How fast can global capital change its mind about Latin America? In 2025 it gave a number. MSCI’s Emerging Markets Latin America Index, which captures large and mid cap representation in Brazil, Chile, Colombia, Mexico and Peru, returned +55.67% for the calendar year on an annual gross basis in US dollars. On the same series 2022 returned +9.51%, 2023 +33.54% and 2024 -26.02%, so 2025 was the strongest of the last four years by a wide margin. Our report, published in September 2025, argued that the region’s valuation gap was a temporary mispricing driven by solvable structural factors rather than a permanent verdict on its fundamentals. The public market has begun to agree. This post sets out what that return prices, what it does not, and what to do about the part of the region that has not repriced yet.

A +55.67% Year, and What It Prices

The 2025 return follows a -26.02% year, so part of it is a rebound off a depressed base rather than a durable re-rating, and we would rather say so ourselves than have it said back to us. What the year does establish is that the pricing gap our report headlined is not a fixed feature of how the world values the region. Global capital marked Latin American assets up sharply inside twelve months without any of the structural constraints the report catalogues being resolved first. Appetite moved before the fundamentals did, which is what the beginning of a correction looks like.

One thing to hold onto when you cite the figure. The index is a listed large and mid cap benchmark, so it prices Latin American public equity risk and nothing else. It holds no private deep tech company. The region’s two listed science champions sit outside it as well: Establishment Labs, the Costa Rican maker of Motiva implants, with 25 patents across 25 jurisdictions and distribution to more than 70 countries, is NASDAQ-listed at the US$1.8 billion valuation our report carries from the IDB’s 2023 mapping; Satellogic, founded in Buenos Aires in 2010 and flying a constellation of 34 high-resolution satellites with Liberty Strategic Capital, Tencent and the IDB behind it, is listed in New York too. If you are pricing a Latin American science venture, +55.67% tells you about the appetite forming around it, not about the asset.

Where the Discount Comes From

The number our report leads with is a valuation gap rather than a return. On Itaú BBA’s 2024 read of the MSCI Latam Index, Latin America traded at a -51% price-to-book discount to the world, against a long-run average of -13.9%, and at a -27.7% discount to emerging markets as a whole. Itaú BBA’s own explanation of the gap is the part worth dwelling on: it attributes much of the discount to the rising relevance of tech companies in global indexes, climbing faster than in emerging markets, while Latin America has virtually little exposure to that sector. Read that as a to-do list. A discount that comes from sector composition is a discount a region can work off by building the companies it is missing.

One piece of guidance for anyone about to put the discount into a memo: give it its date. The -51% is a 2024 snapshot, price-to-book gaps move daily, and after a +55.67% year the honest move is to pull the current figure rather than quote ours as though it were live.

LATAM’s discount represents a temporary mispricing driven by solvable structural factors … rather than permanently inferior fundamentals.

The Cost of Ignoring the Region Has Come Down

Page 47 of the report asks the question an allocator actually asks: why bother with emerging markets, when investors might comfortably remain in the U.S., where returns are stable and fixed income rates currently exceed 5%? That sentence cites Reuters in 2024 and it was accurate when written. It is not the world of January 2026. US policy rates fell through 2025, and the above-5% risk-free comparator that made home bias comfortable went with them. We are not going to print a replacement number here, because our re-verification record does not carry one and a guessed yield is not a finding. The direction is what matters. The report used the high US risk-free rate as the strongest available case for looking away from the region, and argued the mispricing thesis anyway. That case for looking away is weaker now than when we made it. Cristián Hernández, who manages the LATAM-active venture fund Zentynel, put the shift in the report this way:

The question is shifting from “Why Latin America?” to “Why haven’t we invested more?”

