Latin America Business Boom: Start-Ups Connect with Large Companies

In recent years, Latin America has emerged as the world’s best start-up region. Even more interesting, however, are the curious alliances being formed between major investors/corporations and smaller organizations. According to a corporate venturing report by Prodem, more than 2000 startups have joined hands with larger corporations to establish themselves in the local market.

Investment schemes such as Wayra, an initiative funded by Mexican telecommunications giant Telefónica, have invested close to MXN$50 million into supporting young, promising businesses. The trend is being replicated across the Latin American region: Brazil has 64 initiatives linked with leading corporations and nascent startups, Chile has 28, Mexico has 24, and Argentina has 23.

Technology and Telecommunications: The Main Industries

The report suggests technology and e-commerce are the industries keenest on participating in this type of partnership, with 18.4% of relationships occurring within these sectors. The second most popular field is the insurance and financial sector with 16.2%. The next major sector is telecommunications with 11.8%.

According to Hugo Kantis, Director of Prodemand, and author of the study, the idea of these partnerships is still relatively new in Latin America and is yet to reach its full potential. These partnerships have shown tremendous growth in recent years with local companies starting to show interest in the prospect of a merger. Market-entry specialists, such as Biz Latin Hub, have been instrumental in facilitating the development of these partnerships, by assisting foreign companies in a number of company formation tasks.

Medellin is known as one of the major startup capitals in Latin America.
Medellin is known as one of the major startup capitals in Latin America

Grand Plans for the Future

The potential for profitable business market opportunities in Latin America is by no means a secret anymore. Many venture capitalists have cited Latin America as the future of international industry, and have emphatically played their cards as a result.

Chinese moguls are investing heavily in the Latin startup scene and are using many tactics to tap into the steadily growing market. According to online giant Bloomberg, Chinese investors that were struggling to crack the saturated workplace back home, are simply replicating successful business models and exporting them to Latin America. A good example of this is the hugely popular news provision service, Notícia Aguila which has drawn inspiration from Beijing-based Jinri Toutiao. Overall, it is estimated that in 2017, Chinese entrepreneurs invested USD$1 billion in Latin American projects.

Another intriguing development highlighted by Forbes has been the emergence of government-backed initiatives to attract further investment into the startup sphere. These projects hope to incubate the “next big thing” and provide financial support for ambitious concepts that wish to break into their respective economies.

High profile examples of these state funded schemes include Start-Up Chile, which has provided $40 million to over 1000 companies. Other examples include the ingeniously named Argentine equivalent, IncuBAte and the equally innovative, but slightly less puntastic Puerto Rican Parrelel18.

Conclusion

The startup scene in Latin America has snowballed at a quite phenomenal rate in the last decade. The concepts being produced are more dynamic each year, and there are no signs of anything stopping this expansion.

One example of a particularly innovative project that is starting to gather momentum is Wizeline, a company which provides creative solutions and support to any tech development task that a client has, from web design to assisting with conversational interfaces.

The emergence of commercial alliances and the increasing investment programmes, backed by deep-pocketed businessmen and governments alike, is conclusive evidence that startups in Latin America are only just starting to come to the fore. Watch this space.

Shruti Gupta is a writer and digital marketing consultant at Rankmebest.com. She has a passion for technology, startups and other business topics. She lives and breathes digital marketing, and has contributed to a number of famous websites. Her aim is to spread her thought-provoking ideas to all generations.