Starting Up in Buenos Aires: A Tale of One City, Two Expats

For many entrepreneurs, the question of where to start up is equally as important as what to do – or it at least comes close. And though Silicon Valley is the go-to answer for many, it’s not the case for all. Latin America has become an increasingly viable option for entrepreneurs, including Argentina.

Such is the case for Withers Davis, Director of Uplifted and Founder of Buenos Aires Delivery, and Eric Northam, Founder and CEO of EasyBroker. I recently got the chance to speak with both Davis and Northam about their experiences as expat entrepreneurs in Buenos Aires, Argentina’s capital.

Withers Davis: The Expat Advantage

Prior to landing in Buenos Aires in 2009, Davis worked at Accenture and Harris Corporation in the United States. At the end of 2008, he decided to leave behind his job and join a friend with an idea for a startup. Unfortunately, the two launched their product just as the financial crisis hit, and most of their funding pledges disappeared. Given the situation, Davis, who had traveled to Buenos Aires previously, made the decision to try to make the company work there.

As to the thought process behind landing in Argentina, Davis explained that the nation is known for graphic design and development talent that is high-quality and affordable. Moreover, he noted the country’s time zone, which is closely aligned with that of the U.S., as a draw for client communications.

After moving to Buenos Aires, Davis’ initial project went under in five months. Instead of cutting his losses and heading back to the U.S., he decided to stay and give it a go, using his professional background, design know-how and startup experience to start building websites for U.S.-based clients – a project that eventually became Uplifted. At Uplifted, Davis and his team help startups to build applications and define strategies, leveraging their experiences to help others. Davis explained, “A lot of people assume that an idea in itself will make a website succeed, but a lot happens post-launch.”

Though Uplifted has been quite successful, Davis, at least in the Buenos Aires community, is best known for Buenos Aires Delivery, a local version of With Buenos Aires Delivery, Davis has capitalized on Buenos Aires’ extensive expat community and a common problem faced by foreigners living in the city: Placing food orders by telephone, when one is not a great Spanish speaker, is hard.

In 2009, Davis decided to create a solution for the problem. Employing the lean startup method, he bought a website domain, put 20 local delivery menus online, and let the site sit to see what would happen. Little by little, Buenos Aires delivery gained traction, and today, it receives over 7,000 orders per month. Davis attributes much of the company’s fast growth to what he referred to as the “Gringo niche” but also recognizes that the website’s popularity among expats has been vital in its spread to Argentine users as well.

Though Davis has managed to build two stable and profitable businesses in Buenos Aires, he acknowledged that the lay of the land is by no means easy going, especially when it comes to funding. Right now, Buenos Aires Delivery is in a solid position, and the local delivery market is huge. However, in the eyes of VCs and investors, its location poses a big problem. Because of regulations, barriers and the recent currency clampdown, most investors are extremely hesitant to inject funds into Argentina-based businesses. Risk mitigation plays an essential role in investment decisions, and at the moment, the risk posed by Argentina is simply too high.

Davis described the current situation in the country as both a curse and a blessing. The crackdown on foreign currency has placed those in possession of or earning in dollars and euros in a unique position of power in terms of economic reach. And with top-notch developers and a solid labor market, Argentina still, in Davis’ eyes, represents a strong opportunity for expats interested in starting up abroad.

Eric Northam: Argentina About Forgiveness, Not Permission

Northam founded EasyBroker, a CRM and marketing tool for the real estate sector, in 2007. After traveling to 26 countries in Eastern Europe, Southeast Asia and Latin America, he chose Buenos Aires as the center for his operations. The city felt like a great place to live and, at the time, was more economically-friendly than other locales.

Northam’s experience in setting up a business in Argentina was something that, while perhaps not surprising for those familiar with the country, may come as quite a shock for those from abroad accustomed to doing things by the book. He explained, “Argentina is a place where you should ask for forgiveness, not permission.”

Following the advice of fellow entrepreneurs, local lawyers and accountants, Northam never set up an official business in Argentina. While Argentine authorities tend to be quite forgiving when one does things wrong, they make it a painful experience to do things right. In other words, flying under the radar, especially when one’s market is not local, is the road most traveled.

During his time in Argentina, Northam watched the entrepreneurial community explode and grow exponentially out of a near non-existence in 2007. He said that many expats who want to stay in Argentina choose the entrepreneurial route because it is the most viable way of making enough money to live comfortably. Most Buenos Aires expats aren’t looking to create the next Microsoft – they’re trying to make enough money to enjoy life and live well.

After a few years in Argentina and watching his product evolve, Northam noted an important opportunity elsewhere in Latin America: Mexico. As EasyBroker was developing traction in the country, and in recognition of the political and economic troubles in Argentina, the decision was made to pick up and take off to a new Latin American locale.

Northam described Mexico as a strong market with a growing and stable economy that has been largely overlooked over the last few years. Because of the country’s relatively open trade policies, Mexicans can access goods and electronics at more affordable prices than most Latin Americans. Consumers are accustomed to electronic payment, and technology penetration is quite high. Mexicans have a good amount of buying power, and the country’s population is large enough to serve as a principal market.

While the Argentine entrepreneurial community is enthusiastic, Northam said that the current economic and political climate has rendered doing business in the country next to impossible. Like Davis, he expressed the sentiment that no one wants to invest in Argentina.

The Value of Community

For local and expat entrepreneurs alike, Buenos Aires is not the easiest place to be at the moment. However, both Northam and Davis commended the city for the important assets it does possess. The value of Buenos Aires as a startup hub has nothing to do with politics or economics but instead with the smart, creative and driven entrepreneurs and developers who make up its vibrant startup community.