Latin American startups and entrepreneurs face numerous challenges in 2018, especially in terms of the capacity to attract investors, the ambition to tackle other markets and the willingness to generate synergies with other startups from the region in an effort to sustainably grow.
Such events as the South Summit-Pacific Alliance, held in the late 2017, have underlined the huge technological innovation and development capacity of Latin American startups, as well as the impact of structural and business culture problems that are somehow limiting their growth. The endemic fear to failure and aversion to risk and alliance generation in Latin America are evident. These factors, which are almost genetic characteristics, have an evident impact in the ecosystem of startups in the region. However, things are changing and entrepreneurs are betting their smart money on launching projects with international scope. The ecosystem is alive and governments, academic institutions, innovation agencies and investment funds are working to see some change in this deeply-rooted culture.
Such countries as Mexico, Colombia, Chile and Argentina are developing new laws to encourage the creation of startups, including financial support, tax exemption, mentorship programs and the launch of new co-working spaces. It’s all about fostering an entrepreneurship culture in a business-friendly environment. These elements play a key role when it comes to building a startups ecosystem with capacity to have an impact on the economy. This is the goal of big investors and companies interested in backing up young entrepreneurs. Investment numbers in Latin America are still lower than figures reported in other markets, such as the U.S. and Europe, but the fast growth of the sector speaks of the emergence of a new venture capital culture in the region. “Latin America is experiencing what has already happened in other markets over the past years, since there are bigger funds and stronger investments can be issued to support entrepreneurs. The moment couldn’t be more interesting to invest in the region,” Beatriz Gonzalez, founder and head of Seaya Ventures, says.
“We have improved our ecosystem over the past years. We know that entrepreneurs are going to be the next leaders,” Juan Carlos Garavito, general manager of INNpulsa Colombia, explains: “The collaboration with other countries, like Spain, is very important to our economy and we’re also working with the Pacific Alliance,” he underlines. The bet on innovation is precisely more visible in the member countries of the Pacific Alliance, a policy that is helping people boost the enterprising ecosystem in the region. The initiative engulfs Mexico, Chile, Colombia and Peru, a market share that stands for over 217 million dollars, the eighth economy of the world. In Latin America and the Caribbean, the block represents 37 percent of the GDP, concentrates 52 percent of the overall trade and attracts 45 percent of direct foreign investment.
Information technologies, tourism, mobility, energy, health and agriculture are the industries with higher potential in terms of innovation in 2018. Moreover, Latin America has undergone a transformation process in its cities over the past five years, a circumstance that has given birth to hundreds of technologically-valuable startups related to the improvement of the quality of life in cities or the solution of daily mobility, communication or consumption matters. According to Gonzalo Tradacete, founder of Faraday Venture Partners, “the mobile and fintech segments” will have the highest disruptive capacity in 2018. This is also going to be a key year to the consolidation of machine learning –the scientific discipline related to the Artificial Intelligence sphere that creates automatic learning systems for machines-.
What is the entrepreneur’s profile in Latin America? They are mainly present in the university sphere and show great talent and creativeness. The ambition to climb high, but “keep their feet on the ground” is one of their main virtues. “Latin American entrepreneurs’ resilience and patience take center stage. The good news is that more capital is been brought into the region and governments are doing a good job,” Vanesa Kolodziej, general manager of Xpand, the Clarín group’s corporate fund, points out. According to Vanesa, the ecosystem still needs “more connections.” In this sense, the heterogeneity of the different regions within Latin America and the Caribbean is a factor that gains momentum in the development of a strong startup ecosystem. The combination of forces and new collaboration ways is perceived as an opportunity for startups with global ambition, which look for partners and customers beyond their borders. In this scenario of clear growth, numerous Latin American startups are going to play a leading role over the next months. We have taken six of them, since they will be developing new projects this year in an effort to take both a technological and financial jump: the two keys for a startup to succeed.GRIYUM! (MEXICO)
Mexican griYUM! startup has worked hard to find a solution to one of the biggest problems faced by mankind for decades: while part of the population suffers from hunger and undernourishment, the other portion fights against obesity and the complications entailed by this condition. These Mexican entrepreneurs are proposing a revolutionary solution, to a certain level: they think that insects are the solution for both segments, so they are working to turn the consumption of these animals into a normal diet. The idea was born in 2016 at Monterrey’s Technical University, Querétaro Campus, and it was conceived by Alejandro de la Brena, Cristina Clocchiattim, Alejandro Macías and Francisco Pérez. That very year, their initiative won the second prize at the Cemex-Tec Awards in the Transforming Communities category. The Mexican students developed cricket flour, which delivers 60 percent of high quality protein, easy digestion and low cost. Omelets, breads, pastas and cookies can be prepared by taking this ingredient as their base.