CRISIS, WHAT CRISIS? Puerto Rico’s Parallel18 is what progress looks like.
As we strolled down San Juan’s Avenida Ponce de Leon, it was almost unrecognizable from my visit just a year earlier. We’d just left Lote 23, a food truck park that would make San Francisco jealous (the roast pork sandwich alone is worth the trip to Puerto Rico). A cluster of new apartment towers was receiving its finishing touches. Up and down the avenue, for lease signs were replaced with the promise of something new “coming soon.” Three new office buildings were getting close to completion (Piloto 151, a co-working space, will open its second location in one of them). Bright, cheerful murals abound on formerly bare, dreary walls. Another building’s fresh coat of paint is instantly drying under the tropical sun, capping off a major renovation.The Chinese symbol for crisis is also the symbol for opportunity. After years of economic crisis, Puerto Rico is beginning its recovery. And Parallel18 (P18), San Juan’s international accelerator, is playing a major role in creating opportunity.
First — let’s be clear. P18 is not responsible for all of this increased construction and economic activity. At least not directly. When it began in earnest 18 months ago at the peak of the Puerto Rico’s economic crisis, it had an ambitious agenda — create an ecosystem for entrepreneurship for the island. Self-determination is a powerful thing — with it comes hope. And hope, generated by P18’s success, is a pebble that’s creating ripple effects throughout Puerto Rico.
With its third cohort of startups now in full swing, the impact of the accelerator can be felt in real economic activity. From just the first five months of P18 being in operation in 2016, 168 jobs were created including full-time, part-time and internships. During the same period, 43% of the total revenue collected by the first cohort, $3.2 Million, was part of Puerto Rico’s GDP. Again, this does not include numbers from the recently concluded 2nd cohort or the brand new 3rd cohort of companies.
The story of cohort one’s Sunne Labs illustrates P18’s powerful economic influence.
Sheilla Torres Nieves and Jose Lebron were Puerto Rico ex-pats living stateside. Both are Rensselaer Phds, both were making six-figure salaries with a career track in place. “We had moved back to the island after learning about the vibrant ecosystem that was emerging around startups,” said Torres Nieves.
“We had moved back to the island after learning about the vibrant ecosystem that was emerging around startups,”
Then P18, with its equity free cash infusion, acceleration program and mentorship, sealed the deal for them to stay and further develop their dream to reimagine the application of solar technology. Now out of the accelerator, they’re operating out of an office in Mayaguez and are preparing to begin manufacturing their breakthrough solar water heater. To say the entire island is rooting for them is an understatement. An example — Wal-Mart just recently recognized Ms. Torres Nieves as an outstanding woman entrepreneur and will provide a grant to fund Sunne’s growth.
The effect of Sunne on the local economy is palpable. They’ve hired three people, and have a contract in place with AKM Industries to build their product. AKM is another story of rebirth — originally a maker of air conditioner parts, the company had to recently reinvent itself. Now, they are a defense/aerospace grade, high precision shop and that competes for multi-million dollar contracts. “Puerto Rico has all the right things in place — great weather, an affordable, educated and motivated workforce — it’s incredibly poised for growth and we are going to be a part of that,” said Antonio Negron, AKM’s Vice President of Operations, Aerospace & Defense.
Another prime example of success is Abartys Health, a cohort-two startup focused on fixing US healthcare that just took top prize at a SxSW competition, with a platform for making health insurance companies more efficient. They are keeping their home-base in San Juan and currently have 13 full-time employees. “Working with Parallel18, it is the best thing that has happened to us. We recognize that the exposure we’ve had to mentors and the things we’ve learned in the program saved us approximately three years. They enabled us to close deals and grow smart and fast,” said Doimarie Mendez, a co-founder of Abartys.
“Exposure we’ve had to mentors and the things we’ve learned in the program saved us approximately three years”
And with this kind of success, an ecosystem develops. For example, P18 companies have been able to create a following of and secure investment from local angels, US based investment funds, international VCs and local corporations.
P18’s success should be no surprise. Both Sebastian Vidal, the Executive Director, and Lucas Arzola, Director of Operations, have excellent track records. Vidal ran Start-up Chile which was recently named LatAm’s most innovative company. Arzola ran a business accelerator at UC Davis. “We’ve only just begun to make an impact,” said Vidal. “But it really wouldn’t be possible without the collective efforts of the government, local universities, private business, our mentors and staff, and the 98 companies so far that have put their faith in Puerto Rico to scale their businesses with P18.”
“We’ve only just begun to make an impact”
And if anyone doubts government supported accelerators can have long-term impact — you can look across LatAm at Start-up Chile and Start-up Mexico (SUM) for more proof. After just 3 years, Start-up Mexico has created more than 800 jobs and added $150 Million to Mexico’s GDP. Of the 298 companies through their program, 95% are still in business and 56 of them have received venture funding exceeding a combined $175 Million. And they have now expanded beyond Mexico City with new campuses in Merida and Leon. With SUM’s growth, so has grown Mexico’s culture of entrepreneurship and the ecosystem to ensure it thrives.
It’s my belief that Parallel18 is on its way to similar success. While Puerto Rico still has a lot of work ahead, it’s clear they’ve turned the corner in turning crisis into opportunity.
Neil Cohen is a brand & marketing strategy consultant and an adjunct professor of marketing at San Francisco State University. He also serves as a mentor to Parallel18, Startup Mexico and Start-up Chile.