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For Latin American tech, the best is ahead


A painting of Mexico City at dawn, DALL-E, 2022


‘FAL, we have a problem,’ shared Jimena, sounding alarmed on an early morning of 2013. ‘All communication to the carsharing system is down.’ Carrot’s customers would not be able to open or close their cars. That meant the young startup, our biggest investment at the time, would have to manage another crisis caused by the abysmal Mexican digital infrastructure. The small Carrot team would spend the next few days running around Condesa, Roma and Polanco carrying dozens of keys to open its cars manually.


If Jimena and her co-founder had launched a decade later, communication with cars would probably use a reliable and free wifi provided by the CDMX government. Onboarding would be handled by Mati or Incode and payment by Stripe, D-Local or Conekta. Carrot’s platform would run on code written by experienced Latin American engineers. Carrot’s cars would probably be available on Uber marketplace and CDMX mobility app.


It’s hard to express how much things have changed for the better in tech.


However, ecosystem players, including founders, tend to focus too much on venture capital deployment to measure the health of our ecosystem. It’s important, yes. Yet, digital and financial infrastructure, technology adoption trends and engineering talent matter more.

Venture capital investment in the region will probably go back to pre-Softbank levels. TechCrunch, LinkedIn and Twitter feeds will be filled with bad news about startups and tech in Latin America. It’s scary.


An Impressionist painting of white cars in Mexico City, DALL-E, 2022


Despite the environment, problems to solve have not gone away. Positive trends are still here. If anything, next year will be a better time to build. Here’s why.


The Mexican peso and Brazilian real are some of the strongest currencies in the world posting better inflation numbers than most European countries. 660 million consumers with a GDP per capita 3x* that of India’s are eager to try the latest mobile service. E-Commerce is still soaring in Latin America growing by 25% in 2021**. Companies, more digitally savvy after years of remote-work, need software to run more efficiently.


Mexican Peso & Real relative performance


There are still so many obvious things we need to invest in. Despite Brazil’s recent growth, credit card penetration stands at 19%***, lagging other middle income countries outside of Latin America. Insurance penetration in Mexico is barely at double digits. Another super opportunity. Healthcare is as broken as it has ever been. Education is still waiting for its tech moment. A monster nearshoring trend to Mexico needs software for manufacturing, payments and logistics.


By now, the best founders are done with chasing bloated valuation and quick unicorn status. Most of the record numbers posted in 2020 and 2021 were explained by mega rounds of financing to support capital intensive tech enabled startups. Product-led growth strategies and genuine software startups require much less capital to grow anyway.


Another source of anxiety for investors and tech entrepreneurs is the wave of leftist governments and political instability in the region. It’s worth noting that the first two shaky years of the AMLO administration coincided with the best years for Mexican founders and VCs in 2021 and 2022. The same happened for the region’s giant with the great Brazilian recession in 2014. We’re used to this.


Latin Americans are accustomed to tough fundraising environments. When David & Cristina started Nubank or Oskar, Dani & Chaq launched Cornershop, venture capital in Latin America was scarce and hard to come by. It did not prevent them from starting and scaling category defining companies. It will not present the next generation of great entrepreneurs.

Will things get tougher next year? Yes. Much like in San Francisco, Lagos, Jakarta, London, and Mumbai. When the clouds get darker, we have to remind ourselves how much we’ve evolved since Jimena and Diego started their carsharing company in 2012.


Entrepreneurial leadership, ingenuity and hard work will prevail next year. As 2023 starts, we should not be scared but hopeful. For the best in Latin American tech is ahead of us.




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*According to the GDP per capita, World Bank estimates

**GSMA, The Mobile Economy Latin America 2021

***Latitud, The Latam Tech Report 2022

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I write about my work as an investor, a lecturer, and a mentor. In general, musings about Latin American tech, VC and life.

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