Rethinking venture capital and innovation in emerging markets

By Alejandro Cercio, MBA ’27

Before arriving in Mexico over the summer, my first year as a student at Cornell’s Samuel Curtis Johnson Graduate School of Management pushed me to think about emerging markets through the language of capital, incentives and growth. Even so, I assumed venture capital worked the same everywhere. Banks operate differently across countries, but the fundamentals are largely universal. I expected venture capital to follow a similar pattern. Instead, I learned that every entrepreneurial ecosystem reflects the realities of the economy it serves, and understanding those differences is far more useful than comparing markets to Silicon Valley.

A different benchmark

Mexico City challenged many assumptions. I had always associated venture capital with frontier innovation, breakthrough technologies and companies pursuing global scale from Day 1. In Mexico, the entrepreneurial ecosystem is shaped by a different set of opportunities.

Innovation in emerging markets is often driven by local needs and structural challenges. In some cases, the most important companies are not trying to invent a new category. They are adapting proven models to markets where logistics, payments, distribution, trust and access to credit still create meaningful friction. That innovation is not less important; it’s more relevant.

Often, we measure ecosystems by how closely they resemble developed market dynamics, but this experience helped me understand that the region is not simply a smaller version of the U.S. market. I no longer think resemblance to developed markets is the right benchmark. The better question is whether an ecosystem is producing solutions that matter within its own context. Building a successful company around financial inclusion or enterprise software for Latin America is not a lesser form of innovation; it simply addresses different problems.

Why artificial intelligence matters

As artificial intelligence (AI) adoption accelerated across the world, the Stanford AI Index helped frame what I was seeing in Mexico as AI moved from research labs into companies and everyday products. I saw a related implication for entrepreneurs, which is that artificial intelligence is lowering the barriers to building companies. Smaller teams can accomplish more with fewer resources, and products can be tested more quickly. Entrepreneurs can validate ideas with significantly less capital than only a few years ago.

This does not eliminate the advantages of places like San Francisco. Access to talent, capital, networks and early adopters still matters, but AI may reduce part of the structural gap that has historically separated emerging markets from the world’s leading innovation hubs.

For Latin America, that represents an important opportunity. If the cost of building software-enabled businesses continues to fall, more entrepreneurs across emerging markets will be able to test ideas, serve local customers and reach scale without needing the same amount of early capital.

That possibility matters because emerging markets do not lack talent or ambition; they lack the institutions and market conditions that allow that talent to compound. Technology alone will not solve those gaps, but it can make them easier to navigate.

Conversations with founders and operators affirmed what I’ve learned through my work on the State of AI in Latin America report for Hi Ventures, an early-stage venture capital firm backing Latin American founders building innovative global companies: AI is already influencing how smaller teams think about productivity, customer acquisition, product development and the speed at which they can move.

A personal lens

Coming from Venezuela, I saw additional meaning in this experience. I grew up in an environment where many of the financial mechanisms that support entrepreneurship elsewhere were largely absent from economic reality. Access to venture capital, private equity, acquisition financing and even traditional credit was limited. Consequently, my generation did not develop the same intuition for business growth beyond selling more and raising prices.

Experiencing those conversations firsthand with Latin American founders helped me understand how venture capital works, but also how profoundly institutions shape the way we think about business. It also reminded me that emerging markets cannot be understood only through their constraints. They must also be understood through the creativity that those constraints produce.

I arrived in Mexico expecting to learn how venture capital operates in the region, but I left with a deeper appreciation for diversity of innovation and renewed optimism about the role that technology can play in helping emerging markets close part of the gap. In that sense, the Cañizares Center for Emerging Markets turned an academic question into a lived experience.

I am convinced that Latin America will play a much larger role in shaping the future if we recognize innovation in more than one form.

About the author

Alejandro Cercio is an MBA candidate at Cornell’s Samuel Curtis Johnson Graduate School of Management. Before Cornell, he worked across fintech, asset management and strategy across the Middle East and Latin America. He holds a master’s in finance from IESA School of Management and a bachelor’s in economics from Universidad Católica Andrés Bello. Cercio’s interests include venture capital, emerging markets, financial innovation and the role of technology in expanding opportunity and supporting long-term development. He is also interested in rebuilding opportunities across Venezuela.