that allows an AI to grow and function.)

The implication is clear: the moat isn't the technology itself, it's the data and domain expertise that make the technology valuable.

The Takeaway

The funding story in LATAM for 2026 is one of clear-eyed pragmatism. Founders know the environment is tough. They’re raising anyway, but with fundamentals. They’re investing in product and growth, not vanity metrics. And they’re facing their challenges head-on: funding access, customer retention, and the pressure of scaling regionally.

The AI question is already answered. The funding question will play out over the year. But the challenge that might define 2026 for LATAM startups is the one that surprised me the most: customer retention. In a region where everyone is focused on growth and expansion, the ability to keep the customers you already have might be the ultimate differentiator.

What’s Next

This wraps up the core findings of the LATAM Entrepreneurs 2026 Outlook survey. I’ll probably be sharing a summary post to highlight the biggest trends and insights. And there’s a good chance I’ll be revisiting some of these charts throughout the year.

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1. Big News of the Month

2. Best Content of the Month

3. Coffee Break

Big News of the Month

Sequoia, Founders Fund Back $70 Million Raise for Latam’s ARQ

Another month, another Latam funding round with some of the biggest names from Silicon Valley. It continues to be a great signal to have large foreign funds active in the region, albeit these massive rounds remain a recurring theme. I’ve said it before and I’ll say it again: the big keep getting bigger, and if you want to attract one of these mega funds, you must make sure you can absorb a massive round while being positioned as a clear category leader. Congrats to the ARQ (formerly Dollarapp) team for this impressive feat.

For those of you that haven't heard about ARQ, the company offers digital financial services such as multi-currency accounts, digital wallets, currency exchange, and debit cards to help users store and move money across borders. Per the company, they currently serve 2 million customers across Latin America and have surpassed $10 billion in annualized transaction volume.

This funding round reinforces the narrative around the Latam VC recovery.

While the numbers speak for themselves, as has been documented over the last several months, and even quarters, the bulk of this volume has been driven by late-stage and growth rounds.

Handle raises $6M seed round led by Andreessen Horowitz

Last month we highlighted a16z’s investment in Mexican unicorn Kavak. This month, a16z decides to continue betting on a Mexican unicorn founder. Handle is the latest endeavor by Poncho de los Rios, co-founder of Nowports, one of the few Mexican unicorns.

Handle builds vertical AI agents that connect fragmented business tools including email, WhatsApp, CRMs, ERPs, and supplier portals into a single operational layer. The company has mentioned that insurance brokers is one of its initial markets. The solution provides real-time visibility across communication channels and systems of record, and further deploys autonomous AI agents that execute workflows such as quoting, claims registration, and data reconciliation without human intervention.

I've written before on how I believe Latam founders should go vertical regarding AI. It provides a stronger moat vs. global players. It is definitely exciting to track how a seasoned and successful founder like Poncho tackles this opportunity.

ChatGPT hits $100 million in ad revenue

A six-week pilot, that’s all it took ChatGPT to reach $100M USD in annualized advertising revenue. This feels significant, and is clearly a key component OpenAI will leverage to achieve profitability.

A few highlights worth noting: the revenue figure was generated from less than 20% of eligible US Free and Go tier users seeing ads daily, meaning there is ample room to expand, as 85% of Free and Go users are eligible. With more than 600 advertisers now on the platform, the company plans to launch self-serve advertiser access in April and expand into Canada, Australia, and New Zealand in the near future. The growth runway here is substantial, and it will be interesting to watch how aggressively OpenAI scales this side of the business without compromising the user experience that got them here.

Best Content of the Month

The AI Divide: Who Wins and Who Gets Replaced

This episode from Prof G Markets where Scott Galloway and Ed Elson interview Bill Gurley is fantastic. In the conversation, they highlight that AI will disproportionately reward individuals and companies that learn to leverage the technology effectively, amplifying top performers and creating “10x” productivity gains, while displacing roles centered on routine, repeatable knowledge work.

Additionally, Gurley highlights that while AI represents a real platform shift (on par with mobile or cloud), he is cautious about the flood of capital chasing the theme, which could lead to overvaluation and eventual corrections. The implication: massive upside for true category leaders, but a high likelihood of mispriced risk across the broader AI investment landscape.

