ALAS Leaders Communiqué 2025

Venture Capital Flows in Latin America

According to the Latin American Venture Capital Association (LAVCA, 2024), Latin America raised approximately US$4.2 billion across 540 deals in 2023, marking a recovery after the global slowdown in 2022.

• Brazil remains the largest market, capturing 46% of total VC volume, followed by Mexico (21%), Colombia (9%), and Chile (8%).
• Early-stage investments (Seed & Series A) accounted for 64% of all transactions, demonstrating sustained investor appetite for scalable innovation.
• Sectors driving growth include fintech (32%), climate tech (18%), and healthtech (11%).

Cross-Border Investment Trends

Cross-border venture and private equity activity across Latin America increased by 27% in 2023, reflecting stronger cooperation between regional funds and global investors (OECD Latin America Outlook 2024).

• Over 40% of all VC transactions now involve at least one international investor.
• Co-investment ratios between regional and foreign funds rose from 0.7x in 2021 to 1.3x in 2023, underscoring the deepening of regional investment ties.
• The Pacific Alliance (comprising Chile, Colombia, Mexico, and Peru) and Mercosur+ (encompassing Brazil, Argentina, Uruguay, and Paraguay) are demonstrating increasing financial alignment through bilateral tax and fintech agreements.

Source: OECD Latin America Outlook 2024; BID Invest Capital Flows Report 2024

DFI Participation and Blended Finance

Development Finance Institutions (DFIs) have become pivotal in de-risking innovation and climate investments.

• DFIs participated in over 22% of all VC/PE deals in 2023, either through anchor LP roles or co-investment schemes.
• The BID Lab, CAF, and IFC collectively committed US$2.8 billion to blended finance vehicles that support digital inclusion, energy transition, and sustainable infrastructure.
• The blended finance share of innovation funds in the region grew to 17%, up from 9% in 2020.

Source: IDB Group Annual Report 2024; CAF Financial Integration Outlook 2024

Startup Density, Survival, and Export Orientation

According to the Global Entrepreneurship Monitor (GEM 2024) and the StartupBlink Global Ecosystem Index 2024, Latin America is home to more than 30,000 active startups, with a concentration primarily in Brazil, Mexico, Colombia, Chile, and Argentina.

• Startup density is highest in São Paulo, Mexico City, Bogotá, Santiago, and Buenos Aires, accounting for nearly 65% of all regional startup activity.
• Early-stage survival rates average 43% after three years, compared to a global average of 50%, indicating both resilience and the need for improved post-acceleration support.
• Export intensity remains low, with only 17% of startups reporting earnings from foreign markets, indicating a gap in their internationalization capacity.

Softlanding Outcomes

Cross-border softlanding programs — initiatives that support startups expanding into new markets — remain fragmented across the region.

• The average time-to-first-contract for startups entering a new LATAM market is 9-12 months, compared to 5–7 months in Europe and Asia.
• Compliance and incorporation costs average US$12,000–20,000 per expansion, due to heterogeneous tax regimes and legal frameworks.
• However, coordinated initiatives such as ProChile Global, Startup Chile, and Brazil’s StartOut Brazil demonstrate that structured soft landing frameworks can reduce costs by up to 40% and lead times by 35%.

Source: IDB Lab Innovation & Trade Report 2023; OECD Startup Internationalization Survey 2024; CAF Regional Competitiveness Outlook 2024

Talent Mobility and Visa Facilitation

Talent mobility across Latin America remains limited despite growing demand for regional collaboration.

• Only four countries (Chile, Colombia, Mexico, and Brazil) currently offer startup or innovation visas.
• Intra-LATAM talent movement accounts for less than 5% of total skilled migration, which is significantly lower than the benchmarks for ASEAN (14%) and the EU (21%).
• Harmonized visa regimes and mutual recognition of professional qualifications could increase cross-border innovation employment by 25% within five years.

Corporate Venture and POC Conversion Benchmarks

The corporate venture capital (CVC) landscape in Latin America continues to expand rapidly, signaling a maturing innovation ecosystem.

• In 2023, corporate-backed VC deals represented 22% of total venture transactions in the region—up from 12% in 2019 (LAVCA, 2024 Industry Data & Trends Report).
• More than 180 corporations across Latin America currently operate open innovation or corporate venture programs, led by sectors such as finance, energy, and retail (IDB Lab, Innovation in Corporates Report 2023).
• However, the POC (proof-of-concept) to scale conversion rate averages only 27%, compared to 41% in OECD economies, primarily due to long procurement cycles and risk-averse governance models.

Technology Adoption Rates by Sector

Technology adoption across Latin American industries shows strong momentum, particularly in digital transformation and sustainability.

• The manufacturing sector achieved 58% digital adoption (ERP, IoT, data analytics), while agriculture reached 36%, and healthcare 42%, with telemedicine and data integration accelerating post-pandemic.
• Public sector digitalization has also progressed, with 72% of LATAM governments adopting e-procurement systems and 40% deploying AI pilots in service delivery.
• The region’s overall digital transformation index rose from 49% to 61% between 2020 and 2024, indicating substantial convergence toward global averages.

Procurement Cycles and Pilot-to-Scale Ratios

Innovation procurement remains one of the main barriers to corporate–startup integration.

• The average procurement cycle for innovation-related pilots in Latin America lasts 9–14 months, compared to 5–8 months in OECD economies.
• Only 1 in 4 pilots transitions into full-scale deployment, mainly due to budget rigidity and compliance bottlenecks.
• Regional initiatives such as ChileCompra, Brazil + Inovador, and Colombia Compra Eficiente have shown that structured innovation procurement models can reduce pilot-to-scale time by 40%.

