One of the drivers of economic growth is innovation, which raisesproductivity by creating new production methods, technologies, productsand firms. This article examines an instrument that supports this process,venture capital, and highlights the need for a financing system coveringeach phase of innovation. It starts by illustrating Latin America's innovationdeficit. It then proceeds to a general analysis of the difficulties affecting thefinancing of innovation and the provision of venture capital to overcomethese. It goes on to examine the form taken by these obstacles in theregion and, considering the experience of Brazil and Chile, the methodsused to deal with them. In relation to a number of the subjects addressed,the article discusses issues connected with major problems of financialsystem development.