Latin American tech hubs attract record VC investment

Latin American tech hubs are attracting global attention. Venture capital investment in the region has grown steadily over the past five years. Funding doubled annually since 2016, reaching a record high of $4.6 billion in 2019. The COVID-19 recession impacted this flow, but start-up communities across the region, from Brazil to Mexico, have shown resilience.

São Paulo’s Financial Dominance

São Paulo is often referred to as Brazil’s innovation powerhouse. The city’s tech community attracts steady flows of VC funding from around the world. Over 60 percent of start-up investments in Brazil are concentrated in the city. It houses a rich ecosystem that supports numerous local unicorns and boasts more fintech start-ups than any other Latin American city. Tech giants like Amazon, Uber, and Spotify have chosen the location as their Latin American base. The established nature of the sector spared São Paulo from the worst effects of the recession, allowing many start-ups to thrive.

Mexico’s Strategic Gateway

Mexico City is a sprawling megacity with over 21 million residents. It is fast establishing a reputation as a promising tech hub. Investors often view Mexico as a gateway to the rest of the continent. While Brazil is more populous, its primary language is Portuguese, which creates a challenge for businesses seeking a wide Latin American presence. Spanish-speaking Mexico provides an ideal entry point. The capital also enjoys a strategic location near US tech hubs in Los Angeles and Austin. Streaming giant Netflix set up a regional headquarters in the city to show confidence in the local community.

Santiago’s Accelerator Program

Santiago earned the nickname “Chilecon Valley” despite being a remote city surrounded by the Andean mountains. It has long been a hotspot for entrepreneurial activity. Back in 2010, the Chilean government launched the ‘Start-up Chile’ seed accelerator. This program provides equity-free investments for start-ups from around the globe. It has worked with over 1,500 start-ups from 80 different countries since its launch. The nation ranks as Latin America’s top country for entrepreneurship according to the 2020 Global Entrepreneurship Index. The progressive community is expected to drive recovery in the aftermath of the Coronavirus crisis.

Buenos Aires and the Blockchain Rise

Some of Latin America’s most successful start-ups have emerged from Buenos Aires. The capital city possesses an active and ever-expanding technological ecosystem. It has gained a reputation as the region’s best performing tech incubator. Ecommerce giant Mercado Libre, often called the Amazon of Latin America, is the city’s greatest success story. However, Buenos Aires is also becoming a regional blockchain hotspot. The number of Argentinian blockchain and cryptocurrency companies rose by 10 percent in 2019 alone.

Medellín’s Transformation

Colombia’s second-largest city has seen its tech scene grow significantly in recent years. The area has worked to reinvent itself and shed a reputation for violence. Time magazine famously dubbed it “the world’s most dangerous city” in 1988. Today, Medellín is associated with positive adjectives like innovative, open, and dynamic. In 2019, China’s largest tech companies, Huawei and Tuya Smart, announced they would establish bases in Medellín. They will operate within the city’s specially developed Innovation District. The Ruta N complex acts as a co-working space designed to support innovation and collaboration between start-ups.