in Latin America
t h e s t a r t u p e c o s y s t e m
Fostering
1
INDEX
INTRODUCTION_____________________1
TALENT__________________________4
DENSITY_________________________16
CULTURE___...
From inspiration to IPO, Techstars exists to empower
the world’s most promising entrepreneurs through-
out their lifelong ...
2
Great projects are found everywhere in the
world, and you don't need to be in Silicon Valley
to turn your ideas into gre...
On the other hand, the history of ups and downs
in the region’s economic cycles has helped to
cement a sort of "entreprene...
This document aims to analyze these possible
lines of action in five dimensions: talent, density,
culture, capital, and re...
TALENT
TALENT
Having adequate talent is a necessary condition to
develop entrepreneurship. Countries in the region
must invest in...
Produce more specialists
One of the main problems encountered by entre-
preneurs in the region when assembling their teams...
Supporting the creation of venues and opportu-
nities for education outside the formal system,
complementing traditional e...
Platzi is an online learning platform that con-
tains IT and programming courses. It was
developed in Colombia in 2013, an...
Produce more entrepreneurs
Aside from specialized talent, it's also necessary to work on
promoting entrepreneurship as a w...
The Tegucigalpa Technical University (Honduras) Entrepreneur-
ship Club (Hub UNITEC), functions as a physical space in whi...
The Medellin (Colombia) School of Management, Finance and Technology (EAFIT) is a
pioneer in incorporating a culture of en...
One of the main difficulties for many startups is talent
retention. The difficulty in creating a "sense of
belonging" to s...
StartUp Chile is a program created by the
Chilean Government in 2010 that offers
entrepreneurs a temporary visa for one
ye...
Produce more women entrepreneurs
Latin America follows the global trend in rela-
tion to the lack of diversity in the busi...
Inclusive participation of more women in com-
munities and specific incentives for business-
es led by women is another po...
DENSITY
Big ideas transform into great projects when they're
shared. Exchanging experiences, knowledge, and
ideas among entreprene...
Supporting the growth of clusters and coworking spaces.
nnovation is born out of the confluence of great minds. A communit...
Atom House is a coworking space found in Bogotá and Medellin that includes 24/7
access to meeting rooms, auditoriums, work...
t's important to develop these spaces in urban centers that aren't necessarily great hubs for
entrepreneurship or traditio...
Building the voice of the community
Exchange and synergy between various
actors are two of the fundamental pillars of
a dy...
Linking these actors of the
entrepreneurial ecosystem
A robust entrepreneurial ecosystem's foundation lies not only in the...
On its part, the construction of spaces where investors can share their experience around new tech-
nology enterprises is ...
CULTURE
CULTURE
Develop and maintain an entrepreneurial culture is
no easy task in communities that traditionally
don't value fail...
Promote a work ethos in the communities
Culture around an entrepreneurial eco-
system must be open, inclusive, and
transpa...
Community interactions must not be limited to entrepreneurs, but should also aim to create solid
relationships with the pr...
Promoting failure as part of the recipe for success
The mantra "fail often, fail fast" is the corner-
stone of entrepreneu...
The de-stigmatization of failure shouldn't be limit-
ed to entrepreneur communities, but should be ex-
tended to the rest ...
In Latin America, one can see how many startups seek to emulate the objectives and business models of
others that have alr...
CAPITAL
Access to capital has been one of the
main obstacles for s tartups in Latin
America to grow and compete at a
global scale....
Fostering access to smart capital
The reality appears to be that the problem isn't always a lack of capital,
but rather th...
Weaving investor networks that, among other things, help to document and make visible the
experiences and lessons, is a fi...
On the other hand, "counterpar-
ty capital" models promoted by
governments are an option for
international venture capital...
$
Finally, investment funds normally function better when their teams include people who have been en-
trepreneurs with fi...
There are currently several crowdfunding platforms, the best known at a global level being Kickstarter and
Indiegogo. Over...
Moreover, given the global nature of digital enter-
prises, it is important to seek fiscal harmonization
between countries...
REGULATION
REGULATION
Governments play a fundamental role in the
creation of stable and predictable regulatory
environments that allo...
Easing bureaucratic procedures for opening and closing a business
The complex mire of bureaucratic and administrative proc...
Promoting a modern regulatory framework
on liability for intermediaries and copyright
Digital businesses need a modern reg...
Promote alternative means of payment
The availability and diversity of means of payment is a key
component for the growth ...
These new means of payment being developed in the region are oftentimes forced to adapt to
means of payment regulations fr...
Thus the importance, on one hand, of engaging governments and startup communities in
policymaking debates that affect them...
