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LatAm 2025 + 2026: the market is back to normal, now only those who execute survive
For our LatAm review of 2025 and 2026 outlook, we had the pleasure of having Ian Faria, Founder & CEO of Mecanizou, pencil in his thoughts. You might recall Ian from the wonderful interview he gave as part of our TakeOff series. For convenience, a Portuguese version of this interview is available here.
You can’t start talking about LatAm without talking about available capital. And that does not mean founders shouldn’t keep a bootstrap mindset. The topic of available capital is about supporting innovation to reach disruptive levels and new business models that didn’t exist before.
There’s no way around it: LatAm needs fresh capital. Funds understand this. The bottom is behind us, but none of them miss the 2021 madness. And that’s a good thing. A PPT and a good relationship won’t define valuation anymore. Execution and resilience will.
Recent reports from LAVCA and other players show a stable scenario: something like US$4–5 billion per year in venture capital, split across 700-800 deals, consistently since 2022. We didn’t go back to the US$16 billion peak of 2021, but we also didn’t fall further. The market “froze” at a new level of normality.
This matters for anyone raising capital: understand the VC you’re talking to, where their fund is in the cycle, and the moment they’re in. Success in LatAm has increasingly become a prerequisite to prove yourself and keep that door open.
Some important movements:
Brazil + Mexico remain the axis: Together, they concentrate around 70% of VC dollars, alternating leadership quarter by quarter. In 2025, Mexico had moments where it surpassed Brazil in volume, strongly driven by AI, fintech, and nearshoring. Brazil, however, remains the largest market in revenue and tech density.
Early stage runs the game: Seed and Series A lead the flow. Growth is far more selective, with checks going to companies that already proved unit economics (or that have enough data + infrastructure to become a “mandatory layer” in an ecosystem).
Investors are prioritising quality: 2025 reports explicitly talk about a “flight to quality”: fewer checks, more diligence, higher governance requirements, and clearer paths to profitability.
In short: life for founders in LatAm was never easy, but now it’s hard mode ×2. Ultra-selective VCs, with expectations that only people in the trenches understand how hard it is to balance: I want growth, I want positive CM, I want breakeven, and I want AI. In other words, everything. Choose your challenges and your “whys”, carefully. The era of beautiful stories without a P&L is over.
Growth still matters, but today the standard question from any serious LatAm investor is: “Show me a clear path to positive CM and breakeven and where AI enters your model in a non-cosmetic way.”
I tried to consolidate some of the most relevant discussions and topics. This isn’t about talking only about what my business is involved in, but about what I see as real paths for LatAm.
AI in LatAm: no longer hype, now product default
2023 and 2024 were years of POCs, hackathons, and “let’s test GPT somewhere in the flow”. In 2025, we can say it clearly: AI became the base infrastructure in the region. If you don’t have it, or aren’t even discussing it, you’re already losing the game.
Some signals:
- The LatAm AI Benchmarks Report 2025 by SaaSholic, with 400+ startups surveyed, shows massive adoption: the majority already use AI in product or operations, and AI-native startups grow faster across all revenue bands.
- Reports like State of AI in Latin America 2025 and studies from big tech (Oracle, etc.) show the discussion has shifted from “if we’ll use AI” to “how to operationalize, govern, and monetize AI.”
- Globally, Stanford’s AI Index 2025 already cites relevant model and infrastructure launches outside the US/China, including Latin America. The region stops being just a “customer” and starts appearing as a producer in some niches.
Three fronts are becoming particularly interesting:
AI as a transversal efficiency layer
Heavy automation of customer support (WhatsApp-first), logistics routing, fraud detection, dynamic pricing, collections, KYC, CRM, etc.
For SMBs, any SaaS tool that arrives without AI embedded in the user’s daily routine already feels outdated.
Verticalized AI as an “operational co-pilot”
AI in logistics (demand forecasting, route optimization), agri (climate, yield, credit), healthcare (triage, reports), industry (failure prevention, computer vision).
Here, the differentiation isn’t the model itself, but proprietary datasets + deep embedding into customer workflows.
Data + AI infrastructure “built for LatAm”
Data/AI solutions that understand accounting, tax, languages, base noise, and the region’s “structural hacks” are becoming real edge.
This is where partnerships like global hyperscaler + local player who truly understands the mud show up.
But beware: if it doesn’t move margin, revenue per FTE, or cycle time, it’s just perfume. I’ve seen plenty of founders say any nonsense to shove AI into the model and make it look “sexier.” Don’t be that founder. AI is not an innovation slide. It’s CM, CAC, and headcount.
Fintech and embedded finance: less neobank, more infrastructure
The narrative that “fintech is over” is false. Not all spaces are filled. What is over is the illusion that yet another generic neobank would solve anything.
Trend reports show LatAm remains one of the most fertile environments for fintech, with strong growth in instant payments, wallets, SMB credit, and niche products. But the centre of gravity shifted:
- A recent 2025 fintech trends report highlights open banking, AI, and embedded finance as the three main axes.
- Another study points to the embedded finance market in the region reaching close to US$39 billion in 2025, with projections above US$60 billion by 2030.
The 2025 game is: Less “new-color banking app,” more “infrastructure that empowers those who already have distribution.” ERPs, marketplaces, B2B platforms, and management apps embed accounts, credit, insurance, payments, and collections directly into the flow.
Regulation became leverage, not just risk. PIX (Brazil), open finance, digital registries, electronic invoicing, and regulatory frameworks across countries create rails for companies in any sector to expand financial products, if they have data and customer relationships. Plug-and-play miracles don’t work.
And be careful. In Brazil, we say: “Every day a trickster and a fool leave home, when they meet, business happens.” It captures a truth in fintech: there’s always someone trying to take advantage, and someone vulnerable to being fooled.
