Latin America’s Five Most Competitive Industries for Startups in 2019

Fund managers in Latin America often review 3-5 applications for investment every day. Most of these startups can be quickly ruled out because they don’t fit the investment thesis, they are asking for too much money, or their cap table is a mess. However, within the volume of funding requests, another pattern becomes clear. Startups in Latin America’s most hyper-competitive industries are at a significant disadvantage in finding smart capital.

In many cases, competition is unavoidable, and it can be a good thing, because it validates a founder’s idea. Identifying and understanding one’s competitors is usually a sign of strength rather than weakness.

However, when a fund manager starts to see the same idea crop up repetitively, and with few distinguishing merits, no one wins. Being disruptive can be the key to success as an entrepreneur, but to do so in an industry that already has a clear startup leader will require the founder to fiercely defend what makes them different from the pack. Few entrepreneurs do this task well, leaving investors with questions about what will happen to the startup when a competitor catches on and pivots to include that new technology. Can the newer company keep up?

A few industries are currently dominating the startup ecosystems across the region for 2019. While these ideas and niches are not bad – they are all problems worth solving – they are almost impossibly competitive in at this stage. Here are five industries to avoid if you’re going to start a company or find funding for your startup in Latin America in 2019.

1. Last-Mile Delivery

In the last quarter of 2018, Latin America’s biggest delivery startups raised several mega-million dollar rounds. A combination of crippling traffic and low delivery costs has allowed these startups to boom across almost all of Latin America’s biggest cities.

As these startups begin to consolidate, they are also competing with international companies. Rappi, iFood, Glovo, PedidosYa, Mercadoni, Cornershop, and UberEats are all fiercely competing within the same space. Any new last-mile delivery startups looking for funding will have to compete not only against these giants, but also against other smaller competitors seeking to improve on the model. This market saturation makes last-mile delivery a particularly risky business model, both for the founder and the investor.

2. Pet care

Some cities in Latin America have more pets than people, making pet sitting an attractive gig industry. People are often willing to pay a lot of money to keep their pets in safe care while they are away and pet sitting marketplaces across the region capitalize on that opportunity to match owners with verified sitters. This business model is relatively simple and proven to work; however, there is only room for a few marketplaces within a single area, since they compete directly for users.

Almost every country in Latin America has their own “Rover” clone, including CuidaMiMascota in Mexico and Brazil, and DogHero in Brazil. These market leaders are unlikely to acquire smaller regional startups as they expand; they will probably outcompete these companies through user volume. A marketplace is only as strong as its user base, so new pet sitting marketplaces have to fight an uphill battle to bring on users by differentiating their business from the current leaders.

3. E-scooters

E-scooter mania hit Latin America hard. Mexico’s Grin and Brazil’s Yellow raised the region’s largest Seed and Series A rounds in 2018, respectively. Following these startups’ explosive growth, international competitors like Bird and Uber, started entering the region’s largest cities, especially in Mexico and Brazil.

There was no clear winner of the e-scooter battle until Grin and Yellow merged to create Grow Mobility, raising an extra US$150M along the way. These scooters are also available directly through the Rappi app. The high fixed costs of starting an e-scooter business will keep most competitors out of the market. Although the e-scooter fad started recently in Latin America, the battle is now being fought out between international giants, leaving little room for new startups to join the fray.

4. Logistics

Delivery logistics is one of the most pressing problems facing Latin America today. As more customers participate in e-commerce, people demand faster, safer, and more accurate delivery times for their goods. In some countries, logistics remains a wide open field; however, the region has a few standout winners who will likely dominate the logistics industry across Latin America.

Brazil’s CargoX, Colombia’s Liftit, Chile’s SimpliRoute, and Peru’s Chazki have all received international recognition for improving on inefficiencies in Latin America’s logistics industry. Almost all of these market leaders have received multi-million dollar investments, giving them the power and agility to outcompete up-and-coming logistics startups.

Logistics is a challenging industry anywhere, but red tape, regulations, and lack of infrastructure make Latin America a particularly difficult market. The standout logistics startups have found ways around these issues, but their success leaves little room for newcomers to join the market.

5. Apartment sharing platforms

Apartment sharing, as popularized by Airbnb, has been well-established in the US since the late-2000s, but it took longer to reach Latin America, where people often live with their parents until marriage. Now, more young people than ever are moving out of their parents’ homes before they get married, meaning many people are looking for apartments and roommates.

While Facebook groups can be a great source of rooms for rent, Latin American renters also use platforms like CompartoDepto (CompartoApto in Colombia) or DadaRoom to find spare rooms without going through a broker. DadaRoom was recently acquired by US counterpart, Roomi, to help the latter reach the Latin American market. These platforms require users to build trust in the online system, so the established market leaders are at a significant advantage over newer companies who must convince landlords and renters to join their marketplace.

With Airbnb, CompartoDepto, and DadaRoom leading the way, apartment-sharing has become an overcrowded industry in Latin America, making it a risky field for new startups.


Copycat business models can work well when entrepreneurs bring US models south. However, copying and competing against Latin America’s market leaders in key industries will likely end in a race to the bottom, rather than an exit. As a founder, it is your responsibility to clearly explain what differentiates your startup from the competition, especially if you are in a particularly fierce industry.

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