SOURCES
46
1 http://data.worldbank.org/indicator/IT.NET.USER.P2
2 http://data.worldbank.org/indicator/IT.NET.USER.P2, http...
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Fostering the startup Ecosystem in Latin America

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There are more common threads uniting us than creating barriers. And when we talk about the conditions necessary to the development of a thriving entrepreneurial ecosystem, it is a fact there are common ingredients. These common ingredients are positioning Latin America to a once in a lifetime opportunity to build wealth and opportunities through entrepreneurship.

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Fostering the startup Ecosystem in Latin America

  1. 1. in Latin America t h e s t a r t u p e c o s y s t e m Fostering
  2. 2. 1 INDEX INTRODUCTION_____________________1 TALENT__________________________4 DENSITY_________________________16 CULTURE________________________24 CAPITAL_________________________31 REGULATION______________________39
  3. 3. From inspiration to IPO, Techstars exists to empower the world’s most promising entrepreneurs through- out their lifelong journey by providing a global eco- system made up of tens of thousands of community leaders, founders, mentors, investors, and corporate partners. Techstars’purpose is embedded in its give first, entrepreneur-centric approach. Every decision that Tech- stars makes is carried out with the best interest of the entrepreneur in mind.)
  4. 4. 2 Great projects are found everywhere in the world, and you don't need to be in Silicon Valley to turn your ideas into great companies. Latin America is no stranger to this: a number of stud- ies have rated Latin Americans as one of the most entrepreneurial populations in the world. What is missing, then, so that the next u nicorn comes from Latin America? Structural deficiencies in the links between the various countries in Latin America (and within each country) make it difficult to talk about the region as a homogenous block. For example, whereas Internet access in countries like Chile, Argentina, and Colombia exceed 50%, in coun- tries like Haiti and Nicaragua, these percentages are no more than 15% . Besides, there are cul- tural differences between countries, some subtle, some not so much, that make this region as rich and diverse as any in the world. INTRODUCTION However there is more that brings us together than what drives us apart, and in terms of the conditions needed to develop a thriving entre- preneurial ecosystem, the fact is that there are a number of ingredients that place Latin Ameri- ca at a historic opportunity to create wealth and development through entrepreneurship. First of all, with the exception of Brazil and some Caribbean countries, a common language unites the region: 400 million people speak Spanish as a native language. If we add Spain and the Hispanic community in the U.S., we have a base of over 280 million Internet users who speak Spanish , and more than 13 million new users arrive every year, a trend which grows year after year .3 All of the above illustrates both the reality and the potential market of users to scale up a success- ful enterprise focused on Latin American users . 1 1 2 3 4 3
  5. 5. On the other hand, the history of ups and downs in the region’s economic cycles has helped to cement a sort of "entrepreneurial DNA" among the people of Latin America. The need to overcome the various economic crises and their impacts on employment have left a deep mark on the capacity of Latin Americans to adapt and overcome difficulties through cre- ative solutions. According to the World Bank the region stands as the second most entrepreneurial in the world . Finally, countries in our region share certain obstacles faced by entrepreneurs in the ardu- ous process to transform an idea into a business: lack of specialized talent, access to financing, and absence of modern and consistent regulatory frameworks throughout the region, among others. The main challenge for governments in the region is to work to elim- inate these obstacles, facilitate entrepreneurship, and produce the structural conditions that promote a startup and innovation ecosystem throughout Latin America. 2 5
  6. 6. This document aims to analyze these possible lines of action in five dimensions: talent, density, culture, capital, and regulatory environment. The ideas and examples included here arise from discussions held in nine cities in the region car- ried out during 2015, and involving members of the business community for each city. To start the discussion, these workshops relied on the document "Fostering a Startup and Innovation Ecosystem" . Interviews were conducted to 11 figures in the business ecosystem to comple- ment the information gathered during the work- shops. Organizing these activities wouldn't have been possible without support from Google, the entrepreneurs, facilitators, and public officials who generously participated. The information contained here aims to be a representative reflection of what works and what doesn't in our region, and a first step towards en- gaging Latin American entrepreneurial communities in policymaking discus- sions needed to strengthen and pro- mote the already vibrant entrepre- neurial ecosystem in our region. 3 6 7
  7. 7. TALENT
  8. 8. TALENT Having adequate talent is a necessary condition to develop entrepreneurship. Countries in the region must invest in human capital to produce a workforce with the necessary skills, not only to cover the needs of the entrepreneurial ecosystem, but also for the development of technology innovation and en- trepreneurship in the future. 5
