5 Reasons Behind the Success of Latin American Startups in the U.S.
Latin America is a region known for its vast cultural diversity, with around 650 million inhabitants spread across 30 countries. These diverse attributes have catalyzed the development of various companies and startups that have gained worldwide recognition for their innovative business proposals and growth potential. This trend has been pivotal in driving the advancement of Latin American startups on the global stage.
According to the Global Entrepreneurship Monitor (GEM) 2023, Latin America exhibits the highest levels of entrepreneurial activity. In countries like Puerto Rico, Chile, Brazil, and Mexico, three out of ten people are starting and leading new businesses, with plans to employ at least six people in the next five years. Additionally, the Venture Capital Report in LATAM highlights that last year, 2.783 billion dollars were invested in companies across the region through 724 investment rounds, thus strengthening the Latin American startup ecosystem.
Internationalization of Latin American Startups
Solutions for Specific Problems
A key factor in the success of Latin American startups is their ability to offer solutions to specific, significant problems in the market. Alejandra Winter, Director of the Soft Landing program at Cambridge Innovation Center (CIC) explains that Latin startups often develop indispensable solutions rather than merely nice-to-have products. This approach ensures that their products and services are essential for customers, driving demand and adoption.
Growth Potential
Growth potential is another crucial aspect. Winter emphasizes that Latin American startups understand the importance of having clear strategies for the short, medium, and long term. It is not enough to have a good idea; it is essential to have a solid plan that guarantees future profitability and allows entrepreneurs to maintain control of their destiny.
Diverse and Visionary Teams
Latin American entrepreneurs are characterized by their diverse life experiences and exposure to various challenges, making them more resilient and persistent. This resilience translates into an entrepreneurial culture that knows how to overcome obstacles and seeks to establish itself both in local and international markets. Winter points out that these entrepreneurs understand the importance of making an impact in more developed countries.
Creativity and Bootstrapping
Creativity and the ability to start a business with limited resources, known as bootstrapping, are distinctive qualities of Latin American founders. Often, due to the lack of access to private capital, these entrepreneurs are forced to be more innovative and committed, using available resources efficiently. This ability contrasts significantly with other markets where access to capital is easier, and reliance on investment is greater.
Local Culture
A specific attribute that favors Chilean entrepreneurs is their pragmatism and efficiency in business. According to Winter, this characteristic allows them to adapt more quickly to new markets, such as the United States and Japan. The ability of Chileans to close deals directly and effectively accelerates their entry and consolidation in foreign markets.
The success of Latin American startups on the global stage is no accident. Their ability to solve specific problems, growth potential, team resilience, creativity, and resourcefulness are factors that make them stand out. Additionally, certain cultural characteristics, such as Chilean pragmatism, can facilitate their internationalization. With significant investment and growing entrepreneurial activity, the future of startups in Latin America promises to be bright and full of opportunities.