In Brazil, they say the year only truly starts after Carnival. Well — Carnival has passed. And with it, the curtain rises on a 2026 that is already signaling where it’s headed.
Our take is straightforward: 2025 was the year the mood turned. Market sentiment in emerging market venture capital shifted — even if valuations haven’t fully caught up. For those tracking the cycle closely, the signals were unmistakable: revenues growing (customers started buying again), new rounds happening (funding follows - with a lag - and valuation recovery), capital flowing back to the region. Two months after year-end, consolidated data doesn’t just confirm this reading — it amplifies it.
The 2025 Numbers
Latin America closed 2025 with USD 4.13 billion in venture capital — up 13.8% over 2024 and the first meaningful recovery after three consecutive years of correction since the 2021 peak of USD 17.4 billion.
Brazil captured USD 2.03 billion (52.9% of regional capital), with an average ticket of USD 5.6 million per deal. Deal count fell 1.9% (from 694 to 681), the lowest since 2017 — confirming this is a quality recovery, not a volume one. Average ticket size rose 16%. Late-stage and growth rounds totaled USD 477 million in Q3 alone, up 176% year-over-year.
This happened amid unprecedented geopolitical tensions: tariff wars, political instability across regions, and global interest rate volatility. Our ecosystem’s resilience in this context is notable — and reveals maturity.
The First Signal of 2026: PicPay on Nasdaq
The PicPay IPO (PICS) was the most visible milestone of early 2026. The fintech raised USD 434 million at a USD 2.5 billion valuation, pricing at the top of the range (USD 19 per share). It was the first Brazilian company IPO on a U.S. exchange in over four years — breaking the drought since Nubank’s 2021 listing.
More relevant than the size: demand was solid. American investors are looking at Brazilian fintechs with genuine interest again. With 39 unicorns in Latin America and 60+ companies that have raised USD 150M+ still awaiting exits, 2026 may become the year of liquidity preparation.
The Era of Applied AI that actually deliver value
2025 was also the year AI companies started actually delivering value. The generative AI race dominated headlines — OpenAI raised USD 40 billion in March, the largest VC round in history. But in Latin America, we saw something more interesting: practical AI applications in fraud prevention, credit scoring, clinical decision support, and operational automation began generating real recurring revenue.
That said, a caveat: calling a company “an AI company” in 2025 is like saying it was “an internet company” in 2000. It means nothing. The technology has become commodity. Our portfolio companies that incorporated AI into their products performed well not because they are “AI-first,” but because they used the technology to generate measurable efficiencies for their clients.
2026: Four Forces Shaping the region
1. Monetary policy at an inflection point. The Selic rate remains at 15% — the highest since July 2006 — but the Central Bank signaled in January that rate cuts should begin in March. 2025 inflation closed at 4.26%, the lowest annual level since 2018. Market consensus projects 50bps cuts per meeting, bringing the Selic to approximately 11.5% by year-end. For venture capital, easing cycles historically precede increased risk appetite.
2. The Banco Master lesson. The November 2025 liquidation — with R$ 41 billion in CDBs to be reimbursed by Brazil’s deposit insurance fund (FGC) — was a painful reminder that not all fixed income is conservative. The problem isn’t high-yield per se; it’s reckless allocation to issuers with weak governance, attracted solely by 140% CDI returns. For those seeking wealth preservation with asymmetric upside optionality, real assets — including equity in private companies with proven traction — offer a different value proposition.
3. Tax Reform goes live. On January 1, 2026, Brazil officially began implementing its landmark tax reform. The new IBS (state/municipal) and CBS (federal) taxes now appear on invoices at test rates (0.1% and 0.9%, respectively). The grace period for compliance errors runs through April; starting in May, compliance will be required on every invoice. All businesses will be affected — some more than others.
4. Election year. By definition, a period of volatile expectations. Depending on how the race develops, market mood could either amplify or dampen risk appetite swings. Prudent managers navigate this with positions that don’t depend on specific political scenarios to generate returns.
Where We See Opportunity
The same turbulence that creates disruption creates opportunity. We’re focused on three fronts:
Tax-tech and compliance. Every Brazilian business will need to adapt systems, processes, and pricing strategies to the new tax reality. This creates structural demand for fiscal automation solutions, ERP compliance tools, and impact simulation platforms.
Vertical AI applications. Not generic AI wrappers, but solutions that solve concrete problems in healthcare, legal, fintech infrastructure, and operations. Companies that use AI as a means, not an end.
Fintech infrastructure. With Pix processing over 10% of Brazilian transactions already flowing through fintechs like PicPay, the infrastructure layer — fraud prevention, identity, credit-as-a-service — remains the most defensible segment.
Investing Outlook
Venture capital cycles are long — and those who entered the market in the last five years experienced mostly correction. 2021 was the anomaly, not the norm. What we’re seeing now is a return to fundamentals: companies valued by revenue, margin, and runway — not narrative. More disciplined founders. Rational entry valuations. Reduced investor competition.
These are precisely the conditions that historically precede the best vintages. The 2024-2026 funds have the potential to capture the next wave of value creation in Brazil — which will be different from the last one, but no smaller.
The year has begun. And it’s starting well.
Eduardo Küpper
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