  9. 9. Produce more specialists One of the main problems encountered by entre- preneurs in the region when assembling their teams is the lack of specialized talent. This includes mainly new talent, not only in programing, but also in design, and data visualization and analysis, g rowth hacking, and digital marketing, among others. The gap between the educational system and the needs of the entrepreneurial ecosystem can be drastically narrowed by incorporating specific sub- jects in the curricula from an early age, as well as fostering participation in technology university and technical careers, such as engineering and comput- er science. Program.AR is an initiative by the Argentinean Govern- ment that seeks to bring Computer Science teaching and learning to schools, as well as raising awareness in soci- ety about the importance of this discipline in today's world. Their website has teaching materials for teachers and games for students . 6 8
  10. 10. Supporting the creation of venues and opportu- nities for education outside the formal system, complementing traditional education, is another pathway towards more specialized education. Dev.F, for example, works as a community since 2014, and aims to bring software development techniques to Mexico, by promoting "hacker" culture (in the positive sense) towards program- ming education programs . There are also instances of continuous education provided by entrepreneurial communities, like UX Nights , JavaScript or Google Developers Group . Internet also democratizes access to education. Elearning tools and platforms, with specific contents on areas of specialization, facilitate knowledge transfer to those who, for economic or geographic reasons, cannot access educational establishments (formal or informal), that normally concentrate in major cities. 7 1211 10 9
  11. 11. Platzi is an online learning platform that con- tains IT and programming courses. It was developed in Colombia in 2013, and includes contents in multiple formats (text, video, source code, and discussion forums) . It cur- rently has over 80,000 users, and features courses in both English and Spanish . In 2014 it billed over one million dollars, and currently has more than 30 employees in Bogotá, México, and Mountain View, Califor- nia . They recently closed on an investment of USD 2.1 million . 8 13 14 15 16
  12. 12. Produce more entrepreneurs Aside from specialized talent, it's also necessary to work on promoting entrepreneurship as a way of life, understanding fail- ure as a stage along the learning process. Initiatives that foster greater engagement of the entrepreneurial ecosystem with educational institutions are a way to nurture and detect entre- preneurial talent within academia. In the dynamic entrepreneur- ship sector, talent must understand that multitasking and being flexible within the role that is offered are very important skills to have. Talent development must be focused on people who have the three essential qualities to respond to the dyna- mism of a startup: growth potential, versatility to shift between activities, and flexibility to adapt to uncertain and vol- atile surroundings. For this, one must create syner- gies between the state, busi- nesses, and educational institu- tions at every level (not just universities) through, for exam- ple, internship programs in technologybased businesses, and by incorporating entrepre- neurship programs in educa- tional curricula. 9
  13. 13. The Tegucigalpa Technical University (Honduras) Entrepreneur- ship Club (Hub UNITEC), functions as a physical space in which students can gather to work on projects, and to produce and share ideas . With few exceptions, public schools and universities in the region are still very far from the new trends related to the creation of high impact businesses. Although top institutions do have robust research and development programs, graduates rarely has the necessary tools to immerse themselves in the local entrepreneurial land- scape. To achieve this, it is necessary to include entre- preneurship subjects and programs in technology ca- reers, by linking their programs to economics, business, and design schools. 10 17
  14. 14. The Medellin (Colombia) School of Management, Finance and Technology (EAFIT) is a pioneer in incorporating a culture of entrepreneurship in their academic programs. Since the year 2002, entrepreneurship subjects are taught alongside technology pro- grams, leading to the creation of the Centre for Innovation, Consulting, and Entrepre- neurship (CICE) in 2006 . For example, the Computer Engineering program has com- plementary subjects such as Business Development, Initiative and Entrepreneurial Cul- ture, Business Plan, among others . 11 18 19
  15. 15. One of the main difficulties for many startups is talent retention. The difficulty in creating a "sense of belonging" to startups, and the presence of more competitive offers abroad, or by more consolidated companies, all play against talent development within startup enterprises. Many startups are forced to invest resources in early employee training only to see that talent migrate to other horizons. To retain talent, startups can employ horizontal struc- tures that provide more freedom and responsibilities to employees. Providing employees with interesting challenges can contribute to a sense of importance within the company. Attracting and Retaining Talent Other types of monetary incentives are possible once the company has enough capital (for example with company stock, or fringe benefits). Public pro- grams to finance the incorporation of specialized human resources to startups can help maintain a critical mass of talent within the ecosystem. At the macro level, talent retention in the region can also be incentivized through repatriation scholarships or seed capital for Latin American entrepreneurs who reside abroad and wish to create and grow their busi- ness in their country of origin. It is also important to promote the arival of foreign entrepreneurs who import knowledge and experience and contribute to the buildup of a critical mass of talent that is lacking in less developed communities. La generación de retos interesantes para los empleados puede con- tribuir a un sentimiento de importancia dentro de la compañía. 12