Prof G Media

The AI Divide: Who Wins and Who Gets Replaced — with Bill Gurley

Ed Elson and Scott Galloway are joined by Bill Gurley to break down how young people can position themselves for success in the age of AI, how Silicon Valley and the private markets have evolved, and what a potential market correction could look like…

Listen now

5 months ago · 43 likes · 1 comment · Scott Galloway and Ed Elson

Where in the World is AI Adoption Happening?

I found this graphic by a16z very interesting from a Latam perspective, especially for Mexico. I was truly surprised to see Mexico trailing most Latam peers in AI adoption. Given the size of the market and the growing tech ecosystem, you would expect it to rank higher. Makes you wonder what the real drivers or barriers behind this are.

Don’t Start as an Analyst: What 12,000 Careers of Junior VCs Tell About Making it in VC

This month’s content has a clear theme running through it: VC as a career path. Ilya Strebulaev (Stanford GSB Professor of Finance) recently joined Substack and has been sharing fantastic content, a must-follow for anyone interested in VC.

This article really caught my attention. I’ve discussed with colleagues in the past how VC is not the ideal industry for a first job. It is usually best to gain experience in adjacent industries first, then make the jump into VC. Strebulaev focuses on the path to partner in a VC firm and the likelihood of getting there based on when you join. He argues that breaking into VC at a junior level is actually one of the least effective paths to becoming a partner, with career progression much more strongly driven by prior startup and operating experience than by traditional credentials. The data he presents is fantastic.

The takeaway is counterintuitive: the most reliable path to senior success in VC is often building experience outside of VC first, then entering at a higher level.

Reflections on Considering Venture as an Early Career Job

Continuing on that same thread, Alex Lazarow shared some insights on the topic. In this piece, Alex highlights the importance of optimizing for optionality and becoming a “node of talent” matters more than chasing a specific VC role early on.

[99%Tech]

Reflections on considering venture as an early career job

Two MBA students asked me separately for career advice. I was on a plane, so wrote them a long answer. I figured I’d share my thoughts here…

Read more

6 months ago · 6 likes · Alex Lazarow

What I Learned Working in a VC Fund

To wrap things up on the content front, my now former analyst Santiago shared his lessons learned after a couple of years working in Venture Capital. Santi is an absolute rockstar, and I’m grateful to have had the opportunity to work with him, his future is bright!

If you are thinking of entering the VC space as an analyst, the knowledge Santi shares in this post is fantastic. As he highlights, the mythology around VC is loud, but it is also one of the most misunderstood corners of finance.

In VC, success depends on aligning multiple factors: large markets, strong teams, disciplined investing, and access-driven deal flow (alpha), while operating within a high-risk, long-term framework shaped by macro conditions. Even with all the right inputs, luck still plays a role, reinforcing that VC is as much about positioning for outliers as it is about consistent execution.

Santiago Elizondo

What I Learned Working in a VC Fund

Almost two years ago, I joined a venture capital (VC) fund and, as with most new jobs, I started with more questions than answers…

Read more

5 months ago · 10 likes · 2 comments · Santiago Elizondo

Coffee Break

If you’ve followed my Substack for some time, you’ve probably read my annual coffee recap — here’s the 2025 edition if you missed it. Similarly to my book recommendations, there’s no need to wait until the end of the year to share a new gem.

This month, one coffee shop was without a doubt worth highlighting.

Mundano (Valle de Bravo) — This coffee shop was a fantastic surprise during a recent long weekend trip with my wife to Valle de Bravo, a charming colonial town that Mexico City residents love to visit. I stumbled into Mundano as it was on the same street as our hotel. It was clear the coffee shop had recently opened, as they were still sorting out some operational kinks, but the coffee (and matcha) were amazing.

We visited three times during our trip, and the care the staff put into each beverage is worth highlighting. If you happen to be in Valle de Bravo any time soon, don’t hesitate to stop by Mundano.

That’s it for the third download of 2026!

As always, feel free to drop your comments and share your own highlights.

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Quick recap: the average optimism score was 8.0 out of 10, but only 26% see the broader ecosystem as promising. Founders are betting on themselves, not on the environment improving.

Now let’s get into the specifics. What do founders actually expect for 2026 in terms of growth, revenue, and strategy?

The Revenue Bet: Founders Are Swinging Big

When I asked founders what they expect in terms of revenue for 2026 compared to 2025, the responses were as expected for early-stage startups:

Now the natural follow-up question is whether these expectations consider fundraising fresh capital during the year. One would expect that is the case, as only 40% mentioned they fundraised during 2025. Further, this is an ecosystem where 70% of founders see the funding environment as difficult (more on that in a future post).

