Investment in Latin American startups reached a staggering $1.8 billion within the first six months of 2025.
Mexico has taken the lead in venture capital investment in Latin America, surpassing Brazil for the first time since 2012. This shift is largely due to the robust growth of Mexico's fintech sector, which has attracted significant investment, particularly in AI and fintech companies.
The Mexican fintech sector's success can be attributed to its alignment with global trends favouring payments, insurance technology, and digital financial services. These segments continue to attract substantial funding worldwide, even as more traditional banking and lending tech sectors face margin pressures and credit risk concerns.
One of the standout investments in Mexico is Klar, a Buy Now Pay Later (BNPL) startup that raised a record-breaking $170 million, marking the largest private tech round in Mexican history. Other notable fintech companies, such as Jüsto, Zubale, and Kavak, also raised substantial funds in Q2 2025.
However, not all countries in Latin America are experiencing the same level of investment success. Argentina, Colombia, and Chile face slower venture capital activity due to macroeconomic uncertainty and limited exit opportunities. As a result, Argentina raised just $78 million in H1 2025, a significant drop from the same period last year. Chile, on the other hand, brought in $110 million, largely thanks to activity in clean energy and logistics.
The concentration of investment in a few countries and sectors is a reflection of the region's overall venture capital activity consolidating. Latin America's fintech funding fell to about $400 million in Q2 2025, a significant decrease from previous quarters. This trend is expected to continue, with actual Initial Public Offerings (IPOs) more likely to occur in 2026 rather than 2025.
Despite the challenges facing some countries, there are signs of optimism. Private equity interest in secondaries is rising, hinting at the return of liquidity. Additionally, sectors like climate tech raised $321 million in Q2 2025, indicating a growing interest in clean energy, water efficiency, and carbon-tracking startups.
In conclusion, Mexico's fintech sector is capitalizing on AI-driven innovation and a relatively favourable investment climate, while other countries in Latin America face macroeconomic instability and weaker investor confidence, limiting their startup funding growth. As the region moves forward, it will be interesting to see how the venture capital landscape evolves and which countries and sectors continue to attract investment.
The fintech sector in Mexico is capitalizing on AI-driven innovation and securing substantial funding in Q2 2025, with Klar raising a record-breaking $170 million, marking the largest private tech round in Mexican history. Furthermore, investing in the business sector remains strong in Mexico, as other notable fintech companies such as Jüsto, Zubale, and Kavak also raised significant funds during the same period.