  16. 16. StartUp Chile is a program created by the Chilean Government in 2010 that offers entrepreneurs a temporary visa for one year to develop their projects for six months. Since its inception, over 1200 startups and 3000 entrepreneurs have joined the program. The most successful projects have been able to raise over 135 million dollars, and created more than 1400 jobs . 13 21
  17. 17. Produce more women entrepreneurs Latin America follows the global trend in rela- tion to the lack of diversity in the business ecosystem in general, and more specifically in relation to the number of women involved in technology enterprises. This is also a reflec- tion of the low proportion of women following technology careers in college . In events such as S tartup Weekend the number of female participants doesn't exceed 24% of the total attendance. This gap is con- sistent with the entrepreneurial sector as a whole, where the gap between male and female entrepreneurs in the region is 24%, ac- cording to the World Bank . Promoting workforce diversity is import- ant, since studies affirm that businesses with a woman founder perform 63% better than those founded only by men. On one hand, it is necessary to begin by incentivizing technology careers for women from an early age. Identifying and promoting success stories of women en- trepreneurs can inspire new generations of engineers, programmers, and founders of tech companies. Laboratoria is a social technology company that seeks to empower young women by giving them access to education and work in the digital sector. With presence in Peru, Mexico, and Chile, they aim to become a fulcrum to leverage efforts seeking gender equality and female empowerment in the region, addressing the lack of available quality education for women through a payment model derived from students’ earnings after obtaining stable em- ployment . 14 23 24 25 26
  18. 18. Inclusive participation of more women in com- munities and specific incentives for business- es led by women is another possible pathway to support greater diversity in the ecosys- tem. Initiatives such as E picQueen, W eX- change, and W omenWhoCode, which are growing in several countries in Latin America, are playing a crucial role in fostering entrepre- neurial conscience among this demographic. The S Factory i s a preacceleration pro- gram at Startup Chile that focuses on supporting tech projects led by women. Funding for this project is CLP 10,000,000 (around USD 15,000), in addition to the chance to use work- space and have access to experienced mentors . 15 27
  19. 19. DENSITY
  20. 20. Big ideas transform into great projects when they're shared. Exchanging experiences, knowledge, and ideas among entrepreneurs and creators acts as a catalyst for entrepreneurial success. Governments can support the formation of venues and opportuni- ties to reach a certain density of startups, a key factor for the potential success of many businesses. DENSITY 17
  21. 21. Supporting the growth of clusters and coworking spaces. nnovation is born out of the confluence of great minds. A community spirit is key when it comes to laying a fertile ground for entrepreneurship and innovation. The concept of c luster, referring to an ecosystem of alike businesses supported by the vigor and success of all of its participants in a limited geographical area, can not only reference and position the area in relation to a spe- cific product, vertical, or rubric, but also enables regular, facetoface contact that nourishes the dialogue between competition and collaboration, fundamental for the characteristic dynamism of the entrepreneurial ecosystem. Next to the idea of a c luster, which has a broader geographic horizon, we can highlight that of coworking spaces, physical spaces where several companies, not necessarily related, share facil- ities and workspaces every day. The fact of sharing physical space not only enables novel ap- proaches for problemsolving, nourished by the different perspectives contributed by every proj- ect, but also creating the necessary conditions to attract investors, as well as new business and financing opportunities. In many cases, these spaces transform into landmarks of the local en- trepreneurial culture, as is the case with I mpact Hub in Antigua, Guatemala; or A tom House in Bogotá and Medellin, veritable communities for work and entrepreneurship.. 18 28 29
  22. 22. Atom House is a coworking space found in Bogotá and Medellin that includes 24/7 access to meeting rooms, auditoriums, workstations, and leisure and entertainment areas. It's also a venue for workshops and courses of interest to entrepreneurs . 19 30
  23. 23. t's important to develop these spaces in urban centers that aren't necessarily great hubs for entrepreneurship or traditional economic centers for a country or region. For example, in the city of San Juan, Puerto Rico, Piloto 151 has been the spearhead for the development of an entrepreneurial community in the island, where the main agents converge to work with local startups. Similarly, Hacker Garage in the city of Guadalajara, the second major city in México, has positioned itself as a meeting point for the city's hackers, and also as the place where more than 40 developer and programmer communities gather to discuss a collaborative agenda to assemble the necessary density of available talent in the region. The creation of coworking spaces and communities in cities that don't yet have them can act as fuel for recent start- ups to find the necessary momentum to scale up in interac- tion with their peers. 20 31 32