This brings us back to a recurring theme: there seems to be a mix of optimism and confidence in execution despite the environment. Keep in mind, as highlighted in Part 1, these aren’t founders dreaming on napkins. 73% have teams of 11 or more, and 37% were already profitable in 2025. They’ve been through the hard part. Now they’re projecting from a position of traction.

It will be interesting to revisit these numbers in a year.

The Path to Profitability

Revenue growth is great, but the real question is: are these companies building sustainable businesses?

The results suggest these are indeed sustainable business models. 70% of founders expect to either be profitable or achieve profitability this year. Combined with the fact that 37% were already profitable in 2025 (from Part 1), the trend is clear: LATAM founders have fully embraced unit economics. These numbers also suggest founders are adjusting their growth and burn to be able to achieve profitability if needed. A clear case of hope for the best, in this case fundraising a new round, but prepare for the worst. Fresh capital is scarce, and profitability is the only sure path for survival.

As one seed-stage founder from Chile shared:

“Considero que es de enfocarse en rentabilidad más allá de un crecimiento acelerado con quema de cash.”

(I think the focus should be on profitability rather than accelerated growth burning through cash.)

The growth-at-all-costs era is over. In LATAM, at least, founders got the memo.

Economic Outlook: Cautiously Positive

Before diving into strategy, it’s worth understanding how founders view the broader economic environment they’re operating in.

57% view the economic outlook as positive or very positive. 33% are neutral. Only 10% see it as negative. No one selected “very negative.”

This is more optimistic than I expected, especially considering the geopolitical uncertainty and trade tensions that have been dominating headlines. Regionally, LATAM faces its own headwinds: GDP growth is expected to slow to around 2% in 2026, the USMCA renegotiation looms large for Mexico, and while inflation is easing across most countries, interest rates remain elevated. But the founder sentiment aligns with the broader theme we saw in Part 1: founders aren't waiting for perfect conditions. They're reading the environment as "good enough" and focusing on what they can control

As one Series A founder from Mexico put it simply:

“Controlar nuestro propio destino.”

(Control our own destiny.)

Hiring: Precision Over Headcount

Now let’s talk about how founders plan to grow their teams.

87% of founders plan to hire in 2026. But the breakdown tells a much more interesting story:

The dominant strategy is clear: surgical hiring. Four out of ten founders are adding specific roles, the senior engineer, the country manager, the head of sales, rather than scaling headcount across the board.

This is a meaningful shift from the 2021-2022 era when hiring fast was a competitive advantage (or at least felt like one). Today, efficiency matters more than size. The question isn’t “how many people do we need?” It’s “which people will unlock the next stage of growth?”

I mentioned in Part 1 that the stories of 1-2 person startups going from zero to millions in ARR at light speed are all over the news. The data here suggests LATAM founders aren’t buying into that narrative entirely, but they definitely expect to move toward leaner, more intentional teams.

Expansion: Going Regional (and Beyond)

Expansion was a defining theme of 2025. 57% of founders expanded to new markets last year. So what does 2026 look like?

The expansion push continues:

Here’s what stands out: 77% of founders plan some form of expansion. That’s consistent with 2025 and confirms something fundamental about building in LATAM: single-country businesses are the exception, not the rule. The markets are simply too small to stay put.

The 13% targeting the US is particularly interesting. These are companies that have proven their model in LATAM and are now looking north. It’s a harder move, different buyer expectations, different competition, different sales cycles, but it signals growing ambition and confidence. It might also be a feature of the AI era we are living in, as these new solutions should be able to adapt and travel more efficiently into new markets. Time will tell.

For the 23% not expanding, I'd bet most are either at an early stage where deepening product-market fit in their core market makes more sense than spreading thin, or they're based in Brazil or Mexico, the two markets in LATAM large enough to sustain meaningful growth without going regional right away. Either way, that's a smart call.

Product Launches: Innovation Doesn’t Stop

You might expect that in a tight capital environment, founders would hunker down and focus on existing products. The data says otherwise.

This connects back to the AI adoption numbers from Part 1. 90% adopted AI in 2025. My hypothesis is that AI is enabling faster product development cycles, allowing smaller teams to ship more. The founders who invested in AI tooling are now reaping the benefits in terms of product velocity.

