AI Startups attract more investment in LATAM: what’s happening with the rest of the market?

In 2024, AI startups have become a focal point for investors, seeing exponential growth in investments. As highlighted in previous reports, these companies raised an astonishing $110 billion in 2024, marking a 62% increase compared to 2023, according to Dealroom. 

This surge contrasts sharply with a 12% decline in total investment in technology, which reached $227 billion. In this article, we will analyze how the investment landscape is shifting, highlighting key figures, the most funded startups, and the impact this trend has on the global investment ecosystem.

The giants leading the charge in AI investments

The major players in the AI space led the largest funding rounds of the year. Anthropic raised $7 billion, Waymo secured $5.6 billion, and Databricks received $10 billion. These funding rounds not only set the stage for future growth but also underscored the rising dominance of generative AI, autonomous driving, and data processing technologies. 

Although OpenAI remains the most recognized name in the field, Databricks attracted the largest investment of the year, showcasing the growing interest in advanced AI models. While the AI sector booms, other technology industries are facing challenges. 

The decline in investments is particularly notable in fintech, edtech, and e-commerce, as caution among investors is leading to smaller rounds of funding across these sectors.

The decline in other tech sectors and the impact on Latin America

In Latin America, the situation is even more severe. According to Endeavor, investment in startups across the region dropped a staggering 72% from 2020 to 2024, with countries like Brazil, Mexico, and Colombia being the hardest hit. 

Factors such as economic uncertainty and a cautious investment climate have led to a sharp decline in capital for startups in these areas. In particular, the logistics sector, which has strong ties to e-commerce and fintech, has felt the impact of the reduced flow of funds.

This shift in investment priorities highlights a growing imbalance in the technology sector, with AI startups capturing the lion’s share of venture capital, while other innovative fields are struggling to secure necessary funding. This could have long-term effects on the diversity of the global tech ecosystem.

What lies ahead for the investment landscape?

Looking forward, the focus will likely remain on AI. Investments in language models and generative AI applications reached $47.4 billion in 2024, further solidifying AI as the fastest-growing segment of the tech industry. 

While this growth is promising, the challenge lies in maintaining a balanced investment ecosystem. The concentration of capital in AI could limit the development of other critical technologies, which may slow down overall technological innovation in the future.

To sustain long-term growth and innovation, it is essential for investors to diversify their portfolios and not overly concentrate resources in a single area. While AI will continue to be a dominant force in the industry, a diversified approach will ensure that other key sectors such as fintech, edtech, and e-commerce continue to thrive and drive progress in the tech world.