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Cine Papaya, a Leader in the Latin American Ecosystem of Startups

Cine Papaya, a Leader in the Latin American Ecosystem of Startups

Posted by Juan Gavasa on September 24, 2014

Cine Papaya is one of the biggest news of the Startup ecosystem of Latin America. Founded in 2012 in Peru by Manuel Olguin, Inma Cañadas and Gary Urteaga, it is a platform that sells movie tickets online and through online devices. Its result during this period has been outstanding because they have achieve what every entrepreneur wants: find a solution to something society is asking for. They developed and app for iPhone, Android, Windows Phone, Windows 8, Smart TV, and they have experimented an exponential growth that took the total value of the company from 500 thousand dollars when it started to 7 million dollars nowadays.

Its product doesn’t have any limitations and thanks to the capital provided by a great investor it is ready to grow in the rest of Latin America, backed up by the amazing results it has had in Peru, and the success that even the owners of different cinemas have had. Gary Urteaga, one of the founders explains in this interview the key parts of the “Papaya phenomenon” and how they have managed to add so much value to their company in only two years when their idea was accepted by the accelerators Startup Chile and Wayra. Cine Papaya will be one of the participating companies in Latam Startup Conference, which will take place this weekend in Santiago de Chile. 

The actual team of Cine Papaya. The company has foreseen to grow up to 30 employees in 2015​.

How did Cine Papaya Start?

We started in 2011 trying to create an initial project with Holosens, a company that develops projects linked with IT. We managed to create a base to develop a prototype in the service of Video Streaming for Latin America; something like what Netflix does in Europe, for example. When we were developing the project we joined the Intel Challenge, Startup Chile and Wayra. We moved on through stages and we were chosen in 2011, which meant we were going to have funds for 2012.

When did the focus of the project change?

When Netflix and Telefonica announced that they would start giving their video streaming services to Latin America. This is when we realize this project doesn’t make any sense anymore because it can’t compete with those monsters. But by then we were already developing other ideas such as the creation of the portal in which we announced the movie listings with a rigorous constant update of times and movies. The creation of this website allowed us to create good contacts with the cinematographic industry and movie theaters. One of the main theater companies came to us and suggested the creation of a system of selling movie tickets online. This is how the final project started. 

Gary Urteaga with Steve Wozniak, co-founder of Apple. He was one of the first people to try the Cine Papaya App for the iPhone inside of Startup Chile.  

Is the market the one to say how much demand there is and make you choose your path?

It has been a combination. When we created the first prototype we had already launched the website with the movie listings, this was our MVP (Minimum Viable Product). Until then people had to look in the newspapers for the times of the movies and we realized a lot of this information was wrong because newspapers couldn’t adapt to last minute changes the movie theaters made. That’s why our service was so good and demanded from the first minute. And that’s how we started to get recognized, because there was a real opportunity in the market.

How has the growth of Cine Papaya been?

In 2012 we got 30,000 dollars of revenue; by the end of 2013 they were already 750,000 and we hope to reach the 1.5 million for 2014. We hope to reach 5 million in a relatively short amount of time thanks to our expansion to other countries such as Chile, Colombia, or Ecuador. When we started the project we were three founders and a developer. By the end of 2012 we already had 8 people; 14 in 2013 and 16 during this year. But our forecast is to have 30 in a short time. 

Receiving the award Challenge Intel in APEC, a prize for which they competed Pacific in hardware and software against startups from more than 23 countries of Asia of the Pacific. 

Was the search for initial capital to start the project hard?

We managed to get 40,000 dollars from Startup Chile and 50,000 from Wayra as an investment and we gave them 10% of our company. With this money we could hire our first workers and develop the apps. We never used this capital for marketing or publicity; it was only for contents, research and development. Until now we haven’t invested anything in promoting our company; this is something we will fix next year.

Which have been the main problems you have had?

The access to resources is the main issue; human resources with talent, good working skills, and compromise. It is not easy to find talent, well prepared, together with interest and will. Now, with all that is going on with entrepreneurs, every young person wants to be one, create their own companies. Finding talent and keeping it is hard and that is the reason why we have rotated so much in this time. The legal system for hiring is also a problem because it is not adapted for startups. Labour laws in Peru make any hiring, it doesn’t matter if it comes from a startup, very expensive. And then there is the access to financing, banks ask for guarantees and resources. There is not a corporate culture interested in investing in companies of technological advance, even though we are starting to see how angel investors are starting to appear with a certain interest, something we didn’t have three years ago. 

What do you expect from your participation at the Latam Startup Conference?

We are going to share experiences. We would like to get to know and inspire other entrepreneurs, keep learning, meet investors and make our perspective about the ecosystem of startups in Latin America grow in a key time for us because we are about to launch in Colombia and Brazil. 

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