Strategies for Scaling Startups in Latin America

In entrepreneurship, scaling, scalability, and scale-ups are common terms these days. They are often associated with growth in size, but it is also possible to scale, for example, an innovative business model or the impact of a social enterprise.

Despite their popularity, research is only beginning to address and define the differences between these concepts. On the one hand, scaling relates to the actual process of rapidly expanding a firm’s output through internal transformation, while scalability relates to an organization’s capacity for delivering this process. On the other hand, a scale-up is any company in this phase of development that grows by replicating a validated business model.

In Latin America, scale-ups are a rather recent phenomenon, with companies that rapidly scaled across the region such as Nubank, Mercado Libre, Rappi, Kavak, Ualá and Ubits. To understand the drivers and factors that enable such startups to scale, I explored this topic in the chapter “Scale-Ups and Scaling within Latin America”, included in the book A Research Agenda for Startups' Scale-up, Scale-down and Re-scaling Strategies.

5 Startups That Successfully Scaled in Latin America

Some authors classify scaling strategies based on financial aspects (e.g. economies of scale) or organizational aspects (e.g. resources), while others also consider scope (e.g. geographic, industry, or product expansion), mode (e.g. organic growth vs. acquisitions), unit (e.g. product, service, technology, capability, business model), and other criteria. Below, I analyze five case studies of tech startups that successfully scaled in Latin America over the past decade. They share common traits: they operate under a platform-based model, leverage digital technologies, rely on venture capital investment for growth, and have entered international markets as part of their expansion strategy.

1. Kavak

Kavak has scaled its business through international expansion, strategic acquisitions, and continuous financing. Founded in Mexico City in 2016, it became Mexico’s first unicorn in 2020 with a valuation of $1 billion. That same year, it began expanding beyond Mexico, first entering Argentina and other Mexican cities, then moving into Brazil and Turkey in 2021. In 2022, it opened operations in Chile, Colombia, Peru, the United Arab Emirates (UAE), and Oman.

During its scaling period, Kavak grew its team from 400 to 8,500 employees and secured six funding rounds, raising 2.84 billion USD by 2022. Its growth strategy also included key acquisitions, such as Checkars in Argentina in 2020 and Istanbul based startup Garaj Sepeti in 2021, facilitating entry into those markets. In 2022, it acquired Mexican based platform OPI Analytics to enhance its data analytics and forecasting capabilities, as well as Carzaty in Oman to enter the UAE market.

2. Nubank

Nu (Nubank) focused its growth strategy on gradual market expansion, acquiring tech companies, and securing significant capital investments. For its first five years, the company operated exclusively in Brazil before expanding to Mexico in 2018 and Colombia in 2020. In 2021, it went public on the New York Stock Exchange, strengthening its position in digital banking. Its customer base skyrocketed from just 13 in 2013 to 100 million in 2024, with its workforce growing from 1,211 employees in 2018 to 7,686 in 2023.

Unlike Kavak, Nu’s acquisition strategy did not focus on direct competitors but rather on technology and talent. In 2020, it acquired Brazilian consulting firm Plataformatec to enhance agile methodologies and integrate software engineers. It also expanded its service portfolio by acquiring investment platform Easynvest in 2020 and payment platform Spin Pay in 2021. In the U.S., it acquired AI and data analytics firms Olivia and Hyperplane to strengthen its technology capabilities.

3. Rappi

Rappi’s growth has been driven by rapid market expansion, venture capital financing, and strategic acquisitions. Founded in Colombia in 2015, it entered Mexico and Brazil in 2016, then Argentina, Chile, Uruguay, and Peru in 2018, followed by Ecuador and Costa Rica in 2019. During its internationalization phase from 2016 to 2020, its revenue surged from 2 million to 109 million USD, supported by funding rounds totaling 2.39 billion USD by 2022.

