Impediments to risk capital in Argentina, Brazil, Chile, El Salvador, and Mexico
Inter-American Development Bank (IDB); Morrison & Foerster LLP (MoFo)
This report examines aspects of the legal and regulatory frameworks of Argentina, Brazil, Chile, El Salvador and Mexico which impact risk capital and private equity flows into small and medium size enterprises (SMEs). By risk capital or private equity we refer to arms-length investments made by third parties in enterprises with a high risk profile by virtue of such factors as the absence of operating history and unproven markets for their goods and services. Fund managers in Latin America confront limitations in legal and regulatory frameworks that discourage risk capital investment. Although macroeconomic and market factors play an integral role, legal framework will also help promote financing through risk capital in Latin America and the Caribbean.