Venture Capital Isn’t Dead—It’s Restructuring
The venture capital industry in Latin America is undergoing a moment of profound transformation. Far from dead, as some predict, risk capital is experiencing a fundamental restructuring that is redefining the rules of the game.
The current landscape reveals a fascinating paradox. While funds historically set themselves apart by spotting opportunities before anyone else, today, capital has become commoditized. The real competitive edge no longer lies in simply having more money, but in offering what money can’t buy: genuine operational expertise and truly valuable networks.
This transformation is particularly evident in Latin America, where, according to Cuantico VP’s Latin America Venture Capital Report 2025, 189 venture capital firms raised funds for the region between 2017 and 2024. However, only 106 managed to close capital between 2021 and 2023, signaling greater selectivity and tougher competition in the fund market.
Capital Concentration and the Access Dilemma
One of the most concerning trends is the concentration of capital in just a few hands. Brazil and Mexico captured 70% of the venture capital dollars invested in Latin America in 2024, reflecting a pattern of geographic concentration that mirrors global dynamics, with giant funds “vacuuming up” capital while returns cluster among a few.
Regional family offices face a particular dilemma in this new landscape. Everyone wants direct access to startups, but without information asymmetry, they’re usually the last to find out. This reality is especially acute in Latin America, where family offices are increasingly interested in diversifying into venture capital but lack the networks needed to compete effectively.
Unless you’re a top-tier fund, generalist VC is declining in Latin America. The right to win now means a combination of domain expertise and so-called “operational scars”—real experience building companies. Operator-led funds are showing better performance, outperforming traditional VC funds by about 1.7x in early-stage investments.
Latin America’s Structural Advantage
Despite the challenges, Latin America offers unique structural advantages. Brazilian VC funds have an average MOIC of 2.60x, compared to 2.11x in the United States, a gap that favors capital efficiency. Latin American startups have developed the “Camel” model—highly capital-efficient companies that can thrive in resource-constrained environments.
This efficiency shows up in superior metrics: the LTV/CAC ratio in Latin America is at least twice as high as in the US at every stage, and startups in the region enjoy runways 15 months longer than their American counterparts. In an ecosystem where only 79 exits were recorded among VC-backed companies from 2017 to 2024, the ability to do more with less is fundamental.
With many of the 106 firms that closed capital between 2021 and 2023 expected to return to market in 2025–2026, the ecosystem is poised for a new investment wave. However, the future will depend on whether first-time managers who raised funds can deliver sufficient returns to secure a second fund.
Venture capital in Latin America isn’t dying; it’s evolving into a more sophisticated model—one where scale coexists with specialization, where data filters out the noise, and where operational expertise is the true edge. The question isn’t whether it will survive, but who will first understand the new rules of the game.
Originally published in Forbes Mexico.