As one pre-seed founder shared:

“En 2026 esperamos un año de mucha ejecución: menos ‘hype’ y más productos que realmente escalen.”

(In 2026 we expect a year of strong execution: less hype and more products that actually scale.)

The Takeaway: Ambitious, But Disciplined

Here’s the picture that’s emerging from LATAM founders heading into 2026:

They expect big revenue growth. 57% are targeting more than double. But they’re not throwing money at it. They’re hiring surgically, expanding strategically, and launching products with purpose. 70% expect to be profitable or reach profitability this year.

The description I’d use is disciplined ambition. These founders have big targets, but they're pursuing them with the efficiency and focus that the past few years have demanded.

The environment isn't getting easier. But the founders who have navigated the tougher times have been forged by them. They're leaner, sharper, and more intentional than ever.

What’s Next

In the next post, we’ll dig into the money side: funding plans, the types of capital founders are seeking, how they perceive the funding environment, and where they’re investing their dollars. Spoiler: 70% think the funding environment is difficult, yet 53% plan to raise anyway. That tension tells a story worth exploring.

We’ll also cover the top challenges founders expect to face in 2026. Hint: funding access isn’t the only thing keeping founders up at night.

Stay tuned.

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As a result, it got me thinking: wouldn’t it be great to understand what LATAM entrepreneurs expect for the year? No one is asking the people actually building the companies.

That’s easier said than done, since it is a dataset that doesn’t readily exist.

In line with that, I’ve spent years complaining about the lack of good data on LATAM startups. So instead of writing another prediction post, I decided to ask 30 LATAM startup founders what they expect for 2026. Not what I think will happen. Not what the data from last year from reputable sources suggests. Not what the experts are expecting. What the entrepreneurs in the trenches—raising capital, hiring teams, shipping product—actually believe is coming.

A Few Caveats

This is version 1.0. Call it the MVP version of what a survey of founders would look like. Believe me, there are a few lessons from this first experience, and ideally the dataset should be larger. Let’s see what 2027 has in store. Additionally, the dataset definitely skews toward my network: 50% of respondents are based in Mexico, and there’s a heavy B2B software bias. But the sample is diverse enough as it spans 7 countries, multiple industries, and stages from Pre-Seed to Series B allowing for meaningful insights.

Thirty founders responded over two weeks. To everyone who took 10 to 15 minutes to fill this out: thank you. Your honesty made this possible. While I personally know most of you, many responded to the survey without a direct request from me, as it was shared through different text groups.

This is the first of (probably) four posts analyzing the results. Consider this the scene-setter: who these founders are, what happened in 2025, and how they’re feeling heading into the new year.

Let’s dive in.

How Founders Actually Feel About 2026

One of the key questions I asked founders was simple and to the point of this exercise: On a scale of 1 to 10, how optimistic do you feel about 2026?

The average score? 8.0 out of 10.

I would say that it is an optimistic outcome, especially considering 2/3 of the responses fell in the 8 to 10 range. Traditionally, the typical founder profile should be optimistic, and I believe that is the case here. Despite the funding winter, despite economic uncertainty, despite everything, founders across LATAM are overwhelmingly optimistic about the year ahead.

But optimism about what, exactly?

When I asked how they view the broader LATAM entrepreneurial ecosystem for 2026, the picture got more nuanced:

The LATAM ecosystem view is split. 37% see the ecosystem facing significant challenges. Another 37% think it’s stable. Only 26% see it as promising or very promising.

Here’s what this tells me: founders are optimistic about execution, not conditions.

They’re not betting on the macro environment improving. They’re not waiting for the funding market to heat up. They’re betting on themselves.

As one seed-stage founder from Chile shared:

“Es el año donde más se marcará la distancia entre los equipos élite y el resto.”

(This is the year that will most separate elite teams from the rest.)

This sentiment captures where we are, in my opinion. 2026 won’t be easy. But the founders who execute will pull away.

Who’s Building in LATAM Right Now

To understand where founders think we’re headed, you need to know who’s answering. Let’s take a quick look.

Geography: Half in Mexico, The Rest Across LATAM

Half of respondents are headquartered in Mexico. Colombia comes in second at 17%. The rest spans Chile, Uruguay, USA, Brazil, and Argentina.

