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This research and report was conducted by Odisea Labs, a research and innovation lab focused on driving technological innovation where it is needed most. Scaling LatAm's Crypto Builder Ecosystem focuses on identifying the most prominent crypto founders in the region, unpacking where they are facing their growth challenges, and getting a clear picture of what we need to do to bring more support for these builders. This report is for those who are crypto builders in LatAm, for partners who are looking to understand how they can best support the builders in the region, and for investors who are looking to know where some of the founders in the area are facing shortfalls. Happy reading!
As crypto continues to emerge back into the global limelight, we have always held the conviction that one region has all of the right conditions to be a hotbed of crypto mass adoption: Latin America. Latin America's historical backdrop is one steeped in brutal dictatorships, catastrophic economic policies, and decimation of natural resources, among other socioeconomic dynamics that can only emerge within systems that are imbued with centralized powers.
These historical precedents we have inherited are the main drivers behind Latin America's adoption and development of crypto:
El Salvador was the first country to make Bitcoin legal tender.
Argentina is a hotbed of developers in the ecosystem who have both contributed and founded some of the most consequential projects in crypto.
Prospera, located in Roatán, Honduras, is gathering some of crypto's brightest minds and builders to flesh out an entirely new platform for human coordination.
Brazil, Mexico, and Argentina rank in Chainalysis' top 20 countries for crypto adoption
Dozens of local Latin American crypto communities are onboarding beginners into the ecosystem and creating an onramp for new developers to begin their journey into the space.
Seeing the opportunity for Latin America, as part of the Ethereum Foundation's Next Billion Fellowship, which seeks to explore how we can drive more adoption in emerging regions, we conducted an extensive research process titled "Last Mile DeFi." Last Mile DeFi was both a written report and an accompanying podcast that sought to unpack the utility and challenges for DeFi to provide enhanced financial rails in a region where most lack access to dignified financial services.
As we conducted our research, speaking with over 400 protocols, foundations, builders, and users of DeFi, we found that while Latin America is primed for large-scale adoption of crypto-native consumer applications, there needs to be more builders shipping products to market. In Latin America, crypto protocols are not just "nice to have" but critical to unlocking flourishing economies built on decentralized rails.
The question then is how can we lay the foundations to support emergent builders who are both technically talented and understand where crypto can massively improve our economic, financial, governance, technological, and cultural systems?
To answer this question, we embarked on another research venture, speaking with over 100 pre-seed and seed-stage builders, where we aimed to understand the following:
What the builders in the region are working on
What challenges have arisen as they have embarked on their journey
What support do these builders need to scale their projects 100x
Below, we have compiled the data from our interviews across geographic locations, ecosystems, industries, and growth challenges.
Notably, we have a strong contingency based in Mexico, with nearly half of the founders coming from this region. Unsurprisingly, Argentina also made up about 25% of our conversations. Central America and the Caribbean must catch up, with a mere 10% of founders coming from the regions.
A substantial majority of builders are focused on deploying their projects on the EVM (63%); however, Solana (17%) and Bitcoin (16%) were the two primary alternative ecosystems that founders were choosing to deploy on.
As far as the industry is concerned, DeFi (33%) leads the way concerning what founders are looking to build; this includes payments and lending, among other use cases of DeFi. Following that, infrastructure (16%) and education (16%) were the two follow-on industries.
Now comes the most crucial part of our findings: exploring where these founders have struggled with scaling their projects. We detail each of these below.
Product-Market-Fit (52%)
More than half of the founders in our research struggled primarily with two fronts regarding PMF. The first one was market research - which revolved around conducting the necessary investigation to identify meaningful gaps in the market where their product would serve a pressing need. Some founders we spoke with were enthusiastically hacking away without first conducting essential research into whether their offering was sought after enough by a sufficiently large group of users.
The second PMF challenge was centered around product development. If the founders had identified what they considered a sufficiently compelling problem to work on, they struggled to build a product that met the needs of the problem statement they were addressing. Even if the founders were technically capable, they were often held back by needing help to deliver a smoothly designed interface that gave their users a smooth onboarding experience. To some extent, this could be attributed to crypto's already challenging user experience, and many cited account abstraction and multi-party computation as being important unlocks in creating more seamless experiences for their users.
Growth and Scaling (73%)
Nearly three-quarters of the founders called out growth and scaling as areas of struggle in their journeys. Developing go-to-market strategies that were sufficiently compelling for the market got in the way of them being able to deploy their projects either in LatAm or, even more challenging - on a global scale. While many of these founders had already developed strong products, navigating how they could drive users to them was a particularly complex area.
With more mobile phones than toilets in the region, Latin America is a region where adopting technological advancements is just waiting for the right product to ignite a revolution. However, many founders in the region need the necessary growth strategies or marketing visions to bring their products to scale fully. Consequently, once they launched, some founders needed help gaining meaningful traction.
