(FORTUNE Magazine) – Latin pop phenoms Ricky Martin and Jennifer Lopez may have ruled the airwaves during this so-called Latin summer, but for investors, the season's main act was StarMedia Networks.

The first global Net portal in Spanish and Portuguese, StarMedia went public in May at $15 and quickly hit $64 a share before settling back into the mid-40s. Not only has StarMedia's debut gotten Wall Street excited about the Internet's potential in Latin America, it also has drawn attention--and money--to a host of Miami-based startups eager to follow its lead. "After the IPO, investors started to look at Latin America as the next Internet sleeping giant to awaken," says Jeff Leibowitz, CEO of Laredo Group, a Boston-based consultancy.

"Sleeping giant" may be a bit of a stretch. After all, much of Latin America is saddled with outdated telephony infrastructure, poor security for Web transactions, and archaic telecom pricing rules that make going online extremely expensive for the average consumer. And although Internet usage in the region is expected to jump 172% by 2003, according to San Francisco-based IDC, the current base of seven million users is relatively small.

While Latin American Net plays may not promise an instant vida loca for investors, the long-term outlook is, well, on fuego. America Online, for one, believes in the region's potential. AOL plans to launch its first Latin American portal in Brazil this month in a $200 million joint venture with Venezuela's Cisneros Group.

As for startups that bear watching--one is Yupi.com, a four-year-old, Miami-based portal that started out as a Spanish-language search engine on the AltaVista network. (In fact, Miami boasts so many Latin Internet startups that the local wags have nicknamed it Silicon Beach.)

Yupi.com CEO Oscar Coen, an MBA and CPA who logged a few years under economist Arthur Laffer, thinks it's vital to make a good first impression, so he eschewed spending seed capital on advertising until the portal could break away from the pack. Yupi quietly developed proprietary home page-creation technology, acquired a popular GeoCities-like virtual community in Spain called Ciudad Futura, and installed a menu of e-mail, news, sports, and entertainment channels. Says Coen: "We decided to earn critical mass by executing the best we could, and not going out and buying buzz, because if the user visits your site and doesn't have a positive experience, that ad money is out the window."

Coen's word-of-mouth gamble has paid off, with traffic reaching 103 million page views and 600,000 active e-mail accounts in August. Earlier this year Yupi received $13 million from private-equity investors, and in August, Sony took an undisclosed minority stake in the portal. Don't look for an IPO too soon, however. Coen is content to continue tapping the private-equity pipeline before going to the Street.

Another angle for investors is following broadband providers in the region. Diginets Americas, a Washington, D.C.-based provider of wireless broadband access, has more than $145 million in equity capital from Goldman Sachs, among others. Diginets has operations in Argentina and Colombia, and plans to move into Brazil later this year. Plus, CEO Larry Hinz says, the firm has already signed on multinationals like IBM and SAP as well as portals like StarMedia. Indeed, Microsoft sees a similar opportunity on the consumer side: It's planning to invest $126 million in Brazil's largest cable operator, Globo Cabo, to expand high-speed access via cable.

Not all the Latin players have developed as methodically as Yupi and Diginets. For example, QuePasa.com, a Phoenix-based Spanish-language portal targeting U.S. Hispanics, went public in June after recording a minuscule $16,000 in sales in the second quarter. Its stock recently traded at 33% below its first-day closing price. That hurts, but investors will eventually have a spectrum of more promising Latin Net stocks to size up.

--Edward Robinson