Peru’s Potential: Driving Innovation & Opportunities
By Ana Sofia Almagro, Associate
About the ‘Peru Startup Snapshot’ Series: In late 2017, we surveyed over 25 startups, investors, ecosystem builders, corporations, and NGOs to take a pulse on Peru’s upcoming startup ecosystem.
In the 3rd article in this series, we present some of our insights on what’s driving potential in Peru.
Our Approach
We polled respondents from a diverse pool to give us a 360-degree perspective- 30% ecosystem builders, 25% investors, 20% entrepreneurs, 25% Corporations/NGOs. From this mix, we were able to gather a snapshot of the current sentiment about the Peruvian startup ecosystem from local players. We’ve highlighted their insights (and a few of our own!) in this article.
We’ve segmented our snapshot into Peru’s Potential — a look at what and where people see as the drivers of innovation; and Getting There — an overview of success components for startups and for the ecosystem.
Peru’s Potential: The Opportunity
As mentioned in our previous piece on what’s driving the most promising startups in Peru, MIT’s Regional Entrepreneurial Acceleration Program (REAP) has been working closely with the Peruvian government to identify the country’s greatest entrepreneurial opportunities. Their analysis led to RetoBio, a new program where leading opportunities are eligible for grant funding. REAP identified leading sectors of biotech, agtech, and foodtech as leading sectors, noting the country’s rich biodiversity, and dominant agriculture and mining sectors. However, is this where Peru’s startup ecosystem also sees the opportunities? What other opportunities are leading startups moving on?
Our survey respondents believe Agriculture and Financial Services (which go hand in hand with financial inclusion) are the biggest opportunities for Peru. These same sectors were reflected in the impact investment trends in Peru, which leads the region in impact investment deal flow in the latest report from IGT Ventures, LAVCA, and ASEP (2016).
Agriculture
In Peru has been an ongoing effort and particular focus of the national government with a big push aimed to diversify the industry. Peru is unique in its agriculture makeup due to the prevalence of smallholder farmers as opposed to large scale farms. Some incremental innovation in agriculture is being done through agricultural cooperatives but these entities could also pose a barrier to wide-scale adoption for startups to scale over the long-term.
- The Potential: Smallholders can make innovation testing low risk and easily accessible, allowing startups to do some small pilots and see quick results without compromising reputation or brand.
- The Challenge: A small holder reliant system may make scale and adoption across many (usually lower income and lower willingness-to-pay) consumers trickier, adding a higher customer service cost.
This is the interesting challenge and paradox in Peruvian agriculture yet poses great opportunity for agtech and foodtech innovations — startups could test solutions on small farms quickly then scaling abroad with big clients.
There is also opportunity in foodtech, Peruvians can harness nearby farmers and rich production to create value-added products for the local and international market — see more about this Food Feast Trend (insert link).
Financial Services
Financial Services reflects a broader trend in the region. With financial inclusion being a gap in Latin America, many startups (centered in big cities like Lima) are taking on the financial inclusion challenge with solutions such as access to cheaper/faster/easier loans, savings solutions, or financial education. For more on the B2C Fintech trend, check out our Trends article.
Peru’s Potential: Innovation Drivers
The real question is, who will be driving this innovation? It is no surprise that most of the respondents of this survey selected startups as the main drivers of innovation?
Almost 1/4 of respondents chose Accelerators/Incubators; this could be the ~30% of respondents who were ecosystem builders themselves, and it’s important to remember they depend on startups. Although there are biases inherent in the way we crafted the survey (and all parties work with startups!), perception of drivers of innovation are reflected on the ground and in the roles each player is taking on:
Accelerators/Incubators — The Trend Setters
Peru has a multitude of accelerators, some of the most respected being Wayra Peru (led by Telefonica), and StartUp Peru (Peru Government’s Accelerator), who often work together. Although the value of accelerators and incubators is sometimes questioned, their role in Peru is undoubtedly important in creating a startup culture in the country by bringing networking opportunities and a trendy-ness to the ecosystem with events such as the SUP SUMMIT where global startup leaders share their failure stories in Spanglish. Why is this important? Chris Heivly, Entrepreneur in Residence at Techstars, made the point elegantly at his Wayra event; It’s about building a community of trust.
Universities & Governments — Extending Accelerators/Incubators
Peru is unique in that all universities in the country are required by law to incubate startups; and it’s true, some of the most respected accelerators in Peru are led by universities. Notably: UTEC Ventures and Emprende UP are 2 powerhouse accelerators that are always putting on events and programs for entrepreneurs and presenting at events organized in the ecosystem. These organizations play a key role as connectors between entrepreneurs and funding, especially with Emprende UP acting as a member of PECAP, the Peruvian network of angel investors.
Corporations — Lagging Behind/Trying to Catch Up
Corporations in Peru are not viewed as innovative. A few have invested this that by creating internal innovation labs — one of the trendiest is La Victoria Lab, from one of Peru’s most powerful corporate groups, Intercorp. Their internal innovation lab was built with the help of international advisors and the company allocates an innovation function that roots down into each of its business units to facilitate innovation transfer. Tech-savvy companies such as Liquid are starting their own accelerators — such as Liquid’s Liquid Venture Studio — as a way to stay in touch with the ecosystem, provide their digital expertise, and potentially become part of the disruption. However, most large Peruvian companies have a long way to incorporate innovation or actively engage in the emergent startup ecosystem.
Overview
In the next and final post, we talk about the “What is Missing,” and some recommendations on areas to focus to grow the ecosystem.
For more information, other perspectives, and specific startups, see our previous posts with information on the most promising Peruvian startups and the startup ecosystem trends.
Part 1. Top 10 Startups to Watch in 2018
Follow us: #perustartupsnapshot
About I-DEV International:
I-DEV is a strategy and investment advisor focused on building leading businesses in emerging markets. Across its offices in San Francisco and Nairobi, I-DEV is focused on following and featuring key trends and opportunities for investors and others interested in the local entrepreneurial ecosystems.