  24. 24. Building the voice of the community Exchange and synergy between various actors are two of the fundamental pillars of a dynamic entrepreneurial ecosystem. The benefits of startup density don't just lie in creating the conditions for successful ideas to flourish or for projects to grow, but also to find a common voice that expresses the interests of the entrepreneurial community. One example of this is Meetroopers in Gua- dalajara, an organization born out of the idea to group together leaders from the technology, innovation, and entrepreneurial communities in order to build a culture of collaboration in the region and improve rec- ognition and visibility of these communities within the innovation ecosystem. These "communities of communities" must speak for the needs, but also the advances and success sto- ries of each entrepreneur- ial ecosystem. They can also take the stage as rep- resentatives of a united front before business, industry, government, ac- ademia, and the media, conveying the messages needed for the ecosystem to flourish. From a government stand- point, it is important for governments to promote the spread of success sto- ries in the entrepreneurial environment in order to shift the cultural perspec- tive around entrepreneur- ship and to create a condu- cive environment for reaching critical densities. Attraction and repatriation of entrepreneurial talent also helps with this objec- tive. 21 33
  25. 25. Linking these actors of the entrepreneurial ecosystem A robust entrepreneurial ecosystem's foundation lies not only in the development of innovation and the new projects that arise from it but also the relations with which other sectors nourish and propel it, such as investors, business and industrial sectors, universities, and governments. They create networks that link those who wield the tools of technology with the traditional business community who understand better than anyone the problems that plague the various productive sectors in the region, and may serve as a gateway to dialogue and to new entrepreneur- ial solutions to old problems. One example of a bridge between traditional business sectors and tech enterprise is A gave Labs , from Guadalajara, who get in touch with CEOs to discover ways to aid them through a d hoc technology solutions under the commitment f rom the company that it will employ the technology once it is developed. In this way, they not only provide a novel and effective outlook on existing problems but also manage to hedge their risk at maximum . A similar connection between public research institutions and the industrial sector is possible with gov- ernment sponsorship in the way of technology engagement programs. 22
  26. 26. On its part, the construction of spaces where investors can share their experience around new tech- nology enterprises is of vital importance to raise awareness on the challenges and opportunities of the sector, redirecting capital that would otherwise end up in more traditional, less risky enterprises. Suc- cessful examples are the Venture Club of Panamá, or G uadalajara Angel Investors Network (GAIN) , local entities that seek to gather angel investors in both cities. These associations aim to develop an innovative entrepreneurial culture among individuals who are in condition to invest in startups, but that have historically created wealth through traditional invest- ment instruments. Other international initiatives, such as S tartup Angels, have found in Latin America an opportunity to identify, recruit and train investors in the region to invest in the early stages of tech based businesses. 23 34
  27. 27. CULTURE
  28. 28. CULTURE Develop and maintain an entrepreneurial culture is no easy task in communities that traditionally don't value failure as a necessary step on the path to success, or entrepreneurs as role models. Within the communities, the relevance of teamwork and the focus on providing solutions to local problems are also critical elements of a culture of entrepre- neurship. 25
  29. 29. Promote a work ethos in the communities Culture around an entrepreneurial eco- system must be open, inclusive, and transparent in order to generate and transform ideas into successful business- es. However, many times entrepreneurs forget their gregarious essence and give themselves to the individualist impulse, influenced by the fashion and illusion that the value of enterprise lies in the entre- preneurial act, rather than in the value that they add to the communities they are a part of. The road to a vibrant entrepreneurship ecosystem begins with events in which its actors meet each other, exchange ideas and experiences, and begin to act as a community. This gives way to more ambitious initiatives, such as hackathons or coworking spaces, in order to finally reach more sophisticated scenarios like an incubator. The successful entrepreneur's recipe can't do without a community and the organic growth it pro- vides. 26
