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“Latin American startup ecosystem is 10-12 years behind India”

“Latin American startup ecosystem is 10-12 years behind India”

Posted by PanamericanWorld on July 09, 2015

A lot has been written about startup ecosystems across Asia, US and Europe. However, there are few markets that are begging for attention from global VC and startup communities.

Latin America is one such market where lots of interesting startup activities are taking place. These are mainly centred around Brazil and Chile (Indian startups such as Zomato and TableGrabber are also doing business there). Although still in its infancy, Brazil and Chile have huge growth potential, with respective governments now starting support programmes for startups.

e27 spoke to Antonio Ventura, a Brazilian entrepreneur who has been closely watching the startup space in his country, and Pawan Marwaha, Co-founder of TableGrabber, an online table reservation startup with operations in Santiago (Chile) and India, to know more about their respective startup ecosystems.

Here are the edited excerpts:

On entrepreneurship and market…

Ventura: Brazilians are one of the most creative people in the world. This is because of the diversity in culture and languages. We have so many cultures living together in Brazil and ideas merge so easily. Although there are good support programmes in Brazil, startups still don’t have adequate knowledge when it comes to building a business.

Many startups here have raised money from angels/VCs, but they lack the knowledge to execute their ideas properly. They often take the wrong path and lose all the money they raised, and then they give up. They are not even ready to give it a second chance or pivot the product if necessary.

Marwaha: The local market in Chile is very small. As a result, most of the startups are building products for Latin America or US markets. This is not the ideal situation as they are quite cut-off from their customers and competition, making it hard to iterate rapidly.

Startup Chile (a government-run accelerator) has been able to create a dynamic startup ecosystem in a very short duration. Yet, the total number of local startups are very few, but they are growing. As compared to India, they are probably 10-12 years behind. So they are where India was in early 2000s.

On poster boys…

Ventura: In Brazil, there are lots of startups with great potential. They include ZeroPaper (a financial management portal for business which recently got acquired by Intuit), LoteBox (a maritime shipping sales software startup), CabenaMala (a collaborative delivery site that connects travellers with extra space in their baggages with people who want to export products from other countries), Contabilizei (a cloud-based accounting startup), and PortalArp (it helps government buy products from distributors).

There is also a great exit to our credit. South African media and Internet giant Naspers bought 91 per cent stake in Buscape, a price comparison startup, for US$342 million.

Marwaha: In Chile, there are no big poster boys/girls who have rapidly created high valuation startups. While Chile has attracted a lot of international startups and created a nice ecosystem, it hasn’t been able to retain startups or create any big success stories.

India is certainly a decade ahead and the market conditions and potential in the country is far more than Latin America combined together, making it the top startup destination after the US, UK and Israel.

On the investment scene…

Ventura: There are some prominent investors in the country like Joao Kepler who has invested in over 30 companies already. The country also has an angel investor association called Anjos do Brazil. As a matter of fact, there were some good VC investors in the country two-three years ago. But they have now left the country for some reasons. Although, there are still some investors left, there are not many.

Marwaha: Angel funding is negligible and is not necessarily the smart money which can open doors to new customers or subsequent rounds. And VC money is almost unheard of. I would say it is in a similar phase like India 12 years ago, where VC funding was not common.

On government support…

Ventura: In my opinion, the government is not doing enough to improve the startup ecosystem in Brazil. Although there are some startup programmes such as Startup Brazil, there are not many funds to back innovative startups. Minas Gerais, a State of Brazil, recently closed a seed initiative called ‘Seed Minas’. This programme used to offer seed money to startups.

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