Achieving Peru’s Potential for Startup & Ecosystem Success
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 4th and final article in this series, we present some of our insights on what it will take to get Peru to the next level.
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 the ecosystem.
Getting There: Start-Up Success Components
If startups are the main drivers of innovation in Peru, what do startups need to succeed and what does the country need to sustainably grow these innovators? We’ve all seen the top reasons lists for why startups succeed or fail. CBInsights recently released its own comprehensive list on a global scale, but we wanted to see if these factors still applied for the Peruvian context.
Survey says there is general agreement on these factors and their relative importance in Peru! Folks in the Peruvian startup ecosystem still believe an ability to execute, seek mentors, and access financing are all the most critical components. Something that is notable in Peru, however, is the high emphasis on Networks and Contacts. Peru is still a country where contacts and who you know are fundamental to rise in society. This is another reason the role of accelerators (especially university accelerators) is fundamental in stimulating the Peruvian startup ecosystem and helping it to grow in volume of founders and solutions that cater to a wider Peruvian consumer base.
Getting There: What’s Missing?
If we understand what startups need to be successful, and it’s not that different from other startup ecosystems around the world, then what is missing in Peru for the ecosystem to grow?
Conrad Egusa in Tech Ceviche argues that Peru has all the ingredients to be a successful startup ecosystem, and we agree! But there is road to be traveled, so we explore where we can get to work. Our survey respondents highlighted regional scalability, well prepared founders, and local early stage capital among the top components missing from the ecosystem. With the abundance for incubators and accelerators, ideas are flourishing, but the mentors, resources, tech savvy and business savvy to get them to scale could be boosted. In a nutshell, we believe priority areas of focus should be in skill development and bringing more capital to the ecosystem.
Technical Skills — To Get from Food Delivery to Machine Learning
In his article, “Observations of the Peruvian Startup Ecosystem,” Eddy Wong (founder at Wanderu and tech expert) also emphasizes the lack of technical co-founders, and technical expertise in Peru. He makes the case that universities at a technical level still cater to big software companies and not enough on open source. That, coupled with Peruvian companies’ emphasis on administrative roles as careers of choice often discourage advanced technical studies required of strong tech founders. Eddy offers various solutions to address this, and he’s frequently spotted at Lima startup events sharing his recommendations on learning from intrinsic Peruvian entrepreneurship (the emolliente sellers, the man who is accumulating water from clouds, etc.).
More Capital —China, the US or regional players?
Local investment capital is also an area where Peru is still behind relative to larger, more mature markets with VC sectors. The good news is there are funds that are popping up. For example, Angel Ventures Peru closed a seed fund at the end of 2017 to make early investments into Peru-based ventures, and Magma Partners raised a $15M fund in the beginning of 2018 (not exclusive to ) but with an eye on Peru. Another area of opportunity still to be developed is increasing foreign capital investment to promising Peruvian startups. China has proven to be a big player in the Latin American market. How can Peru harness China’s capital to build its internal startup ecosystem?
Conclusion & What’s Next
Peru has a bright future alongside the rest of Latin America in developing its startup ecosystem. In a space with so much potential it can be hard to pinpoint areas of focus. Below we propose some questions to guide the conversation as we continue to grow.
Questions ecosystem players should be asking themselves:
Developing tech skillsets. The skills gap is not unique to Peru with “advanced” countries like the US facing a shortage of data analysts and software engineers but this gap is deeper in Peru. What can we do to build the skills needed to build the Peruvian OLXs?
Incubation held to a higher standard. While all universities are required to offer space for incubation, no standards have been set on quality or results that come from this. This will become a question of quality over quantity. How can incubators improve their programs to adapt their product-market hypotheses to their local markets, and help their cohorts obtain funding mentorship on a global scale? One potential partner is GrowthHax, focused on improving the way mentorship is done today.
Strong policy and government commitments to innovation. For instance, Mexico recently passed the Ley Fintech stimulating innovation in the fintech space. Peru has shown strong commitment in the past five years but still has ways to go to provide ongoing assistance past the early stages of innovation. What policies could the Peruvian government think about to prepare its ecosystem for tech innovation?
Corporations as active partners in the ecosystem. Although many of today’s startups are not B2B, this could be accelerated through. How can corporates use innovation to change the way they interact with their consumers (Most of Peru’s existing startups are B2C)? And how can corporates think about changing the way they operate internally through innovation?
Past Articles & Other Perspectives
For more information, other perspectives, and specific startups, see our previous posts with information on the most promising Peruvian startups, the startup ecosystem trends, Peru’s startup potential.
Part 1. Peru Top 10 Startups to Watch in 2018
Part 2. Peru’s Top Startup Trends
Part 3. Peru’s Potential: Driving Innovation & Opportunities
Part 4. Achieving Peru’s Potential for Startup & Ecosystem Success
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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.
