Skip the global GDP forecast. Inside Latin American deep tech, AI is the second-largest vertical by company count (11% on the IDB mapping) and already one of the larger shares of capital and value — behind biotech, and in places ahead of it once NotCo is in the frame.

Latin America and the Caribbean is keeping pace. Approximately 47% of Latin American companies have actively integrated artificial intelligence into their business operations, surpassing the global adoption rate by five percentage points. In contrast, only 16% of companies in the region report having no interest in exploring AI as part of their digital transformation efforts2.

It goes beyond corporate adoption. Startups in the region are building AI tools for regional and global markets. According to the Inter-American Development Bank (IDB) report Deep Tech: The New Wave, 11% of LATAM Deep Tech companies that have raised over $1 million from institutional investors are AI-focused, making AI the second-largest Deep Tech vertical in the region after biotech (61%)3.

From well-established companies founded in LATAM like NotCo, which uses AI to create plant-based alternatives to animal products (valued at 1.5 billion dollars4), to Runway, a generative AI platform for audiovisual content (also valued at 1.5 billion dollars5), AI is already one of the region’s largest deep tech verticals.

Three reads sit on the same page: ILIA’s country readiness scores, the IDB’s company-count share for AI inside deep tech (11%), and where the value actually concentrates — NotCo in Chile, for one.

LATAM’s AI Momentum

The region’s digital ecosystems make it a fast adopter.

According to the IDB, the region can enhance government efficiency, create smarter cities, and address critical gaps in education and healthcare by adopting AI. Whether it becomes a durable source of growth rather than a narrow one depends, on the IDB’s account, on ethics, skills and equitable access being built in rather than added later.

AI is already one of the larger parts of the region’s deep tech ecosystem. It is the second-largest Deep Tech sector in the region and contributes 15% of the 8 billion USD created-value within LATAM, third only to biotech (42%) and medical devices (22%).

In terms of capital, AI startups raised 22% of the 2 billion USD invested by VC’s in LATAM from 2018 to 2023, second only to biotech (35%).

Complexities behind LATAM’s AI Momentum

The 2024 “Latin American Artificial Intelligence Index” (ILIA)6 is the regional benchmark for the drivers, the readiness and the obstacles to AI adoption. Now in its second edition, ILIA distilled its insights into 10 essential findings that describe the region's complexities.

Talent Gap: The concentration of AI talent in Latin America has doubled in the past eight years, yet no country matches Global North levels, maintaining a significant gap.

AI Literacy: The skills gap in AI engineering is five times wider compared to industrialized nations. However, AI literacy penetration is higher in some countries, presenting opportunities to improve workforce skills.

Brain Drain: Since 2019, Latin America has consistently lost more AI specialists than it has attracted, except for isolated cases in Costa Rica and Uruguay.

Economic Boost: In Chile alone, generative AI could enhance the productivity of 5.69 million workers in the country’s top 100 occupations, potentially raising the national GDP by 1.2 percentage points.

Economic Matrix Impact: Liberal economies like Chile, Uruguay, and Costa Rica lead in entrepreneurship and private investment, while industrial powers like Mexico and Brazil excel in patents, high-tech workforce, unicorn startups and advanced manufacturing.

Gender Gaps: women’s participation in AI varies widely by country, and across the region as a whole too little is being done to close it.

Multidisciplinary Growth: Approximately 80% of AI-related publications in the region are multidisciplinary, with 70% concentrated in 10 key disciplines, particularly clinical medicine.

Legislative Momentum: The region has 38 AI-related legal initiatives, addressing topics like modifying penal codes for generative AI misuse, including fraud (Chile) and privacy violations (Mexico).

Lack of Urgency: Despite progress, most national AI policies lack substantial resources and urgency to close gaps and capitalize on AI’s potential.

Startup Challenges: AI startups stay concentrated in a few countries, with little private investment and almost no unicorns. That is a funding and support problem before it is anything else.

Factoring all these dimensions, ILIA featured individual scores for each of the 19 LATAM countries to rank their AI ecosystem maturity levels.

Chile, Brazil and Uruguay are the region’s Pioneers: better technological infrastructure, more talent coming through, more scientific output. All three are also writing national strategies to push the technology across their economies.

Argentina, Colombia, the Dominican Republic, and Mexico are the leading Adopters, representing countries that have begun integrating AI into various sectors of their economies and societies but have yet to establish a position of leadership.

Honduras, El Salvador, Guatemala, and Bolivia are classified as Explorers, falling behind in the adoption curve. These countries are in the initial stages of investigating AI, focusing on developing basic capacities but with limited AI-based applications and a nascent research community.

Leading sectors by number of Deep Tech startups, per the IDB

Chile (1st on ILIA’s Index)

Of the 65 Deep Tech startups that have received VC funding, 13% focus on AI, the second largest group after biotech (52%).

While biotech startups dominate in terms of number, accounting for over 50% of the total Deep Tech startups, AI leads in terms of value, largely due to NotCo’s rapid growth, a company worth 1.5 billion USD.

Brazil (2nd on ILIA’s Index)

Of the 101 Deep Tech startups that have received VC funding, 16% focus on AI, the second largest group after biotech (57%).

There’s no AI company highlighted in the Top Deep Tech Startups report by the IDB.

Uruguay (3rd on ILIA’s Index)

Of the 11 Deep Tech startups that have received VC funding, 10% focus on AI, the second largest group after biotech (90%).

MetaBIX Bio, which uses AI and biotechnology to predict and prevent diseases in plants, animals and humans, is worth 1.5 million USD.

Argentina (4th on ILIA’s Index)

Of the 103 Deep Tech startups that have received VC funding, 8% focus on AI, the second biggest one after biotech (67%), and co-equal with nanotechnology.

There’s no AI company highlighted in the Top Deep Tech Startups report by the IDB

Colombia (5th on ILIA’s Index)

Of the 30 Deep Tech startups that have received VC funding, 22% focus on AI, the second largest group after biotech (33%).

Colombia is the country with the biggest percentage of AI startups in the region.

There’s no AI company highlighted in the Top Deep Tech Startups report by the IDB

Conclusions

LATAM’s obstacles are talent gaps, brain drain and thin investment. Education, skills and better policy are what would close them.

Chile, Brazil and Uruguay, the ILIA leaders, got there by getting governments, startups, investors and universities to work on the same problem. That is the arrangement worth copying elsewhere in the region.

From an investor and stakeholder perspective, it’s worth noting the diverse strengths shown by countries across the region. Chile’s AI startups dominate in value (e.g., NotCo), Brazil leads in the number of AI startups (16), and Colombia has the highest percentage of AI-focused startups (22%). There is no single door into the region; which country you pick depends on what you are after.

The flagship report now covers this ground in full: Accelerating Deep Tech in Latin America. Download the PDF here, or browse the open findings.