The Private Side of the Same Trade

Public equity repriced in a year because listed equity is liquid and money can arrive in days. A venture channel is built from funds, mandates, technical diligence and exit history, and it does not move on that schedule. Our own mapping of 2,566 Latin American deep tech companies, drawn from Tracxn with a March 2025 cutoff, puts Brazil at 1,048 companies, 40.8% of the database, then Mexico at 358 (14%), Argentina at 256 (10%), Chile at 251 (9.8%) and Colombia at 219 (8.5%). Of those ventures 72% are still at seed stage funding and 19% have secured a Series A, while median round size scales from US$0.6 million at seed to US$8.3 million at Series A, US$17 million at Series B and US$100 million at Series C. Those shares and medians are extracted from our database work and have not been re-verified against a comparable database, which is the honest limit on an original figure taken from a proprietary source.

Where the money landed is a different map from where the companies are. EMERGE and Cubo Itaú’s Radar Deep Tech LATAM 2025, presented on 11 September 2025 and mapping 1,316 companies on its own taxonomy, reports 2024 private deep tech investment of US$607 million in Chile, US$486 million in Argentina and US$216 million in Brazil. We carry those as reported by EMERGE rather than re-verified by us, and EMERGE’s counts are not interchangeable with ours because the two mappings scope the sector differently. On EMERGE’s numbers one company carries most of Chile’s total: NotCo, the AI-driven food formulation company backed by Kaszek, Tiger Global and Bezos Expeditions, at roughly US$466 million cumulatively, about 75% of the country figure, a cumulative company total set beside a single year of investment. Brazil’s largest deep tech recipient in 2024 was brain4care, non-invasive intracranial pressure monitoring, at US$23.6 million raised across the whole life of the company rather than in that year alone. EMERGE also finds that 47% of Brazilian deep techs received no investment at all, 36% rely solely on public funds and 7% received private capital.

Inside the region’s own funding mix, deep tech took US$536 million in 2024, 6% of the US$8.8 billion that reached Latin American tech across all sectors, third behind fintech at 55% and energy at 13% on Sling Hub’s numbers, while growing 219% year over year, faster than any other category. Those Sling Hub figures are extracted from the report and not yet re-verified. Appetite for Latin American risk and appetite for Latin American science are still two different instruments, and only the first of them repriced in 2025.

The Index the Region Still Lacks, and What We Are Building

Here is what we cannot yet tell you. A price-to-book discount can be pulled for listed equity in an afternoon. There is no equivalent instrument for private science ventures, so nobody, ourselves included, can state what the discount is on a Latin American deep tech company set against a comparable American or European one. The report’s regional investment-per-person figures are LADP calculations, not third-party measurements, and we label them as ours. Closing that gap is why recommendation 17 of the report proposes a Deep Tech LATAM Discount Index: an MSCI-style, repeatable framework that quantifies valuation gaps and the frictions behind them, cost of capital, time to approval and exit, regulatory burden, with an open methodology fed by regulator statistics, deal-level data and founder and investor surveys, a baseline plus quarterly updates. It is the one measurement we most want to exist, and the one we are building toward.

For allocators, 2025 settled one question and sharpened another. Global capital will reprice Latin America quickly once it decides to, and the instruments that convert that willingness into science ventures are still thin. The report’s twelfth recommendation is the most direct lever available: an independently managed fund-of-funds that channels a slice of regional pension assets into domestic deep tech through vetted specialist managers, modelled on France’s Tibi initiative and the UK’s Mansion House reforms. For founders, the narrative you are raising against improved materially in 2025 while the diligence burden on you did not, so bring the KPI framework the report asks for. For ministries, Itaú BBA’s explanation of the discount reads like a policy brief: the gap is partly the absence of technology weight in the region’s indexes, and technology weight is buildable.

The endowment underneath all of this never moved. Latin America still holds 42% of the world’s biodiversity, the lithium triangle still contains 58% of global lithium resources, resources being the identified endowment rather than the producible reserves, and 65% of the region’s electricity is already clean against a 41% global average. What changed in 2025 is the price the world is willing to pay for exposure to it. Our report, Accelerating Deep Tech in Latin America, carries the full argument and the twenty recommendations behind it. If you are allocating, building or legislating against this thesis, tell us where our numbers meet your experience and where they do not. That is how the next edition gets sharper.