Source: IDB Public Procurement & Innovation Report 2024; OECD Government Innovation Observatory 2023

Regulatory Burden and Business Entry Timelines

The regulatory environment across Latin America has improved modestly over the last decade, yet significant disparities persist.

• According to the World Bank Doing Business Legacy Database (2023), the average time to start a business in Latin America is 28 days, compared to 7 days in OECD economies.
• Regulatory burden indices (World Bank & OECD Composite 2024) show an average score of 0.58/1.0, reflecting moderate-to-high administrative complexity.
• Reforms in countries such as Chile (Empresa en un Día), Colombia (Cámara de Comercio Digital), and Brazil (REDESIM) have reduced entry times by up to 40%, serving as benchmarks for regional harmonization.

Formality Rates Among Early-Stage Ventures

Despite progress, informality remains a structural challenge for early-stage ventures in Latin America.

• The average informality rate among startups and MSMEs stands at 46% regionally, reaching 60% in Central America and 35% in the Southern Cone.
• Administrative costs, tax uncertainty, and fragmented reporting obligations are key deterrents to formalization.
• Research by BID Lab (2024) indicates that simplified regimes for startups can reduce informality by up to 20% within three years when combined with digital compliance tools and access to finance.

Cross-Border Payment Settlement Costs and Timelines

Cross-border financial integration remains limited, constraining startup internationalization and VC transactions.

• Average payment settlement costs for intra-LATAM transfers are 5.8% of transaction value, compared to 1.2% in the EU (IMF Cross-Border Payments Study, 2024).
• Settlement timelines average 48–72 hours, hindered by currency controls and fragmented banking infrastructure.
• Initiatives like PIX Internacional (Brazil) and Sistema de Pagos en Moneda Local (Argentina–Brazil) demonstrate that regulatory coordination can reduce transaction costs by over 50% and enable near-instant cross-border settlement.

Capital Under Management and Pension Fund Allocations

The Latin American VC/PE ecosystem has grown substantially, yet institutional participation remains limited:

• Total capital under management in LATAM reached approximately US$28.5 billion in 2023, up from US$22.1 billion in 2022, driven largely by early-stage funds and corporate venture programs (LAVCA 2024).
• Pension funds allocate less than 1% of assets under management to venture and innovation vehicles, compared to 4–6% in OECD peers, signaling untapped domestic institutional capital.
• Brazil, Mexico, and Chile account for 70% of VC/PE AUM, highlighting regional concentration.

Syndication Patterns, Cheque Sizes, and Time-to-Close

Cross-border syndication is increasing but remains uneven:

• Average syndicated deal size: US$5.6 million, up from US$4.2 million in 2021.
• Time-to-close for multi-country deals averages 4–7 months, with regulatory alignment and due diligence as primary bottlenecks.
• Syndicated deals now represent 38% of all VC investments, reflecting greater investor collaboration but still below the 50–60% benchmark in Europe.

Source: LAVCA Deal Flow Report 2024; IDB Lab Cross-Border Investment Analysis 2023

Blended Finance Usage and Leverage Ratios

Blended finance is increasingly used to de-risk innovation investments:

• DFIs participate in approximately 22% of all VC/PE deals in the region, with leverage ratios averaging 2.5x of private capital mobilized (BID Lab, 2024).
• Typical blended vehicles combine public funds, impact investors, and corporate co-investment, enabling the scaling of high-risk sectors such as climate tech, fintech, and health tech.
• Blended finance uptake has grown from 12% in 2020 to 22% in 2023, demonstrating its role in crowding in private capital at scale.

Source: BID Lab Blended Finance Report 2024; CAF Innovation Financing Report 2023; OECD Blended Finance Data 2023

Funding Share and Cheque-Size Differentials

According to the LAVCA Gender Equity Report 2024, women-led startups in Latin America received only 13% of total VC funding, with average cheque sizes 25–35% smaller than male-led counterparts.

• Brazil, Mexico, and Chile show slightly better representation, but the funding gap persists across early-stage and growth-stage deals.
• DFIs and blended finance instruments have increasingly targeted gender-lens investing, accounting for ~18% of deals with explicit inclusion criteria in 2023.

Source: LAVCA 2024; BID Lab Gender-Inclusive Finance Report 2023; CAF Innovation & Gender Report 2023

Participation in Accelerators and Corporate Pilots

• Women founders participate in accelerators and corporate pilot programs at rates 20–30% lower than men, according to GEM 2024 and IDB Lab Startup Participation Surveys.
• Successful programs, such as Start-Up Chile Women Cohort and WEConnect accelerators, demonstrate that tailored mentoring and networking can increase acceptance and graduation rates by 15–20%.

Source: GEM Global Report 2024; IDB Lab Startup Survey 2023; OECD Women in Entrepreneurship Data 2023

Retention and Leadership Progression

• Retention in founder and executive roles remains a challenge. Only 35% of women-led startups report having sustained leadership teams beyond five years (BID Lab, 2024).
• Women are underrepresented in board and senior management positions in startups, averaging 22% of leadership roles, highlighting the need for mentorship pipelines and peer networks.
• Studies show that structured mentorship and sponsorship programs improve leadership retention by 25–30%, with positive effects on funding, growth, and innovation outcomes.

Source: BID Lab 2024; CAF Gender and Innovation Survey 2023; World Bank Women in Business Report 2023