Start-ups in Latin America are tackling the world’s most pressing problems that affect these markets the most, from access to education to financial inclusion. As the LatAm market continues to churn creative solutions to global issues, the biggest barrier to these start-ups scaling up is limited funding and business support. That said, start-up investments are on the rise in the region. There’s now more capital available to start-ups than ever before, whether through venture capital or accelerator support.
Investors had closed deals worth $2.3 billion in the last five years, according to the Latin American Venture Capital Association (LAVCA). However, most of this support is funnelled into two countries; Brazil and Mexico. For LatAm start-ups in other parts of the region, options are limited.
This is where Sandra Sinicco comes in. The Brazilian native started a business in London almost eight years ago when she realised that there was a huge disconnect between Europe and Latin America. “Talking to business development professionals and investors, I realised that Latin America is a secret box for them. Either they’re unaware of the opportunities LatAm start-ups present, or they are unsure where to even begin,” she tells GrowthBusiness.
For Sinicco, business is all about making the right connections at the right time. She came up with an awards programme connecting LatAm businesses with UK business experts, the LatAm Edge Awards to form a bridge between these two markets. This inherently breaks down stereotypes and myths that may be holding back a lot of mutually beneficial relationships.
“The LatAm start-up ecosystem isn’t mature yet, but there’s a lot of energy, creativity and innovation. The LatAm Edge Awards is a way for the most ambitious start-ups in 10 countries in Latin America to break into the UK. London is the ultimate connection for these businesses. Once they’re operating in London, the rest of Europe and Asia are natural options.”
But what are some of the myths holding UK investors and even businesses back from looking westward to Latin America?
“To start with, in Latin America, there’s still the perception that London is the ‘last frontier’ for business. These start-ups think that London is the ultimate place to do business, with a different level of sophistication, organisation and competition. They feel it’s tough to enter the market, and they don’t know how to even start,” Sinicco says.
The LatAm Edge Awards programme gives applicants the opportunity to experience this ‘last frontier’ first hand. It starts with an online application process that takes two to three weeks to complete. “It’s a lengthy questionnaire that tests the ambition and foresight of these entrepreneurs. They’ll need to answer in English and make sure they are clear and structured when talking about their business. This isn’t what most of them are used to,” she adds.
According to Sinicco, most entrepreneurs in these markets are used to thriving in chaos. Starting up a business when the socio-economic infrastructure is always in flux forces them to think on their feet, be creative and agile. “At the same time, the way they do business is chaotic, from a British perspective,” Sinicco explains. This is why British investors, businesses, and advisors need to address their own misconceptions.
What the Brits may see as chaos is actually fertile ground for innovation. What LatAm start-ups may see as excessively structured is actually the organisation, risk modelling and preparation these businesses need to thrive in the UK and beyond.
The awards programme is for mid-stage companies that are already profitable and looking to expand. This year, Sinicco had to whittle down 60 applications from companies with over $1 million in revenue or investment, to the top six finalists.
This year, the highest number of registered companies are from Brazil, Mexico, Chile and Peru.
The winner will be awarded a prize worth over £100,000 and will arrive in London with a support network designed to help the company establish itself in little time. The prize includes two hot desks at the WeWork co-working office, as well as a host of service support to help the winning company set up their business in the UK. These include accountancy services from Blick Rothenberg, legal support by law firm Joelson, new business development in the UK by Trade Horizons, marketing and PR from GrupoCASAUK, digital campaigns by Eydos Digital, coaching from Sapovalova Coaching and market research by Talent Capital.
The finalists include DP6, a digital analytics and data science company; Ominic, a provider of customised omni channel solutions and services in e-commerce; Round Pegs, a digital consulting company; Strider Agro, a farming company in the agriculture industry; ERN Resilios APP, specialised in natural risk assessment; and Softtek, an IT services and business process solutions company.
ERN is on disrupting what co-leader Marco Antonio Ahedo Azuara calls the “catastrophic insurance industry in Mexico and Latin America”. ERN has partnered with Resilos to build out parametric products for advance modelling as part of insurance products available in the market.
