Bridging the US and Latin America

Overview: After recently returning from Bogotá, Colombia for the first ever Colombia Tech Week, I’m more convinced than ever the early-stage venture opportunity is now for Colombia, and more broadly, Latin America. Latin America is experiencing an innovation renaissance fueled by entrepreneurial talent, digitization, global trade, and policy reform, presenting a uniquely attractive window of early-stage investment opportunity in the region. Meanwhile, global venture capital firms that were investing in Latin America between 2019 and 2022 pulled back in 2023 and 2024 as markets corrected, consolidating around AI innovation in the US. This left a stark funding gap between seed and growth in Latin America. However, this correction has starkly contrasted the caliber of entrepreneurial talent and ecosystem development in the region over the past few years.

A Unicorn Blueprint: Unicorns like Rappi, Nubank, Kavak, Mercado Libre, and more are spawning a “mafia” of well-connected founders with a proven startup blueprint. Walk into any party during Colombia Tech Week and you’re bound to run into multiple Rappi alumni now building new companies or fostering founder ecosystems. Founders are also able to tap into high caliber talent pipelines from these unicorns, hiring early employees with skillsets and hustle that punch far above the standard Latin American tech wage – skillsets like “product management” didn’t exist a decade ago in Latin America; they have been pioneered and pressured tested by this first wave of unicorns, unlocking unprecedented software quality for the region while fostering a training ground for technical & product talent.

Growing Ecosystems: Meanwhile, Latin American early-stage venture capital firms are refining their platforms, with firms like Monashees, Kaszek, Marathon, Canary, hi Ventures, Cometa, Bicycle Capital, and more doubling down via new funds or expanding their team capacity. Super angels like Ivan Montoya,  Ali Jamal, Andres Bilbao, Daniel Bilbao, Simón Borrero, Sebastian Mejia, Juan Pablo Ortega, and more are writing PreSeed checks into the very best people spinning out from LatAm unicorns. And trailblazing event organizers like Maria Jose Echeverri (Colombia Tech Week) are setting the bar high for connecting the dots. 

Macro Tailwinds: policy and trade tailwinds in Latin America have also accelerated novel opportunities for innovation in key areas like fintech (example: Pomelo), insurance (example: Latu), and logistics (examples: Nowports, Nauta). Progressive policies around open banking are being spearheaded in countries like Brazil, Mexico, Chile, and Colombia, promoting financial data connectivity, while free trade agreements are unlocking unprecedented global trade channels for Latin America. In particular, Mexico is well positioned to capitalize on nearshoring agreements with the US, supply chain relocation by multinational companies away from East Asia, and interest from countries like China and Korea in maintaining western touchpoints. Mexico overtook China as the biggest source of US imports in 2023 and is now positioned to access 60%+ of the world’s GDP via its 14 free trade agreements with 50 countries. Latin America is now positioned as a trade fulcrum between the west and the east. 

Biggest Friction Points to Latin American Venture Capital

Despite the above tailwinds, Latin America remains vastly untapped by global venture capital firms that lack a ground floor presence, network, language ability, and native cultural understanding of the region. I attribute this gap to the following critical missing links:

(1) Lack of Early Connectivity Between Global Corporations & Startups in LatAm: There is a lack of connectivity between global corporations and startups in Latin America at the earliest design stages, resulting in delayed trust building and opaque M&A exit pathways. 

(2) Lack of Investment Collaboration Between LatAm PreSeed & Global Multi-Stage Firms: There is a lack of hands-on investment collaboration between investors at the preseed stages in Latin America and global multi-stage investors, presenting a trust gap. As a result, seed stage companies in Latin America have a substantially higher bar of both performance & network capital required to cross the chasm and stand out to multi-stage firms. 

(3) Lack of PreSeed VCs With Experience Building Scaled Software Companies & Products: Having a trusted investor you can text late at night to pressure test product strategies, discuss modern tech stacks, or assess pitfalls, makes a difference. Otherwise, you’re going to have to figure this out yourself. This is often the case for Latin American founders today.

(4) Lack of Ecosystem Focus: There is a general lack of awareness around which ecosystems across Latin America to focus on, resulting in either too broad of an aperture to be well informed or zero participation altogether. To invest precisely, a firm must have a ground floor presence in emerging ecosystems in Latin America to deduce the signals that matter.

Architecting a Cross-Border PreSeed Venture Firm

Connecting Dots: a preseed stage venture capital firm addressing these gaps at scale by connecting dots in a trusted manner is poised to capitalize tremendously on the Latin American opportunity. Strategies include:

(1) Lining Up Corporate Design Partners: Connecting global corporate design partners to founders in Latin America at the earliest stages of product development to co-develop MVPs instills trust and agency for the corporate stakeholders. This also enables opportunities for native product integration (a harbinger for M&A). A recent example here is Hyperplane AI's acquisition by Nubank to accelerate AI capabilities for the $70bn public neobank.

(2) Active Collaboration With US Multi-Stage Firms: Collaborating closely at the preseed & seed stages with prominent global multi-stage venture capital firms that are keenly interested in Latin America but lack a ground floor presence, perspective, and network drives alignment on investment quality, signal, and criteria. This therefore unlocks a trusted Series A lead investor pipeline, bridging the funding chasm. 

(3) Experience Building Venture-backed Companies With a Modern Stack: Equipping Latin American PreSeed founders with firsthand knowledge on the best building practices in the US and key pitfalls to avoid accelerates product development precision and go-to-market.

(4) Ecosystem Laser Focus & Ground Floor Presence: Focusing specifically on key hotbeds including Mexico City, Bogota, and Buenos Aires, where unicorn founders & startup leaders are cultivating thriving entrepreneurial ecosystems, unlocks critical local networks and investment precision.

Diversifying Exposure Across the US & Latin America Will Yield the Strongest Returns

Investing Across Both Regions: when seeking Latin American early-stage exposure, I believe the best strategy is to diversify an investment portfolio across both the US and Latin America, rather than concentrating solely on Latin America. This unlocks critical cross-regional portfolio synergies, up-to-date perspective on the latest technologies & business models that may be viable across regions, and expanded touchpoints with multi-stage firms. This cross-regional diversification also mitigates macro risk within a portfolio while forcing investment selectivity, thereby capturing asymmetric upside from the very best early-stage founders emerging in Latin America. 

We’re executing on this mission at Predictive – reach out if you share our sentiment: [email protected] 

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DISCLAIMER:

Content contained above is not intended as, and shall not be understood or construed as, financial advice. All views and ideas expressed are my own.