Latin America’s Entrepreneurship Beat
Global interest in the emerging entrepreneurial economies of Latin America has been on the rise. It is where Endeavor began—launching in Chile and Argentina in 1997—and more recently, the region’s vibrant cultures have led the likes of Geeks on a Plane and the Global Entrepreneurship Congress to take a closer look. This spring we report back from a few economies in the region.
Brazil, Chile, Argentina, Colombia and Mexico have already been recognized for their potential in becoming entrepreneurial hubs in Latin America. Each of the four has attracted Endeavor to establish local offices to accelerate the growth of local high-impact entrepreneurs. Equally important is the emergence of professional accelerators that nurture and invest in early stage startups, such as NXTP Labs in Buenos Aires, 21212 in Rio de Janeiro and Wayra in Mexico. And of course, Brazil hosted this year’s Global Entrepreneurship Congress (GEC).
Geeks on a Plane (#GOAP) first traveled to South America in 2011 and started a trend of investors’ watching the startup scene across the continent. In 2012 Dave McClure’s 500 Startups, the organizers of #GOAP, expanded from Brazil into Mexico. Local entrepreneurial financing is also on the rise. According to the Latin American Private Equity & Venture Capital Association (LAVCA), Latin America’s business class, family offices and high net worth individuals have become more aware of entrepreneurial activity in their countries and are backing more startups as angel investors.
Latin America’s strongpoints, particularly Chile and Brazil, have been inspiring each other and their neighbors along their own entrepreneurship journey, such that Silicon Valley is no longer the model that first comes to mind in policymakers’ efforts in the region. For example, Start-Up Chile set an example for the region as to how policymakers can help kick-start a startup ecosystem. Governments across South and Central America are taking note and creating strategies to encourage entrepreneurial growth. Colombia’s InnPulsa agency, for example, was well represented during the GEC recently in Rio. Last year, Peru approved a reform that lifts restrictions on local pension funds investing in private equity. As government pro-entrepreneurship initiatives are emerging across the region, the general attractiveness of the startup culture is building momentum. Latin American nations are showing each other how to do it in their own way.
There are numerous dimensions to explore. For instance, Sao Paulo has the fewest number of founders that have lived in Silicon Valley previously, according to the Startup Genome study, yet is by far the largest startup ecosystem in Latin America. This homegrown model is having an impact on other hubs in the region. For example, the winner of the Latin America 2012 “Hot Company of the Year” distinction went to KienVe, a Uruguayan second-screen mobile TV app. Colombian Ricardo Garcia-Amaya recently wowed a New York audience with his demonstration of AngelPolitics, a web application that matches political donors and candidates for public office, along with Andrea Cornejo from Peru who founded Coderise to inspire students and companies that address inequality and local problems in Latin America to build web tools.
The International Labor Organization estimates that 50% of the working population in South and Central America (approximately 93 million people) have an informal job, so the challenge for policymakers is significant. As the recent trendwatching.com report argues, demand for new solutions is high in the region. Major reforms are called for to address generally weak areas across the continent, specifically intellectual property protection, judicial transparency and corruption.
Development organizations like the Inter-American Development Bank are already focused on the power of entrepreneurship to tackle the region’s challenges. Its Multilateral Investment Fund (MIF), for example, has been arguing that small, young, and high-growth businesses, which they call “dynamic businesses,” contribute significantly to economic growth, job creation and technological development. MIF has been facilitating seed funds specializing in providing financial resources and expertise to address the growth needs of high-impact businesses. This is all in addition to a robust interest from the high-growth entrepreneurship advocates within the World Bank concentrating on the region.
Stay tuned this month for how three Latin American governments are responding to the rise in interest in entrepreneurship in the region and let me know when we overlook a startup or scale-up community stronghold.