March 5 (UPI) -- Part of a series on capital flows and political risk in Latin America
Latin America's tech ecosystem moves fast. Startups chase big markets, iterate quickly, and push new business models into daily life. Yet the main bottleneck is not always product design or talent. In my work evaluating valuations, risk, and capital structures across regional startups and scale-ups, I keep encountering the same structural barrier: a high weighted average cost of capital (WACC). Put simply, WACC is the minimum return a company must earn to create value for shareholders.
This installment looks at Chile and Colombia, two markets that sit at different points on the risk spectrum. Together, they show why the financing hurdle remains high across Latin American tech, even as ecosystems mature and notable companies scale. The discussion draws on country risk estimates compiled by Aswath Damodaran in January 2026.
Why WACC bites harder in tech
WACC is a hurdle rate. If the business cannot clear it, growth can still destroy value. That matters in tech, where expansion often requires continuous reinvestment.
