Central America Venture Capital Report 2023

Latin America is rapidly emerging as a key player in the global Venture Capital landscape, with ecosystems such as São Paulo, Mexico City, and Santiago leading the trends. However, the question arises: what is the trajectory and future of Venture Capital in Central America?

Despite a global slowdown in 2023, the VC ecosystem in Central America shows promising signs of growth. Historically, the region has faced significant challenges, including inadequate financial infrastructure, bureaucratic governance, and deficiencies in public services. Nevertheless, these obstacles are now seen as opportunities by visionary entrepreneurs.

Today, Central America offers substantial potential across diverse industries, becoming an attractive destination for Startup investments. A recent study by Atlantico highlights that investment returns in LATAM outperform other developing markets such as India and Southeast Asia.

Download: Central America Venture Capital Report 2023

Central America: An emerging market in the Venture Capital industry

If we analyze the whole Latin American region, we can say these are emerging markets from a venture capital perspective. This means it is a region that already has global visibility and is generating impact through Startups that are revolutionizing various traditional sectors. However, when it comes to Central America, it is still considered an incipient region from the Venture Capital perspective. With an ecosystem less than five years old, the region is witnessing the rise of its first local investors and its first startups.

Initiatives driving the emergence of the Venture Capital ecosystem in Central America

Several initiatives have converged to allow the Venture ecosystem to take its first steps in the region:

• Guatemala: Initiatives such as Volcano Innovation Summit and CAFI – the Central American angel investor network – are strengthening the ecosystem. The Invariantes Fund, launched in 2015, has been innovating with its global investment thesis.
• El Salvador: The Innogen Capital fund, focused on the Northern Triangle (Guatemala, El Salvador, and Honduras), and the SNBX Summit are notable advancements, along with the wave of innovation sparked by Bitcoin being legal tender in the country.
• Honduras: Tech4Dev, Prospera, and Ulua VC are improving the local entrepreneurial landscape.
• Costa Rica: The new funds Danta Fund and Atta Impact Capital, together with Caricaco and Carao, are key players that have significantly boosted both the country and the region.
• Nicaragua: Initiatives like Regional Investment Connect (RIC) and Impact Hub are strengthening the ecosystem.
• Panama: Venture Club LATAM, Amador Holding, and Escala LATAM are fueling the emerging VC scene.

These efforts culminated in the formation of CAPCA in 2021, the first Venture Capital association in Central America, which brings together more than 20 VCs committed to the region.