Yes, this reflects my network. But it also reflects reality: Mexico has become the center of gravity for Spanish-speaking LATAM tech, especially for B2B startups targeting regional expansion. Further, while many of these companies are headquartered in Mexico, not all founders are Mexican. I’ve discussed this trend before, and it is unique to the Mexican ecosystem.

What They’re Building: B2B is King

This isn’t the consumer internet boom of the 2010s.

The LATAM startup ecosystem in 2026 is overwhelmingly B2B-focused. These are companies selling to businesses, building infrastructure, focused on unit economics over user growth. This shouldn’t be a surprise—the focus on B2B has been significant for the past couple of years.

If I were to guess, this picture should be a bit more geared towards fintech, but at the same time there is a blend of fintech-adjacent companies playing in the B2B space.

Team Size: Real Companies, Not Side Projects

Here’s something that surprised me: 73% of respondents have teams of 11 or more people.

These aren’t solo founders hacking on nights and weekends. These are real companies with payroll, infrastructure, and burn rates. I am curious to understand how this distribution will evolve in the future. The stories about the 1 or 2 person startup that goes from 0 to a gazillion dollars in ARR at light speed are all over the news. Gotta wonder whether LATAM is a bit late to the party or if these stories are a bit exaggerated (my bet is on the latter).

Stage: Early, But Not Too Early

The maturity breakdown shows an ecosystem in its growth phase:

73% are Pre-Seed or Seed. This is an early-stage ecosystem. But “early-stage” here doesn’t mean idea stage. It means companies with teams, revenue, and real traction trying to prove product-market fit and reach profitability.

The picture is clear: LATAM’s startup ecosystem is B2B, early-stage, but building real businesses with real teams.

What Actually Happened in 2025

To understand where founders think they’re going, we need to understand where they’ve been.

When I asked how 2025 performed versus their expectations:

40% of founders met or exceeded their expectations in 2025. Not bad for a year marked by global uncertainty and tight capital markets.

But the real story is in the details.

Funding: Selective, But Available

Capital is out there. But it’s selective. You need traction, unit economics, and a path to profitability. The days of raising on a deck and a dream are over. Having only 40% of these founders raise funding last year is surprising—given their early stage, you could assume a higher percentage would have raised capital.

Hiring: Deliberate, Not Explosive

Team growth is deliberate, not reckless. While 57% of respondents mention they grew moderately or significantly, which may signal aggressive growth, for many of these companies a handful of new hires can push them into moderate to significant growth.

This is another metric I’ll be curious to review in a year. Will the AI era we are living through push the “stay the same” or “decreased” numbers up?

Profitability: Unit Economics Matter

Here’s what stands out: 37% were profitable for the entire year. Another 10% were profitable for part of the year.

For an early-stage cohort, that’s remarkable. It shows the shift from growth-at-all-costs to building sustainable businesses.

30% reduced losses even if they weren’t profitable yet. Only 13% were still burning without necessarily improving their economics.

The message is clear: profitability isn’t just a nice-to-have anymore. It’s the focus.

Expansion: Going Regional is the Default

57% expanded to new markets (countries) in 2025, while 20% expanded internally in their core market.

For the most part, LATAM startups can’t afford to be single-country businesses. The markets are too small. Success means going regional early.

AI: Already Everywhere

AI is here to stay. 90% of founders adopted AI in 2025.

AI isn’t coming to LATAM startups. It’s already here. It’s not a competitive advantage, it’s table stakes.

As one founder shared:

“El software no va a ser diferencial sino el tipo de acceso a información valiosa que permita a una IA crecer y funcionar.”

(Software won’t be the differentiator, but rather the type of access to valuable information that allows an AI to grow and function.)

If you were not using AI in 2025, you’re behind.

The Takeaway

Here’s what 2025 looked like for LATAM founders:

Not explosive growth. But deliberate, sustainable execution.

LATAM entrepreneurs:

• Raised capital selectively

• Hired carefully

• Focused on profitability

• Went regional early

• Adopted AI aggressively

And heading into 2026, they’re optimistic. Not because they think the environment will get easier—most don’t. But because they’re confident in their ability to execute.

The funding market is tough. The macro is uncertain. But they’re building anyway.

One founder from Colombia captured it perfectly:

“El mundo está en un momento de alta tensión. Quienes logremos soportar y salir fuertes de este momento, saldremos muy fortalecidos.”

(The world is in a moment of high tension. Those of us who manage to endure and come out strong from this moment will emerge much stronger.)

