Argentina is the Latin America’s most global tech hub
Argentina is the Latin America’s most global tech hub
Including Mexico and Brazil, Argentina is one of just three Latin American countries in the G20 and its startup ecosystem is promising. With a new government in place, the country is investing in venture funds and creating new legislation to make it easier to start and invest in companies. The startup scene continues to grow, with a new generation of companies on the move. This includes Y-Combinator backed Bluesmart, satellite startup Satellogic, which raised $27M in funding earlier this year, online marketplace Agrofy, “identity-as-a-service” company Auth0, and crowdfunding platform Crowdium.
Argentina’s economic history has trained its population to be resourceful in the face of adversity, and today there are a number of success stories within Bitcoin and Fintech that reflect this. Take Affluenta, a peer to peer lending platform that raised $8 million last year. AgTech is also going well with startup Rootstock among others.
Much of the strength of Argentina relies on the human capital of its population. Historically the most successful companies in Latin America came from Argentina, and they were the most effective at targeting international markets.
As told to us in person many times, the culture of Argentina’s startup ecosystem is changing. Lisa Besserman, founder at Startup Buenos Aires, explained that earlier there was much less collaboration. However, the culture has shifted.
The successes of businesses like MercadoLibre, Digital Ventures, and OLX give Argentina a better track record over other regional startup hubs – chiefly Santiago of Chile and Bogotá of Colombia – but this is still a relatively risky place to invest. For this reason, President Mauricio Macri is working to address concerns about inflation and economic uncertainty. The hosting of WEF Latin America in Buenos Aires, and Argentina’s chairing of the G20 next year, are all helping to make people more optimistic for the future.
Argentina’s startup ecosystem goes back much further than many in Latin America. After almost a decade of recovery following a catastrophic economic shock, startups arrived in 1999 in the form of e-commerce platform MercadoLibre. Arguably Argentina’s most famous success story, MercadoLibre was founded by duo Hernán Kazah and Marcos Galperin. The platform functions as a market that connects buyers with sellers, and has subsequently spread across swathes of Latin America. Both Kazah and Galperin have become prominent investors and mentors within a now established tech community.
MercadoLibre launched in ‘99, but it wasn’t until 10 years later, in 2009, that AreaTres – the first co-working space of its kind in Buenos Aires – launched. In the last eight years, the co-working venture has expanded and become a hub for entrepreneurship. The space’s launch was followed in quick succession by NXTP Labs and Kaszek Ventures, both in 2011. NXTP Labs, which was founded by Ariel Arrieta, Gonzalo Costa, Marta Cruz and Francisco Coronel, is today the most active early-stage fund for tech companies in Latin America and has locations in Colombia, Mexico and Uruguay. Kazak Ventures – launched by MercadoLibre’s Kazah and Galperin – has grown to become the leading LatAm venture capital firm.
Since that time, there has been something of an explosion in Argentina’s startup ecosystem, with each new year bringing bigger and bigger players into the fray. In 2012, Quasar Ventures – an organization that builds businesses from scratch – was founded. Quasar picks an industry, then builds a team and guides them through to successful execution. One year later, in 2013, Startup Buenos Aires, a community-led organization that inspires startups and entrepreneurship in the city, as well as further afield, was founded. In 2011, