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The top 4 hubs of the growing Latin America startup scene

When thinking about where to launch a tech startup in the modern world, don’t overlook the numerous benefits of investing in fast-growing Latin American cities. Here we take a brief look at where you can find the next big tech giant in the Latin America startup scene.

You may be familiar with established tech hubs such as the Silicon Valley, but with highly saturated markets and high costs of living (as well as running a business), other developing nations are becoming more attractive.

Besides the ease of market entry and low running costs, Latin America boasts a lot of talent and entrepreneurial incentive. Crises and hardships have fostered innovation in the areas of environmental protection and improvement of quality of life, and given rise to the development of mobile, social and advertising technologies. For example, FinTech (=financial  technology, or the emerging sector of financial services firms whose products are built on software and modern technology) is a promising industry not only for entrepreneurs but also for the people of Latin American countries, where around 39% of the population don’t have a bank account (The World Bank, 2014; Latin America & The Caribbean). Prominent FinTech pioneers include Mexico’s AirTM and Argentina’s Afluenta.

For all these reasons, LATAM startups have become top-of-the-line targets for global companies for acquisitions and investments.

In this post we will look over the four Latin American hubs that you should consider if you’re looking to invest or launch a startup of your own.

  1. Bogotá, Colombia

Bogotá has a great environment for startups in many aspects.

First of all, the talent pool – the city boasts 126 thousand from 120 higher education institutions and a 4.6 million strong work force.

In terms of infrastructure, Bogotá has 19.3 million square feet of office space and over 50 industrial parks that include free trade zones and warehousing and manufacturing space.

The so-called “free trade zones” (TFZs) have a preferential income tax of 20%, duty free importation of machinery and raw materials, purchasing of raw materials, capital goods, and services with no VAT. Furthermore, goods and services produced in Bogota for export are exempt from the local industry and commerce tax.

A number of organizations have been funded to promote entrepreneurship in Colombia, such as the government based INNpulsa and the Founder Institute accelerator.

.CO is easily Colombia’s biggest startup success story, having been acquired by Neustar for $109 million in 2014. PagosOnline (an online payment platform) and ClickDelivery (an online delivery service) are the next closest in line following .CO.

The top 4 hubs of the growing Latin America startup scene

  1. Buenos Aires, Argentina

Known as the ‘Paris of the South’, Buenos Aires is a beautiful, lively city with a relatively low cost of living in spite of the hiking inflation in the recent years.

The entrepreneurial community of the city is exciting. Around 60% of youths aged 18-24 consider entrepreneurship as a great career choice, and over a quarter of them intend to start a business.

Buenos Aires is home to a number of good quality universities, including Universidad de Buenos Aires, Universidad de Palermo, Universidad Argentina de la Empresa, and The Buenos Aires Institute of Technology (ITDBA), which is frequently regarded as one of the best engineering schools in Latin America, with about 200 graduates each year.

The community of Buenos Aires is very supportive of startups. There are a number of accelerators – Startup Buenos Aires, Palermo Valley, Endeavor, NXTP Labs and Wayra – and in 2014 the city invested $3.5 million in startups (the funds went to the accelerators).

Moreover, the political and economic environment of Argentina makes for a very resilient and risk-taking entrepreneurial community that is used to a changing environment and is ready to take their businesses to the global market as soon as possible

Mercado Libre (a Latin American version of eBay) is the most well-known startup success story from Argentina. Founded in 1999, it now boasts over 158 million users and a $8.5 billion market cap. It is also the only Internet company from Latin America to be listed on the Nasdaq.

Another notable enterprise is Incluyeme, a online portal that connects people with disabilities in Latin America to steady employment, and it partners with corporations such as IBM and Accenture. (Roughly 50 million people have disabilities in Latin America and the Caribbean, and as many as 80 percent are unemployed or outside of the workforce, according to the World Bank.)

The top 4 hubs of the growing Latin America startup scene

  1. México City, Mexico

Mexico City has a population of 21 million people, a diverse talent pool and the infrastructure necessary for startups. There are two pioneering organizations working on shaping the startup environment in Mexico – INADEM (the National Institute of Entrepreneurhsip), which distributed roughly $658 million to 620,000 entrepreneurs, startups and SMEs (small-to-medium-sized businesses), and SUM (Startup Mexico). Together, these organizations include over 20 Venture Capital funds, a lot of co-working space, and frameworks for shared practices.

As many other startup hotspots in the region, Mexico also aims to become a FinTech hub of Latin America. An example venture is Clip – a smartphone device/attachment for processing credit card payments. As stated by Techcrunch, “Mexican fintech is taking off fast. You don’t want to be missing out”.

It is also the place to be for companies that want to mobilize the U.S. Latino population (whose buying power is expected to reach $1.5 trillion) as it’s geographically close to the States. As an example, the Chinese smartphone maker Xiaomi has entered the North American market by selling their products in Mexico. It’s also a good starting point for tapping into the Latin American market. When the French giant BlaBlaCar started to look for new markets to expand to, they acquired the Mexican carsharing platform Aventones.

The top 4 hubs of the growing Latin America startup scene

  1. Santiago, Chile

Santiago’s startup scene, dubbed as “Chilecon Valley”, has a lot to offer.

Besides the region’S lower cost of living and large population (6.1 million), it’s known for its accelerator program Startup Chile, which currently has over 1300 startups and is valued at $1.4 billion. It also boasts a much quicker process to register a business (5.5. days on average compared to 30.1 days average in the rest of South America) and a startup workforce that’s 20% female, which makes it the global capital for businesswomen.

On to prominent examples, Beetrack is a tech startup from Chile which offers a software for helping clients improve their delivery management. The company was featured at the well-known retail and logistics conference Home Delivery World 2016.

Diagnochip, who topped TechFlier’s list of the “13 Tech Startups in Latin America to Watch Out For in 2016”, is a Chilean startup that develops innovative solutions for improving and broadening access to health care services for poor populations living in rural areas. They represented Chile in the “Chivas the Venture” event in 2016.

The top 4 hubs of the growing Latin America startup scene

 

If you’re considering to work or start a business in the Hispanosphere, consider taking Spanish classes with our On-Español Virtual Spanish Academy where we offer online tailored courses for businesses and individuals 24/7.

31st May 2017

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