Legal Business Blogs

The Latin American startup industry

Mauricio Duarte from Legal Plus gives his insights into startups in Latin America, providing particular focus on the growing venture capital market in Guatemala

Startup ecosystem in the region

If you have heard of Duolingo, you might not know that the founder was born and raised in Guatemala. Like this successful company, there are multiple examples of successful startups in Latin America, such as Kavak, Rappi, Ualá, Hybrico, Osigu, CoreCode, Pacifiko, and more.

The startup ecosystem in Latin America is unique. The region keeps giving hundreds of successful startups, many already worth over a billion dollars (unicorns). However, some metrics show that in 2023, there was a 60% drop in venture capital investment compared to 2022, according to

Yet, there are reasons to stay positive. For example, according to Bloomberg, SoftBank Group Corp anticipates increased investments in Latin American startups in 2024.

Latin America is on track to become a hot spring of innovation, fuelled by rapidly growing startups and capital investment. Many of the most successful startups are from Argentina, Brazil, Chile, Colombia, and Mexico, where the number of startups nearly tripled in the last five years. However, based on our observation and practice, you should watch for countries in Central America, especially Guatemala, El Salvador, and Costa Rica.

As a Guatemalan-born and raised attorney now residing in the US, I will focus on Guatemala. As you keep reading, remember that this is not financial advice, but it may sound compelling to invest in Guatemala after reading.

The country’s strategic location and proximity to Mexico, the US, and other Latin American markets, on top of the creativity of its people, make it an attractive country to tap into its potential.

The venture capital market in Guatemala has been experiencing significant growth after the pandemic. Like Statista found recently, there are multiple factors contributing to this growth, such as:

  • The proliferation of incubators, accelerators, and significant regional gatherings, as seen in initiatives like Multiverse, Startup Grind, and the Volcano Innovation Summit.
  • The rising tide of angel investors and investment funds within Guatemala, such as Pomona Impact, Invariantes, GEA Capital, Cacao Capital, and E10. This trend signifies an escalating enthusiasm for investment opportunities in the region.
  • The widespread adoption of smartphones and internet connectivity has revolutionised access to information and digital services, laying the groundwork for an increasingly connected and digitally-savvy population.

For example, the same study from Statista suggests that Guatemala is projected to reach a total capital raise of US$63.4m in the venture capital market by 2024, representing a 6.8% increase. In addition, according to, Guatemala keeps showing a positive outlook on capital investment.

Role of legal

At Legal Plus, we are at the forefront of this trend and provide specialised and tailored legal solutions that respond to Latin American startups’ needs, quirks, and budgets.

The journey of a startup, from its pre-seed stage to becoming a full-fledged business entity, is filled with legal intricacies and regulatory hurdles. It is here that legal advice becomes indispensable, guiding startups through the complex maze of corporate, intellectual property, securities, and financial laws. In our experience, the valuation of a startup is just as good as its legal compliance and protection of intellectual assets.

Especially in the dynamic realm of venture capital financing, technology, and private equity, the expertise of a knowledgeable legal sidekick is invaluable.

We advocate for harmonising external law firm services with the practicality and dedicated focus akin to an in-house legal counsel. This approach equips startups with a consistent point of contact and specialised expertise while also acknowledging the constraints inherent in the ‘one-stop-shop’ model typically associated with larger law firms. By positioning themselves as general external counsel, small and medium-sized law firms can offer a more nuanced and adaptable service, aiding clients in leveraging technology, streamlining legal operations, and establishing vital connections with a diverse network of legal professionals across various jurisdictions.

I came to learn about technology, venture capital financing, and private equity only after I became interested in legal technology. Like myself, our team needed to be taught the importance of venture capital financing or caveats about innovative startups in law school. We came to learn more and more by reading and experiencing ups and downs.

For instance, our team had to quickly understand why it is advisable to use the Simple Agreements for Future Equity (SAFEs) and convertible notes when our local regulations do not explicitly regulate them. Another example was the ability of our team to quickly grasp the importance of standard documents for financing, such as the ones provided by the National Venture Capital Association. Embracing standard legal documents and structures facilitates deals, especially with foreign investors.