Regulatory (32%)
Latin America is a region where crypto regulation is still in development. Often, we look up to our big brother, the United States, for guidance on matters relating to policy - a trend that is becoming increasingly less popular. Already, we have seen El Salvador make significant strides in not only making Bitcoin legal tender and acquiring Bitcoins for its national reserve but also establishing critical pro-crypto regulation that aims to foster an ecosystem of innovation in the country. On the other hand, while some countries are cracking down on crypto, others recognize its potential in the region and aim to attract top-tier talent under their jurisdictions. Overall, we are bullish on where regulation is heading in the area.
For founders, navigating the complexity of launching a startup in a fragmented regulatory landscape is challenging, even more so when we have crypto as an additional legal consideration. The well-versed crypto lawyers in the region are few and far between, and often, incumbents (both in and out of crypto) will go after newly launched projects to avoid them taking any market share in a seemingly fragile financial monopoly. Founders often cited questions regarding the incorporation of their companies, ideal legal structures, and token considerations, among others, as key questions they had when looking to establish their legal entities.
Access to Talent (48%)
While Latin America is a hotbed of crypto developers, the founders we spoke with brought up hiring capable talent as a barrier to scaling. This challenge can primarily be thought of on two fronts: the first was finding technically proficient builders, and the second was ensuring there was a high degree of alignment with the project over the long term. On the first point, many builders, particularly those focusing on more complex projects, mentioned that many of the 10x engineers were often already tied up with other projects or were hard to find amongst the sea of other developers. Most of the founders we spoke with mentioned that working with other Latin Americans was generally a priority, which may be based on language and cultural considerations.
The second challenge founders faced when building out their protocols and dApps was around screening and retention of talent. They described that onboarding aligned talent committed over the long-term of a project was often something they felt they could improve. They frequently mentioned that compensation for engineers from Latin American-based projects differs from a European or North American-based project, making incentivizing long-term alignment challenging, given the competitive hiring landscape.
Raising Capital (91%)
This was by far the most common challenge that the Latin American founders mentioned that was holding them back from developing their projects. Access to capital in Latin America for crypto is scarce for a few different reasons; we will first explore how founders may access grants in the crypto ecosystem and then dive into venture capital.
On the grants side, while many foundations and protocols are interested in supporting emerging builders with capital to scale their projects, it can take time to navigate the crypto grants ecosystem. Many builders needed help knowing where to direct their energy and attention to identify the proper channels to apply for grants. If they identified the right avenue, they spent significant amounts of time tracking grant cycles and submitting their applications. This often implies having a high degree of understanding regarding the grant-giving organization's grant operations and frequently takes a disproportionate amount of time, meaning builders could not focus on their product.
On the venture capital front, this was an even more harrowing journey that Latin American-based founders had to undergo. LatAm founders have two options regarding VC: either you go to a VC in the region or recur to a globally positioned fund. For the regional VCs, accessing capital was challenging for several reasons: First, VCs in the region need to familiarize themselves with crypto's proposition and technological stack. This makes investing in an early-stage crypto project a challenging proposition to these funds as they often would pass on these deals instead of conducting the necessary due diligence thoroughly and making an informed decision. The second problem with working with LatAm-based VCs arises from the first, with many funds often offering smaller ticket sizes with expectations of an unequal amount of equity in exchange. Many founders, therefore, need to pay more attention to this route and look towards globally focused VCs.
On the global stage, there are a plethora of technology/crypto-forward thinking VCs; however, many founders we spoke with mentioned they needed help to raise capital from this contingency. The founders we spoke with often needed help understanding how they should approach the VCs who may be interested in backing their projects, how they should structure their deals, and how to negotiate the terms of the investment. To further compound this, many VCs based in North America or Europe need a clearer understanding of the Latin American landscape, opportunities, and risks, making deploying capital in LatAm founders an additional barrier.
Crypto in Latin America has the opportunity to massively disrupt the incumbent extractive institutions that are holding the region's people back from financial, economic, and social freedom. To get there, however, we need more regional builders focused on shipping products for the area and bringing global products to market. The research above aims to begin a life-long exploration of how we may start supporting the pioneers pushing forward crypto adoption in the region.
Our mission at Odisea Labs is to continue to support the bold visionaries who dare to defy the status quo across Latin America and beyond. This investigation serves as the basis for us to move forward into building a more robust ecosystem of support for the builders in the region. We will continue to work closely with our partners to deliver high-value opportunities to continue to bring LatAm onchain. As a next step, we will outline and create activations to address these issues and look forward to backing these exceptional emerging founders. By providing high-caliber founders with the necessary resources, network, capital, and talent, we will continue to see some of the most impactful projects emerge from the region.
We are grateful to all those who participated and contributed to this research, and we look forward to working with you to scale your projects 100 from here. If you are either a LatAm-based builder or are looking to support builders in the region, you can get in touch via email or connect with the author of this report on X.
Collect this post as an NFT.
This is really interesting, but needs a lot of work in terms of visual presentation. Tip: never kick off an article (or research paper) with a block of text. You'll lose the reader almost immediately. Blocks were actually a common issue as I read through.
Hey! Thanks for the comment. How would you enhance the visual presentation? Any examples of pieces you've seen that do a better job of visually representing their content?