As comms professionals representing emerging markets startups, we have to keep track of market trends. As such, we know things have been tough lately. The days of “easy money” for fintech startups seem to be over. A brutal funding winter has gripped the sector, forcing even the most promising players to fight for survival. But amidst the turmoil, the most resilient and innovative startups are finding ways to adapt.
A recent Nearshore Americas article highlights a stark reality: fintech investment in the LatAm region has plummeted, valuations are under pressure, and venture capitalists are shifting their focus to profitability over rapid growth, all trends mimicked in other EM sectors.
Regionally, Latin America saw fintech investments drop from $7 billion in 2021 to $2.6 billion in 2024. This is reflective of wider trends: In 2024, global fintech investment fell to $43.5 billion, a 20% drop from $54.2 billion in 2023. The number of fintech deals worldwide also declined by 16%, decreasing from 7,683 in 2023 to 6,464 in 2024.
Once-favoured neobanks, alternative lending platforms, and crypto startups now face a changed investment landscape where flashy user growth is no longer enough. Investors want sustainable business models and clear paths to profitability.
So, what’s causing the great funding drought?
1️⃣ Higher Interest Rates – The end of cheap capital means VCs are more risk-averse, prioritizing startups with solid financial fundamentals.
2️⃣ Overcrowding in the Market – The fintech boom led to an oversupply of companies offering similar services, making differentiation harder.
3️⃣ Regulatory Scrutiny – Governments worldwide are tightening fintech regulations, creating new compliance challenges.
4️⃣ Investor Skepticism Toward Fintech Unicorns – The high-profile struggles of overvalued fintech giants have made investors cautious.
But, as the authors emphasise, there are signs of hope in Latin America. Despite the overall decline in fintech investment – from $7 billion in 2021 to $2.6 billion in 2024 – venture capital inflows into the region have rebounded, increasing by over 75% from 2023 levels. This suggests that investors still see strong potential in Latin American fintechs, particularly those that offer innovative financial solutions tailored to underbanked populations and local market needs.
As startups in the region shift their focus towards profitability, regulatory compliance, and strategic partnerships, they are proving that resilience and adaptation can drive growth even in a challenging funding environment.
Who Will Survive?
In today’s tough funding climate, only fintechs with strong fundamentals will endure. Profitability is key—startups must demonstrate sound unit economics and cost control. Regulatory readiness is also crucial, as compliance becomes a major factor in investor confidence.
B2B-focused fintechs are gaining traction, as enterprise clients offer more stable revenue than consumer markets. Meanwhile, strategic partnerships with banks and financial institutions provide credibility and new growth opportunities. The fintechs that survive will be those that adapt – prioritising sustainability, compliance, and collaboration in an evolving market.
