This paper aims to show the evolution, current situation, and perspectives of venture capital in Latin America with special reference to Chile. Venture capital development in Latin America has been slow and precarious so far. Investment flows have stagnated since the late 1990s and, in most cases, they have not been used to finance the development of innovative Small and Medium Enterprises (SMEs). This is due to external factors such as the impact of the Asian crisis and the Nasdaq crash in the USA, and to internal factors such as economic instability and short experience of the venture capital activity in the region, the lack of entrepreneurship and risk investor culture and an appropriate legal framework. In Chile, venture capital development has been slow in spite of the country's economic growth and stability. However, institutional reforms and changes in entrepreneurship culture are advancing toward the creation of a more favourable environment for the definite takeoff of this activity.
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Romaní et al. (2006) studied this question.