That’s the mood going into 2026. Not easy. Not guaranteed. But ready.

What’s Next

This is just the beginning.

Over the next few days and weeks, I’ll be sharing more insights into this survey. As you can imagine, upcoming posts will focus more on what the expectations for 2026 look like. I only shared a sneak peek in this post. It felt relevant to set the stage of where we are coming from to provide deeper insights moving forward.

Also, I’m done complaining about the lack of LATAM startup data. We have a fantastic ecosystem, and friendly outreach can quickly help us get a better understanding of where we are standing.

More to come.

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1. Big News of the Month

2. Best Content of the Month

3. Books Worth Your Time

Big News of the Month

Kavak Raises $300M in round led by a16z

Talk about a big time raise by one of the Mexican startup darlings to start the year. Make it even better by having one of the largest and most important funds in the world leading the round. Kudos to the Kavak team, this is a great vote of confidence for the region.

What does this signal for the Mexican and Latam ecosystem? The trend is becoming hard to ignore: a handful of companies at growth stage are capturing the lion's share of capital, and the big keep getting bigger. It keeps overall investment numbers healthy, but don't let that fool you as we are firmly in the mega fund era, and these funds are here for huge rounds. Getting there is a different story.

Further, another trend we began seeing last year: get ready for Mexico to top Latam as the market with more VC investment in Q1. It was a huge theme in Q2 of last year when Mexico led the region after roughly 13 years of Brazilian dominance. Not sure if we’ll get another Crunchbase article — remember this one?

It is great to have more balance in the region, but I keep feeling that these huge rounds and headlines could be blurring the advantage Brazil has in the region. Time will tell.

Tapi raises $27M & Humand fundraises $66M

Gotta show some respect for the Argentinian founders behind both of these companies. The trend we saw last month with Pomelo and Fracttal continues, let’s keep it going.

Tapi, the payments and collections network, raised a $27M Series B round led by Kaszek, with participation from Endeavor Catalyst and Latitud (vamos amigos!). While Humand raised a massive $66M USD Series A led by Kaszek and Goodwater Capital.

Best Content of the Month

How much ARR do you need to raise a seed round? Series A? Series B?

This is a question I often discuss with founders, lucky for us in 2026 Peter Walker and the Carta team is around to share some guidance.

This chart is pure gold, and while there is no perfect number, it does offer some insights into what to expect. Further, keep in mind these numbers are for US-based companies, the bar is higher for Latam-based startups, especially if you want to raise from US funds. Part of why: US funds applying US benchmarks to markets where revenue multiples, growth rates, and burn dynamics can look very different.

My biggest takeaway from the chart is the jump in median delta from Seed to Series A. I’ve written before about Series A being the ultimate test for startups, and this chart is aligned with that point of view.

The ARR Challenge

This post by SaaSholic tackles one of the biggest issues VCs and entrepreneurs are facing in the AI era. For the past couple of decades the software industry had defined ARR (Annual Recurring Revenue) as the key metric to follow. The new AI dynamics require a new playbook and a shift in mindset.

SaaSholic

The ARR Challenge: Does the Golden Metric of SaaS Fit the AI Era?

For twenty years, the software industry operated on a unified theory of value. We had a standard playbook (T2D3) and a single North Star: Annual Recurring Revenue (ARR…

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7 months ago · 13 likes · 1 comment · SaaSholic and Pedro Jannuzzi

La Moda del Emprendedor Online

Really enjoyed this article by Whitepaper (apologies to non-Spanish speaking readers) which documents the Direct To Consumer (DTC) industry in Mexico. Fantastic insights and lessons from multiple entrepreneurs, many of which never raised a single VC dollar.

Whitepaper.mx

La moda de emprender online

Cuando Edgar Aguirre quiso poner un negocio de joyería online hace más de diez años, el mercado simplemente no estaba listo…

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7 months ago · 37 likes · 9 comments · Daniela Dib

Books Worth Your Time

Anointed: The Extraordinary Effects of Social Status in a Winner-Take-Most World - Toby Stuart

This is a thought-provoking book that examines how social status dictates opportunities and outcomes. Anointed makes you think about your own life and how different decisions and turning points might have played out differently. A great read if you're interested in the structural forces that shape careers and industries — and honestly, venture capital is one of the clearest examples of the dynamics Stuart describes.

That’s it for the second download of 2026!

As always, feel free to drop your comments and share your own highlights.

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