  30. 30. Community interactions must not be limited to entrepreneurs, but should also aim to create solid relationships with the private and public spheres. To strengthen a culture of entrepreneurship it is vital to adequately disseminate and value successes that sprout from the community, with a special emphasis on stories that reflect teamwork. Building the reach necessary to highlight the virtues of entrepreneurship at a societywide level requires a joint effort between entrepreneur communities, governments, the media, and academic institutions who transmit the message and create the necessary conditions for a culture of innovation to flourish. Moreover, it must be recognized that the reasons that can lead to a startup failing to take off can be independent from the fact that there may be a great team doing a great job. Matters of context, users, or a given market's saturation can throw a wrench on what appeared like certain success A potential exit to these "dead ends" can be the merger of startups and work teams, which shouldn't nec- essarily happen as a purchase of one by the other, but also through alternative models such as share transfer by the better positioned company to the one that is less so in exchange for joining forces. This can be done even without the need for dilution among the startups, which can in all respects be beneficial for both. An example of it in the region is the merger of Easy Taxy (Brazil) and Tappsi (Co- lombia) in 2015 . 27 35 36
  31. 31. Promoting failure as part of the recipe for success The mantra "fail often, fail fast" is the corner- stone of entrepreneurial culture in Silicon Valley. Now, this doesn't necessarily resonate in our region. The undue fear produced by the possibility of failure isn't just an obstacle en- trenched in Latin American culture, it is also crystallized in business regulation, such as the administrative procedures that regulate bank- ruptcy. Discussing the week's errors in a company meeting or sharing experiences of failure among entrepre- neurs helps to turn these events into sources of learning. One great example of positive awareness raising about failure are what are known are Fuckup Nights, born in Mexico as an initiative by 5 friends who sought a space to speak openly about entrepre- neurial failure. It has grown into an international community spanning over 150 cities in close to 50 countries, providing a more realistic outlook on the process of failing as an entrepreneur. 28 37
  32. 32. The de-stigmatization of failure shouldn't be limit- ed to entrepreneur communities, but should be ex- tended to the rest of society, in particular children and youths who will become future generations of entrepreneurs . The ultimate objective is to showcase entrepreneurship as a way of life that is possible. Failure is nothing other than the other side of risk, which is the main engine of innovation and entre- preneurship. Whether it happens or not, it is always a possibility. Only entrepreneurs who can understand the possibility of failure as a stimulat- ing challenge rather than a hindrance will achieve their goals. After all, if there’s no risk, there is no prize. 29 38
  33. 33. In Latin America, one can see how many startups seek to emulate the objectives and business models of others that have already triumphed in more developed markets. This isn't necessarily bad, but it often fol- lows from the fact that in the region there isn't yet a strong culture of taking risks and seeking disruption. Innovation is essentially disruptive, but disruption doesn't rest exclusively in novelty, in what nobody thought of before, but it also embodies thinking about traditional problems from a new perspective. The c opycat phenomenon is understandable insofar as instinctively we associate innovation with imitation of what has worked elsewhere, and also less by its impact on the population that benefits, but by its eco- nomic success. Innovation in Latin America, and everywhere in the world, shouldn't focus on finding a new Google, Facebook, or Uber, but in seeking novel solutions to real problems in the communities. It is important for governments, which often have the most complete information about the real problems and needs faced by their populations, to approach entrepreneurs with technology competencies and to work in ways to link entrepreneurs, universities, and other governments to develop disruptive solutions. One clear example of how to face traditional problems with novel solutions is S ocialab, a nonprofit NGO that seeks to produce positive social impacts by seeking support for sustainable, disruptive startups at an early stage. It seeks to promote a social and economic development model focused on solving community prob- lems through initiatives . P r o m o t i n g c r e a t i v e s o l u t i o n s t o l o c a l p r o b l e m s 30 39
  34. 34. CAPITAL
  35. 35. Access to capital has been one of the main obstacles for s tartups in Latin America to grow and compete at a global scale. Funding is critical for a company to grow and scale its business at any stage of development. CAPITAL 32
  36. 36. Fostering access to smart capital The reality appears to be that the problem isn't always a lack of capital, but rather the different expectations between entrepreneurs and inves- tors, which sometimes prevents an adequate flow of capital. Whereas early stage startups don't have easy access to funding from banks, various public programs operate as seed financing (ranging from USD 50,000 to 500,000) and can be very useful in attracting private investors. Public funds on their own cannot finance an enterprise, and generally, amounts above 500,000 focus on different expectations and maturities for the projects to be invested in. Normally, venture capital is concerned about short term results, with little consideration for the long term potential of many projects. Maturing the ecosystem requires a thorough understanding of the nature of tech startups: higher risks, but also higher returns on investment. 33