Just because you have an audience doesn’t mean you should believe in every fintech silver bullet. Treat it as a core product, not a marketing add-on.
Logistics and infrastructure: the invisible base that decides who scales
Behind every digital growth story in LatAm, there are always two ghosts: bad logistics and outdated physical infrastructure.
But 2025 marks an interesting point:
- Logistics and e-commerce reports indicate the region’s digital market should surpass US$200 billion in retail sales by 2025, driven by Brazil, Mexico, and Colombia.
- Logistics-focused studies for 2025 point to accelerated digitalization, nearshoring, and sustainability as drivers, with startups modernizing supply chains across ports, trucking, and the last mile.
This is where moves like:
- Mercado Livre is announcing around US$5.8 billion investment in Brazil in 2025, plus US$3.4 billion in Mexico, focused on logistics, tech, and fintech, creating roughly 14,000 jobs. Heavy, long-term infrastructure is being built now.
- Green corridors and electric freight routes between Mexico and the US (Texas-Nuevo León, etc.) are starting to leave paper and reinforce the gap, and opportunity, in sustainable logistics.
What this means in practice: Any startup dealing with physical products, B2B or B2C, must treat logistics as core, not a third row in a spreadsheet.
There’s massive space for SaaS + data + fintech in logistics: route-based insurance, fleet financing, freight factoring, dynamic transport pricing, AI control towers, etc.
We’re no longer in a world where logistics is just cost; it’s a value proposition. Anyone in LatAm knows the bar has been raised by Mercado Livre, pushing standards every day. Delivery apps (iFood, Rappi, Daki) trained customers to expect faster and faster fulfilment.
Innovation in logistics is no longer a freight price comparison marketplace (no offence, but that’s not the bar anymore). Real innovation is expected. Brazil is continental, trucks leaving full and returning empty in 2025? Mexico, with all the power of nearshoring, still has industrial corridors with 30% idle road capacity? Colombia, with one of the most challenging geographies in the world, still relies on manual planning, spreadsheets, and phone calls to coordinate transport between mountains, ports, and capitals.
Logistics isn’t the ugly duckling, maybe for some VCs who just chase where the wind blows. But ultra-real problems impacting every supply chain are still right in front of us every day. Consumers only notice when their “little purchase” doesn’t arrive.
Deep tech and climate: the problems few want to solve, and that will pay the future’s bill
Still niche, still underfunded, but deep tech and climate stopped being academic eccentricities. They need to start now. Capital and patience truly matter here.
You see:
- Reports showing growth in clean energy, precision ag, sensors, batteries, materials, and AI applied to industry.
- Governments making symbolic moves, like Mexico’s plan to build the “Coatlicue” supercomputer, designed to be the most powerful in Latin America, focused on AI and data processing, with construction starting in 2026.
The message isn’t “this will explode in 2026,” but: those who plant now in hard tech + LatAm will harvest brutal asymmetry by 2028.
LatAm combines relatively clean energy matrices, massive climate risk exposure, and industrial productivity gaps. It’s the perfect lab for applied solutions, not theoretical tech, but things that must work on factory floors, in fields, and in real infrastructure.
Look at the biggest LatAm cases in recent years. Tractian directly attacks AI + industrial productivity, and its hardware, something many VCs dismiss as “physical doesn’t scale.”
Agriculture is another massive path. It represents over 20% of Brazil’s GDP, 10% of Mexico’s, and 7% of Colombia’s. As we say in Brazil: “If agro doesn’t plant, the city doesn’t eat.”
They’ll look “ugly” at first, take longer to scale, but they’ll have real moats, proprietary data, and structural impact. Mining (Sigma Lithium), aerospace (Satellogic, BizuSpace)… search and you’ll find examples across sectors.
2026 summary: what really matters for founders and investors
If I had to condense the 2026 thesis to a founder or investor sitting with me at a café in São Paulo, CDMX, or Bogotá, it’d be this:
Infra builders win, not pretty apps: Data + AI infra, financial infra (embedded), logistics infra, regulatory/compliance infra.
Every sector will get its “category OS”: The operating system for mechanics, clinics, carriers, regional retail, farms, etc. Whoever becomes the OS earns the right to plug fintech, insurance, AI, media… everything.
Unit economics are back at the center: Burn without a clear future margin thesis will be less and less tolerated.
Don’t build your core on rented land: Unstable channels or tech you don’t control create invisible fragilities, and they always charge interest.
The founder who can show: positive CM, AI reducing marginal cost to serve, embedded finance/logistics expanding LTV, moves to the front of the line.
AI stops being a “differentiator” and becomes a “competitive obligation”: In 2026, it’s not if you use AI, but where it improves margin and speed. Anyone just wrapping prompts around manual workflows will lose to those who rebuilt the product with AI at the core.
In my opinion, Latin America changes the type of founder who survives
Global capital returns with more criteria, but the deeper transformation isn’t in investors; it’s in builders.
The region quickly exposes fragile businesses. Growth without structure becomes a liability: over-dependence on channels, non-scalable tech, improvised logistics, messy data, governance treated as an afterthought.
Latin America forces operational discipline. It pushes founders to think early about architecture, margin, control, and resilience, not as a “future” topic, but as a prerequisite. Those who pass this filter don’t just build bigger companies. They build companies capable of crossing cycles, crises, and borders without collapsing.
The region needs more homegrown success cases. Nothing against giants arriving with massive capital, competing against our hard-earned money (the kind that survives inflation, government, and all local challenges). But Latin America must stop being the “ugly duckling” of innovation and start leading its own theses, products, and infrastructure.
Founders, be resilient. You are the present and the future.
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