4 ways to ensure that Latin America’s growing capital drives long-term growth – TechCrunch


Business is booming in Latin America: startups on the rise $ 9.3 billion in the first six months of 2021, and the region produced a registration number of unicorns, including Nubank, Rappi and iFood. The growth has also caught the attention and pockets of foreign investors, with SoftBank announcing its Latin America Fund II, committing $ 3 billion to tech companies there.

As Latin America shines the spotlight on startups, actors must think about how the growth of their startup can translate into autonomous economic and social development in all areas.

Investment dollars go way beyond business: in the United States, venture capital investment accounts for 0.2% of GDP, while the revenues of companies financed by VC represent 21%. The more funds contribute to GDP, the more potential there is to fuel a new era of development, where more people have access to jobs, wealth and education. However, this scenario will only be possible if Latin America prepares for it. now, starting with the following areas.

Businesses partnering with schools can incubate the next generation of talent

Latin American companies may have financial capital, but now they must hire senior managers and technical positions as they evolve and seek to create products more efficiently. But Latin America has the greater skills gap in the world, with more than seven out of ten companies saying they are having difficulty finding workers with the right skills.

With so many companies raising large funds in a short period of time, the competition for a large supply of high quality workers is fierce.

AI companies gained attention in Latin America last year, raising a total of $ 862.6 million. However, most AI programs and materials are written in English, in which Latin America has a 56% skill rate.

This means that at present, AI cannot be developed and exploited to its full potential in the region. In response, governments should promote bilingual policies in schools and businesses, providing more funding and hiring support for courses like English for IT Professionals.

There must also be closer collaboration between educational institutions and businesses in Latin America when it comes to upgrading the skills of individuals. This could take the form of courses, mentorships or work experiences, or dedicated schools such as SoftBank Operator school, where a selection of companies from SoftBank’s portfolio and network teach technical skills.

In fact, we are already seeing similar initiatives in Puerto Rico, where the Parallel18 accelerator has in partnership with NASA to provide startups with access to space agency technology and the ability to market their products through it. In addition, Parallel18 published a talent app for freelancers, students and professionals to find and apply to work with local international startups. If platforms like this can be extended across Latin America, they will be a springboard for skilled talent to join and fuel the region’s growth.

Technological infrastructure can create innovation hubs beyond capitals

Despite the revolution at a distance, less than 50% Latin America has fixed broadband – and the majority of people who have access are concentrated in capital cities.

According to the Inter-American Development Bank, over the next 10 years, digitized utilities alone could boost 5.7 percentage points GDP growth in Latin America, or $ 325 billion in revenue. Imagine the impact on GDP if companies also invested in improving digital inclusion: Consumers could access goods and services online, and more people could create 100% digital businesses.

Although the governments of Argentina, Colombia and Uruguay are do tests For 5G networks to accelerate connectivity services, rural governments need more resources and support to get the infrastructure and expertise to expand internet access. This means cultivating more public-private partnership opportunities that can spur innovation in the most underserved places.

Giving local people more opportunities to start small businesses online would stimulate new sources of income to support their families and communities. It would also facilitate distance learning, digital cash transfers, telemedicine and other fundamental aspects of life that have moved to virtual spaces. More people could form or join online advocacy groups, providing under-represented populations a platform to make their voices heard. The overall improvement in quality of life that comes with connectivity means freeing up time and resources to enable people to innovate and create.

Digital inclusion also allows businesses and governments to introduce coding schools in all countries. By teaching critical tech skills away from cities, nations can tap into untapped talent and foster local growth of smart tech solutions. Traditional rural industries like agriculture, for example, have a lot to gain from better knowledge of AI, which could optimize crop quality and precision.

Governments should lubricate the path of internationalization

Latin America is home to 33 countries, each with their own entry requirements and business laws, which means companies are struggling to expand beyond their home markets. This barrier to internationalization makes it difficult for companies to get the strength they need to even consider an IPO.

One possible solution is for Latin American governments to work together and introduce an open passport for entrepreneurs, allowing individuals greater flexibility to start and operate businesses across Latin America.

Governments can learn from African Union passport, which would allow frictionless travel between 55 countries. In Latin America, such a passport could facilitate the formation of international teams and create a more cohesive global ecosystem. More importantly, it could allow startups to go international from day one and potentially move to other continents.

Barriers to corporate IPOs must be lowered

Latin American companies have historically constituted only a small fraction of the listed companies on the stock exchanges. With few companies leading the charge towards IPOs, Latin American entrepreneurs have had little precedent to understand and complete the process.

However, in June, the Uruguayan fintech dLocal spear its initial public offering on the Nasdaq. This recent spark could have a domino effect with other companies and prompt governments to lubricate their course by lowering barriers to going public.

Likewise, government-run entities have the option of preparing companies for an IPO. For example, Start-Up Chile, the public accelerator launched by the Chilean government, facilitated 42 outings in eight years, including Cabify and Glamit. These types of organizations might have specialized departments for public offerings, assisting companies with steps such as choosing an investment bank, regulatory filings, pricing, after-sales stabilization, and transitioning to investment banking. competition in the market.

With more resources backed by the government and focused on IPOs, more entrepreneurs would have the knowledge and confidence to take the public plunge.

The flow of capital from Latin America can mean big things in the long run, but not if governments and businesses don’t distribute it to the people, infrastructure and technology that will make and maintain the progress. This will turn the recent investment boom in the region from a temporary windfall into an engine of real social and economic change.

The author is the former executive director of parallel18.

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