LatAm beckons to SEA tech firms: Is the promise real?

Last year, Singapore-headquartered Airwallex acquired rival fintech firm Mexpago for an undisclosed sum as part of a major push to penetrate Latin America.

With ongoing tensions between the US and China and the reshaping of supply chains after Covid-19, many of the Airwallex’s partner clients have been relocating or expanding their operations to Latin America.

As early as five years ago, the company was already eyeing a Latin America expansion, according to Ravi Adusumilli, Airwallex’s executive general manager for the Americas.  But now is the time to execute it, “given all these macroeconomic trends,” he tells Tech in Asia in an interview.

Adusumilli notes that Airwallex opted for acquisition in its Mexico expansion to save 18 to 24 months on the regulatory process.

Airwallex is definitely not the only major tech player from Southeast Asia recognizing the importance of Latin America. Ecommerce giant Shopee launched in Brazil in 2019, while logisitics player J&T Express expanded to Mexico in 2021 and also Brazil in 2022.

Based on data from SimilarWeb, Shopee was the most downloaded shopping app in Brazil as of October 2024, competing closely with Temu. In August, J&T Express reported rapid growth in new markets including Saudi Arabia and Mexico, with parcel volume surging by 64% year over year.

As the startup ecosystem in Southeast Asia recalibrates its expectations, can Latin America offer a pathway to new growth?

Less competition, predictable regulations

Despite the similarities in spending power and demographics, Tech in Asia’s interviews with investors and startup founders suggest that the commonalities between Southeast Asia and Latin America may end there.

Ravi Kaushik, head of the investment team for Asia at Flourish Ventures, emphasizes this point. He believes that for Southeast Asian firms, expanding to Latin America should be a decision “backed by a real business case.”

Latin America offers numerous opportunities for consumer-focused startups. The region’s six largest economies have an average GDP (gross domestic product) per capita of US$24,516, comparable to the five largest economies in Southeast Asia (excluding Singapore), which average US$20,447, according to data from World Bank.

In many verticals, there are no clear dominant players yet.

Don’t get lost in translation

Worthwhile for a potential exit?