Red Innova NY Panel: Challenges & Opportunities in Latin America

This morning’s Red Innova New York programming included a thought-provoking discussion panel on challenges and opportunities in Latin America. Moderated by PALcapital CEO James Haft, the panel was composed of Patrick McGinnis (Managing Partner, Dirigo Advisors), Demian M. Bellumio (COO, Senzari) and Mathieu Nouzareth (CEO and Founder, FreshPlanet).

Panel participants expressed a wide range of opinions and attitudes regarding the ups and downs of Latin America as a tech hub. Here are a few things we picked up:

Easier Now than Ever

McGinnis pointed out that 10 years ago, launching a startup was a high-cost affair. Entrepreneurs would spend millions of dollars setting up offices in cities like Miami, Mexico City and São Paulo, placing their bets on the mere hope that their ideas would work. Today, however, there is a seed ecosystem that renders the project of building a product a much less expensive undertaking. Programs like Start-Up Chile and iNNpulsa are important in driving Latin America’s startup ecosystem forward.

Investments No Easy Feat

Garnering investment is often essential for growth; however, it’s not always the easiest task at hand. The angel community is not prepared to take on the level of risk implied by technology companies, and entrepreneurs aren’t always great at getting through to potential investors with their stories. There is a misconception that it is easiest to get investments from the United States, but many American VCs are hesitant about sending their money so far away. The conclusion? The best money often comes from local organizations and successful Latin American entrepreneurs looking to give back to the ecosystem.

Building a Business is Hard

All panel participants acknowledged that doing business in Latin America can prove extremely challenging. Nouzareth proposed a global approach as a way to combat regional difficulties, making sure to build a product with other countries in mind even if an entrepreneur understands local culture better. He highlighted the roadblocks to setting up in Brazil and ways to get around them.

High Valuations Not Always Best

Many startups place a high amount of clout on valuation; however, this can be risky. Businesses in Argentina and Brazil often receive very high valuations that end up being detrimental in fostering unrealistic expectations. Furthermore, while seed investment in Latin America is not hard to come by, Series A and Series B rounds are much more challenging (outside of Brazil).