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Latin America could soon be the next big tech hub

Latin America could soon be the next big tech hub

Posted by PanamericanWorld on September 07, 2015

Business-friendly governments have helped cities all over Latin America emerge as attractive propositions for foreign investors. Mexico in particular has set itself apart as fruitful ground for entrepreneurs, with more than 100 incubators and 20 accelerators throughout the country.

Global seed fund and tech startup accelerator 500 Startups saw an opportunity early on and launched its Mexico-based investment platform, 500 Luchadores, in November 2012. The firm quickly became one of the most active in the region. This week – after 3 years of development in Latin America – 500 Luchadores announced that its first investment period has come to an end, with investments in 79 startups in the region through 5 cycles of its acceleration program.

The success of this fund bodes well for entrepreneurs in Latin America, because it won’t take long for other investors to explore emerging economies for their next big win. Now is a good time to reflect on what has happened, and what this might mean for the future of startups in Latin America.

What has 500 Luchadores achieved?

The results for 500 Luchadores have been overwhelmingly positive. Over a third of the portfolio companies are currently achieving month-over-month growth rates in the double digits. This is impressive, and reflects well on smart investment practices. It also highlights the fact that there is entrepreneurial activity outside the Silicon Valley bubble.

The 500 Startups mentoring team is comprised of industry leaders and successful entrepreneurs including David Weekly, Product Manager with Google; Ligaya Tichy, Marketing and Community with Yelp and AirBnB; and Elaine Wherry, founder of Google-acquired Meebo. As part of the accelerator program, many of these mentors have traveled to meet and collaborate with the entrepreneurs in-person, to offer support and industry expertise. It seems that this strategy has worked.

As testament to the continuing success of the 500 Luchadores portfolio companies, more than $20 million in follow-on capital has been raised from a number of funds in the region, including investments from Verizon Ventures, Axon Partners, and Angel Ventures Mexico, among others. Moreover, the portfolio startups collectively bill over $18 million and employ more than 500 people. These figures hint at a bright future.

Reflecting on the achievements of the venture, Dave McClure, Founding Partner of 500 Startups said, “A few years ago, we decided to take Latin America by surprise and base 500 Startups’ second accelerator in the region. Today we can say that it was an excellent decision, and the numbers speak for themselves.”

McClure said that the first cycle of investments was a learning experience and taught 500 Luchadores a lot about the Latin American startup scene. This helps build mutual understanding and will improve investor-startup relationships going forward. “We are a firm that doesn’t fear change, and we aren’t scared to admit that we’re a startup also. This is only just beginning,” McClure continued.

In addition, the success of 500 Luchadores proved that Mexico, and all of Latin America, is a hotbed for entrepreneurial talent and has an energy similar to Silicon Valley’s early days.

What does this say about the future?

Mexico has clearly emerged as leader in the Latin American entrepreneurial space. This is thanks to organizations like 500 Startups, but also to a proactive government. Mexico boasts free trade agreements with 45 countries and has the second largest economy in the region. Furthermore, the government has doubled down on efforts to promote entrepreneurship in the country with their kickstarter initiative, The National Institute for Entrepreneurs (INADEM).

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