The growth of the fintech sector is primarily driven by lending, payments, and remittances, with major players like Nubank and MercadoLibre achieving a combined market capitalization of around $165 billion.
As of early February 2025, venture capital firms are preparing to invest heavily in Latin American startups, particularly in the loan and artificial intelligence sectors.
Bicycle Capital is also looking to invest in 10 to 15 financial services startups by 2028, aiming to leverage the region's high-profit margins despite the challenging funding climate.
Although venture capital inflows were flat at approximately $4.2 billion in 2024, there remains optimism for future investments and potential IPOs in Latin America as US monetary policy evolves.
The anticipated decrease in US interest rates could revitalize the region's IPO market, which has recently experienced stagnation.
Currently, Latitud Ventures manages around $30 million and primarily invests in pre-seed companies, with about one-third of its nearly 100 backed companies focused on credit.
Tomas Roggio, co-founder of Latitud Ventures, highlighted the strong demand for financial technology solutions in Latin America, pointing to the region's significant untapped credit potential.
With approximately 25% of adults in Latin America being unbanked, there are substantial opportunities for fintech lending, as noted by the Inter-American Development Bank.
In fact, fintech giants Nubank and MercadoLibre have ramped up their lending activities by over 50% annually in the third quarter of 2024, contributing to a thriving ecosystem of over 3,069 fintech firms by 2023.
Looking ahead, Latitud Ventures anticipates that the proportion of credit-focused companies among its investments will increase from one-third to 40% in 2025, alongside a focus on AI-based startups to enhance productivity.