Like Nubank, Rappi pursued organic growth, focusing its acquisitions on technology integration and geographic expansion. Key acquisitions include Payit in Mexico in 2019, which strengthened its fintech offerings, and Brazilian company Box Delivery in 2023, which added 150,000 new delivery drivers and expanded its reach to over 250 cities all over Brazil. Its most recent acquisition, in 2024, was Fountain9, an Indian AI-based inventory planning software company.

4. Ualá

Ualá, a digital banking app, scaled its operations through banking licenses, strategic investment, and acquisitions to diversify its services. Founded in Argentina in 2017, it expanded to Mexico in 2020 and Colombia in 2022. Its growth in Mexico was particularly rapid, reaching 100,000 customers in a third of the time it took in Argentina. In 2022, the company employed 1,500 people. Ualá secured early funding through a 10 million USD Series A round in 2018 (with Soros Fund Management) and a 150 million USD Series C round in 2019 (with Rappi’s Sebastián Mejía as an investor). In 2021, it became a unicorn after raising 350 million USD in a Series D round led by Tencent Holdings and SoftBank Latin America Fund—the largest investment in an Argentine startup to date.

Unlike other startups, Ualá had to acquire banks to operate in heavily regulated markets. It purchased Wilobank in Argentina in 2021 and ABC Capital in Mexico to expand banking services. In Colombia, it opted for a banking license instead of acquiring an institution. It also acquired Empretiende in 2022, an e-commerce platform for small businesses, and Ceibo Créditos, a consumer lending company.

5. Ubits

Ubits, founded in 2013, initially developed corporate training programs in partnership with universities. However, struggling to scale this model, the company pivoted in 2018 after joining Y Combinator, shifting to a B2B SaaS-based model. This transition enabled it to attract 180 corporate clients in its first two years, with 45% signing annual contracts worth 15,000 USD in subscriptions.

Its scaling strategy focused on internationalization, opening offices in Mexico and Peru between 2018 and 2020, and expanding to Chile and Spain after the COVID-19 pandemic. To fund this growth, it raised 25 million USD in a Series B round in 2021. Unlike other Latin American scale-ups, Ubits opted for organic growth rather than acquisitions.

Early Lessons for Scaling in Latin America

Scaling in the region has benefited from an increase in venture capital funding and angel investments, coming from both regional funds and global firms such as Andreessen Horowitz, Sequoia Capital, and SoftBank Group. The success of Latin American scale-ups has created a dynamic ecosystem in which successful entrepreneurs actively participate as investors. Additionally, these companies have leveraged acceleration programs outside the region, such as Y Combinator, allowing them to access global networks of mentors and investors.

Another common factor among these startups is the global profile of their founders. Firms like Kavak and Nu were created by entrepreneurs from different nationalities with international experience in education and work, which enabled them to develop strategic networks. These connections, particularly in the U.S. financial industry, provided competitive advantages to scale-ups in their early stages.

Internationalization has also been key to the expansion of these companies, especially into major markets such as Brazil, Colombia, and Mexico, as well as through acquisitions to overcome regulatory barriers, attract tech talent, access new capabilities, and expand their market reach. Thus, scaling is not just about replicating validated business models but is also a process of internationalization driven by strategic acquisitions. Furthermore, factors such as cultural and linguistic similarities among countries in the region facilitate these companies' expansion.

Scale-ups can also play a role in addressing structural challenges in the region, such as slow economic growth, low productivity, and social inequality, as their growth has contributed to job creation and financial inclusion.

This chapter provides a fist glimpse into the characteristics of scale-ups and their scaling process in Latin America, as well as the factors that facilitate it. While it shares similarities with entrepreneurial internationalization, scaling requires a proactive international ambition, the exploitation of relational capital, and the active pursuit of international opportunities. Latin American scale-ups are not only shaped by the characteristics of their founders but also by the environment in which they operate. In particular, venture capital investment, digital technologies, and boundary spanning ecosystems play a crucial role in the scalable growth of these companies in the region.

The author is Research Professor in Entrepreneurship and Innovation at EGADE Business School.