Helping Latin America startups cross borders

Alejandro Brega
Oct 31, 2018 · 4 min read

A new generation of entrepreneurs is detonating a major change in Latin America. The emerging technology companies created by these entrepreneurs declare themselves ready for innovation in sectors such as agriculture, logistics and education; teach students the new skills for a digital economy, improve the productivity of vast arable land and eliminate logistical obstacles. These companies also focus on problems that Latin America has faced for decades, and are betting that they can help solve them with new technologies and ideas.

It is a bet that Latin America urgently needs to win. Traditional companies in the region are not innovating enough and, according to some indicators, they start to lag behind other companies in similar economies in other parts of the world. Companies in Latin America and the Caribbean are 20% less likely to introduce a new product than those in middle-income countries in Europe and Central Asia.

Emerging technology companies (or startups, as they are known in the global collective imagination) are intrinsically innovative, so they are essential to overcome this gap in innovation. Encouraging signs are already being observed. Some of the region’s leading financial institutions are well on their way, for example, to create their own entrepreneurship hubs or to forge partnerships in order to identify new technologies to provide services to their clients.

In places like Mexico City, Santiago, Medellín and Florianópolis, booming technological ecosystems are being developed. Local universities promote programs to support startups and governments formulate policies to attract venture capital investors and future entrepreneurs.

Brazil was the first entry point for Silicon Valley investors and remains the epicentre of the region. Argentina, Colombia, Mexico and Peru are also nuclei of technological ventures. Chile has been called “Chilecon Valley” because of its innovation accelerators, which have attracted foreign entrepreneurs. According to some estimates, the region’s emerging technology companies have received more than USD 2 billion in financing during the last five years.

However, Latin American technology entrepreneurs face a common challenge: their local markets, with the exception of Brazil, are not large enough for their companies to expand their operations. Their growth prospects are usually limited by national borders and poor financing. The ecosystems of these emerging companies, as in Colombia, tend to be grouped around successful entrepreneurs and very closed circles in specific countries, but there is not yet a consolidated network in the region for these firms. Therefore, it is essential to help entrepreneurs and their emerging companies to cross borders and establish relationships with potential investors and partners outside their countries of origin.

Take the case of Loggi, a new Brazilian company that connects independent motorcycle couriers with customers to provide express mail services. Loggi has a group of 5,000 drivers authorized to operate, use a company application for smartphones, and employ vehicles that comply with government regulations. The company uses algorithms to match supply and demand and improve delivery routes for drivers. This is a critical task for commercial and retail operations in Latin American cities, where poor infrastructure and overwhelming traffic impede efficient trade and limit the flow of goods and services.

The history of Loggi is one of the many ventures that excite us in the region. And we look forward to initiatives such as UpLink, a community and digital platform supported by the World Economic Forum where entrepreneurs can interact with their peers and potential partners. With UpLink, companies like Loggi will be able to share knowledge and help accelerate the development of other new ventures in Latin America.

We believe that the key players in the different national ecosystems of startups should encourage a stronger regional dialogue — mainly between new companies, but also between investors, public sector leaders and universities — to exchange perspectives on common challenges such as financing, hiring talent, the improvement of public policies and the expansion towards external markets.

Accelerators such as NXTP Labs, the most active investor in Latin America in the initial phases of technology companies, can also play a key role, helping emerging companies take advantage of new opportunities in other countries in the region and abroad and share their experiences.

Argentina, for example, has become a centre for agricultural technology companies that develop new tools to improve productivity in agriculture, including S4, a company that uses satellite images to improve crop yields. NXTP’s access to an international community of entrepreneurs and like-minded investors plays an important role in ensuring that Argentina’s pioneering efforts in new agricultural technologies reach other Latin American countries that have an urgent need to improve their agricultural sector.

Another example is Laboratoria, an educational endeavour in Peru that teaches programming to low-income women and is a model for new companies seeking to expand internationally. Laboratoria — like Digital House, from Argentina — is part of a wave of new training centres where young people learn technical skills in high demand in the private sector. The impact of Laboratoria is not limited to Peru, since it also operates in Mexico and Chile, where it teaches women skills very scarce in the labour force of these countries. Latin America needs more examples like these so that the most innovative solutions can be adopted in the places where they are needed. And the necessary support so that they can grow and have an impact.

Photo by paweldotio on Unsplash


Originally published at TheStartupFounder.com.

Alejandro Brega

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TheStartupFounder.com — Startups, fintech, e-commerce, crypto and online advertising.