Growing a career
Photo courtesy of El Anacoreta
The idea of formal entrepreneurship is a relatively new concept to South and Central America.
Businesses have, of course, started up organically in countries such as Argentina, Chile, Brazil and Mexico before, but it is only in the last 15 years that entrepreneurship has been formally recognised and cultivated.
In that space of time, significant gains have been made. Success stories such as Officenet (an Argentinean office supply retailer) and Mercado Libre (the South American equivalent of eBay) are testimony to this.
The vast potential of the opportunities available continually attract new start-ups in areas such as ecommerce and services that cater to the rising middle class population.
But barriers still remain. Entrepreneurs in the region especially struggle with financing and lack mentors or inspirational role models.
Entrepreneurial enterprises are springing up to cater to Latin America’s growing internet savvy, affluent population. This includes the expected areas such as casual dining and ecommerce retail platforms, says David Wachtel, senior vice president for marketing and communications at Endeavor Global, a private entrepreneurial initiative.
For example there are PedidosYa, a multi-national online food delivery service, Restorando a multi-national online restaurant reservation service and Buscalibre, a Chilean online book retailer.
But it also includes some more unusual service businesses, he adds. “Internet use is expected to grow by around 50% over the next five years but access to international credit cards – the kind required for online transactions – is nowhere near that. This means that some very interesting online payment platforms are emerging to cater to this.”
This includes companies such as AstroPay in Uruguay as well as PagosOnline and Conexred in Columbia, he says.
There is also significant expansion in specialist service businesses. For example, there are new companies growing to serve copper mining in Chile. “These firms have world class ideas and could easily grow beyond Chile to become world-leaders in the industry,” he adds.
Entrepreneurs have achieved remarkable successes in a short space of time. 15 years ago, Endeavor helped to set up a tech hub in Argentina that has grown to be worth approximately $1bn (£65m) and employ 80,000 people.
The same can be seen in Mexico. “Entrepreneurship in Mexico has always been thriving, but it mainly produced an informal economy,” says Jose Neif, commercial councillor for Pro-Mexico, a Mexican government institution formed to strengthen the country’s participation in the international economy.
“It was just recently when the government started a reform and tax simplification process that entrepreneurship started to be included in the formal economy, started to have access to credit as well as other financial sector services and started to be measured properly,” he adds.
The Mexican government has started to encourage business incubators, business accelerators and credit to the start-ups. It is encouraging service and goods suppliers to do business with smaller, new firms and has established programmes at the main development banks – Nafin and Bancomext – to support new entrepreneurs, Neif says.
In order to keep the forward momentum going, private institutions, such as Endeavor, and governments, such as those of Mexico and Chile, with its Start-Up Chile, programme need to create a generation of home-grown role models to inspire future entrepreneurs and help the current ones access finance as well as deal with personnel issues.
“People are aware of the story of Steve Jobs or Bill Gates but that does not resonate,” says Wachtel. “But if you hear the story of an Argentine or Mexican who manages to become really successful or sell a great business, that’s really inspirational.”
Meanwhile the current generation is still reliant on friends and family for financing, says Neif.
Creating government help, getting banks to start lending and forming venture capital can help to secure entrepreneurs at the critical infliction point – where new start-ups either grow rapidly or fail, says Wachtel. There are signs that this is starting to happen.
For example, Kaszek Ventures is a venture capital firm set up by two former Endeavor entrepreneurs. It is now providing financing to start-ups in the region.
If entrepreneurship can continue to grow throughout South and central America, it will create opportunities for investment and help foreign businesses coming into the market.
“Entrepreneurship will help to provide innovation in the supply chain is one for sure, but also innovation in products, human resources management and outsourcing in general, production flexibility, access to new technologies and development of software to name a few,” says Neif.
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