Be careful, high interest rates slow down investments in startups

Total investment in Brazilian startups is expected to have reached $4.3 billion in 2025 (24 billion reais), 17% lower than the $5.2 billion (29 billion reais) invested in 2024.

The projection comes from Sling huba platform that compiles data on more than 32,500 Latin American startups and includes investments through equity, debt and debt investment funds known as IFCD (an asset-backed investment fund, known in Portuguese as Fundos de Investimento em Direitos Creditórios)

“The continued rise in interest rates in Brazil – 12.25% at the start of the year and now 15% – is one of the reasons for the decline in investments in Brazilian startups,” said the general director of Sling Hub. João Venturasaid Value. He said high interest rates make fixed-income investments “very attractive and safe,” leading some capital to move away from risky assets like startups, resulting in smaller controls and greater selectivity in financing rounds.

The situation in Brazil contrasts with what happened this year in the United States. Investor appetite has increased significantly in the US market, driven by artificial intelligence companies such as OpenAI And Anthropic. This year, Silicon Valley’s most promising startups have raised $150 billion in funding, the Financial Times reported this week, a record that surpasses the previous peak of $92 billion in 2021, according to Presentation book.

Ventura said the sharper pullback in equity investments has contributed to lower overall startup funding projections. This year, equity investments in startups are expected to total $1.7 billion (9.5 billion reais), down 34% from $2.6 billion (14.5 billion reais) in 2024.

In Latin America, investment in startups has also declined. It totaled $7.9 billion in 2025, down 12.2% from 2024, when it hit $9 billion, according to Sling Hub. There have been 708 investment rounds in the region, compared to 925 in 2024, a decrease of 23.5%.

“The appetite for funding rounds has become more selective,” said the Sling Hub CEO. Looking at the ranking of the 10 largest startup funding rounds in Brazil in 2025, he noted that “six out of 10 are through FIDCs and eight out of 10 in fintechs,” with capital increasingly concentrated in already validated business models.

Fintech Walk in the cloudswhich owns Tap-to-Pay mobile payment service InfinityPay, ranks first and second in Sling Hub’s investment rankings, with two funding rounds funded by IFCDs.

In October, CloudWalk raised $787.9 million from banks Itaú BBA, Bradesco BBI, UBS BB, BTG Pactual, Santander, Safra and Banco BV. In June, it raised $549 million from Itaú BBA, Banco do Brasil, Safra, Bradesco and BTG Pactual.

Solfácil, a startup that finances solar energy projects, ranks third on the list after raising $171.2 million through an FIDC in February. Next comes the credit platform Creditswhich ranks fourth with $143 million raised via an FIDC and reappears in sixth place with a Series G round worth $108 million from Andbank, a bank linked to the European principality of Andorra.

Fifth on the list of most important investments is StarienA Flexible plan group company that offers software as a service (SaaS) focused on the construction and legal sectors. In August, the group announced the sale of a stake in the startup to the American investment fund General Atlantic for $115.5 million.

Starian and Creditas led stock investments this year, according to Sling Hub data. Next is Canopya software startup founded by Thiago Rochathe former CFO of the technology company Sinqiawhich sold a stake to investors Cloud9 Capital and Bessemer Venture Partners for $100 million in July.

In fourth place, IQ Technologya financial services infrastructure fintech provider, raised $63 million in a Series B funding round led by General Atlantic and Across Capital.

The fifth of the rounds is Solinfteca startup focused on artificial intelligence, internet of things (IoT) and autonomous robots for the agribusiness. In May, the company sold a stake to Brazilian asset manager Yvy Capital for $52.8 million.

Brazilian startups are expected to face a more cautious and selective environment in 2026, as investors evaluate financing for technology companies.

In the eyes of investors, artificial intelligence is becoming an essential part of the business models of Brazilian technology companies, “but that does not mean that all AI startups will raise funds.” Gustavo Araújotechnology director of the startup ecosystem Districtsaid Value. The data and consulting company tracks 38,000 startups in Latin America.

Rather than a “widespread fear of an (AI investment) bubble,” Araújo expects more rational behavior after excessive expectations in 2023 and 2025, with fewer speculative bets and more capital flowing to companies that execute well.

“Capital tends to concentrate in companies that have already proven traction, revenue generation and real impact on their customers’ businesses, particularly in B2B (business-to-business) and enterprise models,” he said.

Sling Hub’s Ventura reiterated that the outlook for 2026 is one of “caution with the possibility of acceleration.” “There should be more rigor in separating AI with results and AI with storytelling,” he said.

Experts believe that 2026 could mark the gradual reopening of the IPO market after more than four years without new listings – the most recent being Vittia, a producer of organic fertilizers and plant protection products, which went public on B3 (Brazilian Stock Exchange) in September 2021.

“The pace could improve if large rounds return and there is a clearer exit window, including IPOs for more mature cases,” the Sling Hub CEO said.

For Araújo, the IPO window could open to carefully selected companies, “especially for technology companies with consistent growth, strong governance and clear monetization.”