Originally published in Spanish in Forbes México.
In recent years, the dream of an initial public offering (IPO) has drifted farther away for thousands of startup founders, not just in Latin America but across the globe. Several factors have contributed to this reality, and as long as market exits remain scarce, venture capital in the region will continue to be limited. A recurring theme in my conversations is the same observation: while more startups and venture capital funds emerge every day, the options for exit and liquidity remain constrained. Fortunately, viable alternatives are starting to emerge through IPOs in alternative stock exchanges.
About 25 to 30 years ago, going public was much more common and faster. Startups took an average of five to seven years to achieve this milestone, requiring smaller investment amounts. In the late 1990s and early 2000s, many tech companies entered public markets with relatively modest revenue figures, driven by the expectation of accelerated growth. For instance, Amazon went public in 1997 with annual revenues of just $16 million, and Red Hat in 1999 with $10.8 million.
However, the burst of the tech bubble in 2000 drastically changed the landscape. Markets began demanding more robust and sustainable revenue criteria. Between 2000 and 2005, the minimum revenue to list on Nasdaq hovered around $50 million annually, although some companies managed to list with less due to their significant growth potential. Notable examples include Netflix ($75 million in 2002), Travelzoo ($17 million in 2003), Blackboard ($35 million in 2004), and Baidu ($15 million in 2005).
The Current Context: 2024
Today, the landscape is much more demanding. To list on Nasdaq, a startup needs to generate at least $300 million annually, while the threshold on the New York Stock Exchange (NYSE) rises to about $500 million. These figures are achievable for very few startups in Latin America, and without a solid base of growth funds in the region, the chances of reaching an IPO are slim.
This revenue requirement is not arbitrary; it reflects the high costs of an IPO on these exchanges, which can range from $25 to $60 million. For a startup with lower revenues, covering the costs of going public on Nasdaq or NYSE is simply unfeasible.
Alternative Solutions for LATAM Startups
Is there a viable solution? Fortunately, yes. The stock exchanges in Toronto (Canada), London (United Kingdom), and Australia represent a realistic option for startups with annual revenues starting at $50 million—a threshold many Latin American startups can meet today.
Listing on these alternative exchanges is 25 to 50 times more affordable than on Nasdaq and offers comparable benefits: access to global capital, international visibility, and a faster path to liquidity for early investors without requiring founders to give up greater control or board seats.
Firms like HF Capital, based in San Francisco, have paved the way by developing specific alternatives for the region and specializing in guiding startups toward achieving low-cost IPOs. This approach allows founders to maintain their company’s autonomy while accessing the necessary resources to scale.
For hundreds of entrepreneurs in LATAM, investing between $1 and $3 million to go public is a far more realistic and achievable option. This not only provides visibility but also the essential capital to continue innovating and transforming their industries, contributing to the region’s economic growth. While firms like JP Morgan, Goldman Sachs, or BNP Paribas have historically supported companies going public, their focus has rarely been on startups, primarily centering on large corporations.
A Strategic Future for IPOs in Latin America
Maximizing these opportunities requires ecosystem players—investors, accelerators, governments, and regulators—to work together to build an accessible and efficient path to public markets. Establishing strategic alliances with alternative exchanges and creating incentives for high-potential startups will enable Latin America to accelerate its integration into global capital markets.
In this way, startups can access unlimited sources of capital and expand without borders, laying the groundwork for the region to become a competitive global innovation hub.
