By Andrés Uribe, Expedition PR
Recently I had the opportunity to attend a PulsoSocial event at NYU titled PS10 Latin America and Technology. I left the event thinking ’watch out Silicon Valley, Silicon Alley, and anywhere in between. The Latin America startup scene is picking up traction.”
Just last year private equity and venture capital firms invested $7.9 billion in Latin American companies, a 21% increase over 2011. Here are a few of the factors that led to a wave of new startups in Latin America.
Internet accessibility. Lack of Internet access was one of the main factors that have stifled a surge of tech startups in Latin America in the past. Those days are gone. Internet usage has increased dramatically throughout the region. In 2011 alone there was a 16% increase in Latin Americans with Internet access, a bigger increase than anywhere else in the world that year. While Latin America is still not on the same level as the U.S., which boasts a 78% internet penetration rate, their 48% penetration is very respectable and has created an atmosphere that is ripe for the rise of tech startups and innovation made by Latin American companies.
An abundance of inexpensive talent. Anybody who has ever worked at a tech startup knows the importance of good designers and programmers. Latin America has thousands of them and they are willing to work for less than their American counterparts. Mexico alone graduates over 60,000 programmers every year. And while a Silicon Valley engineer might require $6,000 a month before they lift a finger, the Chilean counterpart will get the job done for $1,500 to $2,500 a month.
Educational, Company, and Government support. The public and private sectors have picked up on the potential for economic growth that comes with fostering innovative companies and entrepreneurial thinkers.
At college campuses across Latin America, business schools are holding pitch competitions and hackathons, similar to the programs hosted by U.S. business schools.
Companies are also helping to bolster the Latin American tech communities. Brazilian software giant TOTVS has just launched START it up, a 5 month startup competition where the winner will be awarded $1 million for their company. The Lean Startup Machine, popular in the U.S., has just this year began to host events in Latin America, starting with Brazil. This year Wayra Mexico partnered with the San Francisco-based company Startup Labs to discover new startups in Mexico to invest in.
Governments are getting involved in startup initiatives. For example, the Chilean government launched Start-up Chile in 2010, in an effort to make Chile the startup hub of Latin America. The program brings chosen startups from all over the globe to Chile and provides them with the tools and capital to start their company. Each selected startup receives $40,000 in equity-free seed capital, a one year temporary visa for all team members, and access to a network of mentors and venture capitalist ready to invest. While the first year only had 22 startups participate, the program is growing fast and will easily reach their goal of 1,000 selected startups from a pool of tens of thousands of applicants by 2014.
Although there is still some time before the Latin American tech scene catches up to that of the U.S., the time might be sooner than most Americans think. Keep a close eye on our neighbors to the south over the upcoming years, or partner with them!