  37. 37. Weaving investor networks that, among other things, help to document and make visible the experiences and lessons, is a first step towards evangelizing other investors in the region and draw them to the tech startup ecosystem. he La Latin American Private Equity & Venture Capital Association (LAVCA), brings together more than 170 investment firms, from global investment funds to local managers, con- trolling assets exceeding USD 60 billion. The process of information transfer between the members facilitates the capture of best investment practices . 34 40
  38. 38. On the other hand, "counterpar- ty capital" models promoted by governments are an option for international venture capital to invest in local startups. Under these schemata, governments match the amount invested by a private investor, serving as additional incentive pulsa, in Colombia, has matching grant initiatives for venture investors in Colombia to improve the culture of investment and to leverage resources with cofinancing programs where the investor contributes a certain amount, and the program matches this amount for the investor to invest in local companies, increasing the return expecta- tions for investors and developing new investors who contribute to the system . In- n - n - n - 35 41
  39. 39. $ Finally, investment funds normally function better when their teams include people who have been en- trepreneurs with firsthand knowledge of the real challenges faced by startups o n their path to consoli- dation. Kaszek Ventures is an investment fund owned by Hernán Kasah, cofounder of Mercado Libre, the etrade leader in Latin America, created in 1999 . Since 2011 it has made 36 early stage invest- ments, making it one of the most active funds in the region. Their investment portfolio includes suc- cessful investments such as Netshoes, PedidosYA, and Restorando . Create new crowdfunding platforms Collective funding models, or c rowdfunding, allow many startups to find the capital needed to start a business by tapping large numbers of people. C rowdfunding isn't just a way to gather funds for earlystage projects, but also includes other, nonfinancial benefits, such as product validation, information on market segmentation, and inputs on potential customers prior to the first product sales. 36 42 43
  40. 40. There are currently several crowdfunding platforms, the best known at a global level being Kickstarter and Indiegogo. Over 99,000 projects around the world have been funded with more than USD 218,690,000 on Kickstarter. In Latin America, Ideame has presence in more than 5 countries in the region and the United States, managing to consolidate, together with other initiatives in Latin America and elsewhere, a movement that has started a discussion about the need for more transparent regulation on c rowdfunding as a financing vehicle, in order to facilitate, rather than hinder, its use by entrepreneurs in the region . Fiscal incentives can facilitate considerably the capaci- ty to start businesses and attract venture capital. Gov- ernments can design and implement special fiscal incentives for tech startups to promote the growth of the ecosystem. Harmonize the tax burden to foster greater investment 37 44
  41. 41. Moreover, given the global nature of digital enter- prises, it is important to seek fiscal harmonization between countries that permits expansion into new markets, and for investors to allocate capital to the best projects, independently of the country where they are based. Governments must also avoid imposing economic barriers to startup ex- pansion, such as currency restrictions. 38
  42. 42. REGULATION
  43. 43. REGULATION Governments play a fundamental role in the creation of stable and predictable regulatory environments that allow entrepreneurs to ma- terialize innovative ideas and for investors to allocate capital safely. 40
  44. 44. Easing bureaucratic procedures for opening and closing a business The complex mire of bureaucratic and administrative procedures existing in the majority of coun- tries in the region for starting a business is one of the main barriers to the creation of tech start- ups. For early stage startups, it is common for the entrepreneurs to have few resources for navi- gating the bureaucracy. Regulatory burdens don't only affect the opening of new businesses, but also their closing, impos- ing extremely high costs to failure. Simplifying these processes shouldn't only help to start busi- nesses, but also to close them if they fail, so entrepreneurs can metabolize this experience faster, learn from their failure, and start over. 41
  45. 45. Promoting a modern regulatory framework on liability for intermediaries and copyright Digital businesses need a modern regulatory frame- work, adapted to the digital economy, providing a safe and predictable environment to operate. Safe port laws, limiting liability for Internet intermediaries for usergenerated content, guarantees that as long as certain conditions are met, a platform shall not be held liable for such content. This model, conceived in the United States through the C ommunications Decency Act Section 230 a nd the Digital Millennium Copyright Act, h as allowed Silicon Valley companies to create products and services with sufficient clarity about which material they are and aren't responsible for. In Latin America, Brazil has the I nternet Civil Framework, whereas in Chile there is an Intellectual Property Law, both are examples safe port legislation . Furthermore, a modern copyright law, i n addition to limiting the liabil- ity of platforms, must create flexi- ble limitations that allow creators and entrepreneurs to make legiti- mate uses of protected knowledge to produce innovative contents, and continuing to drive creativity on the Web. On the other hand, the avail- ability of new platforms for users to have legal access to contents de- pends on modern copyright laws, and has been proven to be effective in reducing piracy. 42 45 46