As a part of this learning process, there are other valuable lessons that we suggest for any Latin American startup:

  • Negotiate favourable terms for the startup while keeping reasonable terms for the investor.
  • Structure deals that align with long-term business goals. This also means that not all startups require a C-corporation incorporated in Delaware.
  • Find a suitable tax structure for the company and the investors. Do not undertake unreasonable and overly complex structures.
  • Finally, focus on the product first, but remember the legal!

I do not mean to suggest that lawyers make or break a successful startup. A good product or service is based on the user experience, functionality, and simplicity. However, a solid legal framework will ensure the startup can secure the necessary capital while safeguarding its interests and long-term strategy.

The journey of securing venture capital is pivotal for any startup, especially a Guatemalan startup. The approach for every law firm should not merely be about securing funds; it’s about crafting financing rounds that respect the vision and autonomy of the startup. This might sound easy, and it is if you have a great team that can handle various legal issues.

For example, parallel to financial negotiations, the digital nature of today’s startups often places them at the crossroads of user agreements, data protection regulations, and intellectual property concerns. Therefore, our team provides a comprehensive service that intertwines financial negotiation support with other technological strategies. This dual focus ensures startups secure the capital they need and establish trust with their user base through compliant practices.

This expertise is significant when startups, in their scale-up phase, must navigate complex financial instruments, equity arrangements, and compliance requirements. More than just a service, law firms should focus on becoming a pillar of collaboration with the startup.

Successful examples

Over the past two years, we have had the privilege to facilitate significant milestones for our clients, underlining the critical role of strategic legal counsel in the startup world.

The legal team at Legal Plus, which specialises in private equity and venture capital and comprises Alvaro Hurtado, Juan Andrés Campos, Pamela Rodas, and myself, has successfully spearheaded a series of significant transactions.

These initiatives include, but are not limited to:

  • n Orchestrating the strategic acquisition of Carvajal by Osigu in Colombia and leading Osigu’s Series A-2 Financing and its subsequent corporate restructuring;
  • n Executing a venture debt financing arrangement for Hybrico while securing a senior secured credit facility and managing the Series B Financing and corporate reorganisation of Hybrico.

Additionally, our team has been instrumental in facilitating various equity and debt financings and establishing investment fund structures, collectively exceeding US$75m in transactional value, which reaffirms the data provided by the 2024 LAVCA Trends in Tech.

Looking ahead

The role of legal counsel extends far beyond traditional legal services. Lawyers can be strategic partners to clients, guiding them through the intricacies of financing rounds, cross-border expansions, and the ever-evolving global business landscape.

Like startups and technology companies, law firms must embrace innovative approaches to serving their clients effectively. This necessity is particularly crucial for lawyers who aspire to advise startups and technology firms. In this dynamic sector, lawyers must consider various business aspects, including international tax implications, venture capital funding, technical protections for software, data protection, and cyber security.

For instance, advising a startup on venture capital funding requires knowledge beyond legal terms; it requires an understanding of the venture capital ecosystem, investment strategies, and the financial implications of different funding structures. Similarly, when dealing with data protection and cyber security, lawyers must be familiar with the technological aspects of data management and the risks associated with cyber threats.

Moreover, the delivery of legal services is transforming, driven by advancements in technology and artificial intelligence. Law firms increasingly leverage these tools to enhance efficiency, improve accuracy, and offer more sophisticated services.

Therefore, for lawyers advising startups and technology companies, it’s more than just offering legal services. It’s about expanding how these services are delivered, integrating technology, and applying business concepts to provide holistic, forward-thinking solutions. This approach will benefit the clients by providing them with comprehensive support, and it will position the law firm as a forward-thinking, innovative partner in the client’s growth.

For more information, please contact:

Mauricio Duarte
Attorney at law and LLM in US law

Legal Plus
Ruta 2 4-71 Zona 4,
Edificio 4 Venezia,
2do Nivel, Oficina 203,

T: +502 2293-2984