ERN essentially provides a very precise assessment of the extent of damage after a natural disaster. “We focus on deductibles and exclusion coverages for small to medium-size companies and micro-insurance for low-income households,” Azuara says.
“Our platform allows the underwriting, monitoring, and processing of claims, which means that all participants in an insurance contract (insured, insurer, and reinsurer) can see the risk form the same perspective, resulting in reduced frictions on the underwriting process. Importantly, it provides access to affordable and adaptable insurance schemes for a part of the population that don’t currently have access to products that fulfil their needs.”
Because of its affordability and the timeliness in the payment of the claims, Azuara believes that ERN is on the fast-track to close the insurance gap in Mexico and subsequently in Latin America.”We see the awards as the perfect opportunity to bring a pioneering unique innovative financial solution to the UK insurance market,” he adds.
“We identified an issue that has not yet been addressed in the industry and we feel that the expansion to London is key to the success of our business for two reasons. (Firstly) the UK government is one of the main advocates of insurance solutions to reduce poverty and increase the resilience around the world. (Secondly) London is one of the biggest insurance and reinsurance hubs in the world and a leading point of insurance innovation and bringing reinsurance capacity for our clients is a key aspect of our business model.”
DP6 is a digital marketing consultancy, ready to expand to new markets, according to CEO Thiago Turini.
“Our services help companies reach a data-driven model that enables more accurate results on their digital marketing efforts. Working side-by-side with their marketing agencies and business stakeholders, we are the unbiased perspective they need to take their digital to the next level,” he says.
“Being part of LatAm Edge as a finalist demonstrates that DP6 is prepared to bring its innovation to new markets. We are proud to be recognised as one of the best candidates to explore new challenges and frontiers by LatAm Edge Awards.”
Softtek is a Mexican IT service provider. According to the company’s spokesperson, senior business development manager, Astrid Arizpe, Softtek pioneered the ‘nearshoring’ model that is now used all over the world “(We coined) the term by developing a unique cultural platform that focuses on the human element,” she says.
“We are proud to say that we have over 400 clients of which 74 are in the Global Fortune 500. We are delivering services from several locations, mainly in the LatAm region, where the company has been named as a ‘great place to work’ by several countries including: Argentina, Brazil, Mexico and Colombia.”
Softtek is also committed to social responsibility, according to Arizpe. “We understand the role and responsibilities that we have within our communities, both towards our employees and the environment. We have dedicated departments to ensure that this role is being fulfilled and that we comply with the highest standards,” she adds.
Softtek was founded in 1982 and has been steadily growing over the years to service the Americas and Spain. “We are truly honoured and happy to be able to participate as finalist. We are proud to be a Latin company, and we are thrilled to be considered for this award. For us this is more than an award, this marks the beginning of an amazing opportunity that could very well be the means to achieve our goal of expanding our business into the UK.”
“We have a huge challenge ahead of us. At Softek, we have an entrepreneurial spirit, which is the essence of our company success, and penetrating the UK is one of those endeavours that start as an idea, a dream and now could potentially be coming full circle. LatAm Edge Awards is giving us exposure and momentum to materialise this idea and for that we are really grateful. Hopefully our circle will be complete on Wednesday evening and our dream, ends up a reality.”
Round Pegs is a white label, scalable business platform. According to CEO Pedro Donati, Round Pegs essentially helps business become digital. “We specialise in designing, building and scaling platform business model start-ups, funded by enterprises, and leveraging its assets to trigger a network effect,” he tells GrowthBusiness. “In our first year of operations, we validated our business model and value proofed our framework. Since then, we have enabled four new digital businesses for enterprises, which adds up to over $30 million non-profit value.”
Round Pegs is expected to turn over of $2.5 million by the end of 2017. Clients include The gravity centre of entrepreneurship in Brazil, the largest Latin American medical diagnostic company and the largest bank in Latin America. “Now it’s time to offer our white label framework to the global market,” Donati adds. “The LatAm Edge means a great opportunity to network, meet new investors and partner, and plan the start of our operations in Europe.”