  46. 46. Promote alternative means of payment The availability and diversity of means of payment is a key component for the growth of technology entrepreneur- ship. To reach more users and increase their income, startups must be able to offer payment alternatives for the services and contents they offer their users. The most common method for online purchases is a credit card, but, with the exception of Brazil, countries in the region have credit card penetration under 50% among their populations . Therefore, a portion of entrepreneurs in the region are focusing on developing online payment platforms, such as PayU , providing alternatives to Inter- net users, fundamentally for those who don't have access to a credit card . $ enviar 43 48 48 47 49
  47. 47. These new means of payment being developed in the region are oftentimes forced to adapt to means of payment regulations from the 19th and 20th centuries. Governments can work to mod- ernize their financial regulation in ways that allow for more options, particularly for users with- out bank accounts who cannot access traditional means, and are excluded from contents and services offered on the internet and from ecommerce. Involving startup communities in policy dscussions. The entrepreneurial ecosystem in Latin America is in constant growth. The more Latin Americans turn to entrepreneurship as a way of life, the more their importance will be rec- ognized as creators of wealth and employment. Entrepreneurship is not an easy activity, and governments must endeavor to develop smart policies and the right conditions to facil- itate, or at least not to stand in the way, of innovation and entrepreneurship . 44 50
  48. 48. Thus the importance, on one hand, of engaging governments and startup communities in policymaking debates that affect them directly. On the other hand, entrepreneur commu- nities can harness existing opportunities for interaction to discuss these issues and reach consensus on positions that represent them as a sector towards policymakers. Entrepre- neur associations such as ASECH in Chile, or ASEA in Argentina, or specific startup associ- ations like Engine Advocacy in the United States, are examples of institutions that repre- sent entrepreneurs. Engine Advocacy is an association of US startups seeking to active- ly participate in decision-making processes of public policies that directly impact the ecosystem. Its main activities are to generate information (what is the impact of startups in the economy, how many jobs are created); connect startups with governments to pro- mote debate (through events, round tables, demo days); work on different policy issues that impact the ecosystem (intellectual property, privacy, access, immigration reform, among others). 45
  49. 49. SOURCES 46 1 http://data.worldbank.org/indicator/IT.NET.USER.P2 2 http://data.worldbank.org/indicator/IT.NET.USER.P2, http://www.pewhispanic.org/2013/03/07/ii-internet-use-3/ 3 http://www.emarketer.com/Article/Latin-American-Internet-Audience-Nears-310-Million/1011667 4 https://lingos.co/blog/stats-on-the-spanish-language/ 5 http://www.worldbank.org/en/news/feature/2015/09/30/emprender-esta-de-moda-en-america-latina 6 Las ciudades en las cuales se llevaron a cabo estos encuentros son Lima, Bogotá, Medellín, San José, Guayaquil, Viña del Mar, Guatemala, México DF y Buenos Aires. 7 http://blog.up.co/2014/09/08/white-paper-announcing-5-ingredients-fostering-thriving-startup-ecosystem/ 8 http://programar.gob.ar/ 9 http://www.devf.mx/ 10 http://mexico.uxnights.com/ 11 http://javascriptmx.com/ 12 https://developers.google.com/groups/?hl=es 13 https://platzi.com/prensa/ 14 http://www.educationnews.org/online-schools/online-ed-startup-platzi-succeeding-with-freemium-model/ 15 http://www.eltiempo.com/tecnosfera/novedades-tecnologia/emprendedores-colombianos-en-silicon-valley-platzi/15296516 16 http://goo.gl/bDDyft 17 http://mundo.unitec.edu/index.php/campus/tegucigalpa/268-unitec-lanza-club-de-emprendimiento-hub-unitec 18 http://www.eafit.edu.co/cice/Paginas/inicio.aspx 19 http://goo.gl/KEtjSc 20 http://goo.gl/HF9DZ 21 http://goo.gl/vAL5NJ 22 https://www.quora.com/profile/Andres-Barreto-1 23 http://thenextweb.com/la/2014/01/01/2013-latin-america-heres-happened/2/ 24 http://goo.gl/qDwaiq 25 http://10years.firstround.com/ 26 http://laboratoria.la/ 27 http://www.thesfactory.org/apply.html 28 http://antigua.impacthub.net/ 29 http://atomhouse.com/ 30 http://atomhouse.com/ 31 http://www.piloto151.com/ 32 http://hackergarage.mx/ 33 http://meetroopers.com/ 34 http://www.gdlangels.mx/ 35 http://thenextweb.com/la/2013/07/06/zombies-are-about-to-invade-latin-america/ 36 http://techcrunch.com/2015/12/15/easy-taxi-tappsi/ 37 http://fuckupnights.com/ 38 http://www.worldbank.org/en/news/feature/2015/09/30/emprender-esta-de-moda-en-america-latina 39 http://socialab.com/ 40 http://www.lavca.org/ 41 http://www.innpulsacolombia.com/es/ofertas 42 http://investor.mercadolibre.com/faq.cfm 43 http://www.kaszek.com/ 44 http://www.elespectador.com/tecnologia/el-viacrucis-de-hacer-crowdfunding-colombia-articulo-581507 45 http://goo.gl/NirqsE 46 http://www.planalto.gov.br/CCIVIL_03/_Ato2011-2014/2014/Lei/L12965.htm 47 http://www.leychile.cl/Navegar?idNorma=28933 48 http://goo.gl/Dmy9HY 49 http://www.cioal.com/2015/01/16/el-nuevo-nicho-de-las-pasarelas-de-pago-2/ 50 http://www.forbes.com/sites/freddiedawson/2014/07/31/growing-entrepreneurship-in-latin-america/#5169aa519a3a 51 https://engine.is/

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