As the international economy recovers, the Latin American startup culture follows suit with an economic boom. Technology is becoming more readily available allowing ventures to be empowered autonomously. Also, features such as government initiatives encouraging entrepreneurship, or the general attractiveness of the startup culture is adding momentum. As mentioned by trendwatching.com in this report, both consumers and entrepreneurs are moving away from government associated jobs and services. At the same time governments in South and Central America are encouraging entrepreneurial growth.
Recently tech startups around the globe and in South and Central America have started to receive an almost-celebrity status as “65% of Brazilians aged 18 – 32 said they intend to start a business, against a global average of 48%.” Chile, Brazil and Mexico have already been credited with their efforts in becoming entrepreneurial hubs in Latin America via Silicon Valley-inspired government efforts and regulations.
Moving away from government bureaucracy
Examples of these startups curbed by current South and Central American trends include PagPop who was inspired by US-based startup, Square. It’s an e-payment company that was launched last year March — together with their app and a card reader users can receive credit card payments without having to go through the red tape.
Neosite together with other South and Central American collaborations, including the most recent Santander bank in Chile, give essential tools to help small businesses grow in today’s competitive digital marketing environment. The website creation platform is offered for free to bank members who want to promote and sell products and services online. This shows how initiatives are encouraging other ventures through creating and using their websites.
Direct selling and p2p encouraged startups
GenStok allows anyone to open an online store. By acting as the third-party link between sellers and suppliers this venture is commission-based. Users choose their products, GenStok finds the suppliers and together with a subscription fee, takes care of the web-hosting and logistics. Another strong element contributing to the nature of this environment is the fact that South and Central America is the world’s second biggest market for direct selling. Last year, more than 1.2-million direct sellers were recorded in Venezuela.
In order to cut through the red tape and increase transparency, ventures are starting to steer toward informal and innovative solutions to gain venture capital. “Juntos” in Spanish or coming together through common interests also plays a big role. The internet enables people of the informal economy to seek opportunities through peer-to-peer networking or crowdfunding. An estimated half of the economy’s people earn their income via informal jobs and find it difficult to gain access to traditional means of financing.
Using p2p financing and lower interest rates than those offered by banks, Cumplo offers loans to small businesses in Chile. Inspired by America’s Prosper.com, Cumplo attracted legal action from major banks in Chile claiming its practices are undermining government regulations.
ASAP.me or (As Sustainable As Possible) aims to crowdsource ideas in order to brand, manufacture and engineer sustainable products. It uses the community to post ‘challenges’ and rewards users with ‘influence’ points and royalties on sales.
Idea.me who is in Mexico, Uruguay, Brazil, Argentina and Chile is a crowdfunding commission-based platform that encourages entrepreneurs even if they don’t reach their final funding goal.
Economic factors and governments’ thumbs-up
Together with the current prosperity that some South and Central American countries have achieved, inequality remains high and thus education too, remains much in demand. Brazil for example, that has been one of the countries with the largest inequality gap, has been making headway during the last decade as the number of Brazilians “graduating from university has increased by 100% in 10 years.” Startups contributing to this education gap include Vivo , a text-messaging language learning programme for Spanish users and Qranio (created by Vivo) — the startup uses virtual currency and badges to encourage users to take part in furthering their general knowledge by answering questions. Credit earned can be used to buy books, clothes or DVDs for example where a paid subscription rewards users with double credits.
Government thumbs-up and hands-off approach is furthered by the new jobs these ventures bring as well as investments. Partnerships and initiatives such as Cumplo or Neosite encourage entrepreneurial growth by offering more affordable services essential to startups. It’s much easier for people now to get their own businesses on track. Concepts such as peer-to-peer financing shows us how entrepreneurs are participating and collaborating while at the same time being driven by autonomy as opposed to government-related job environments or stagnating bureaucracies.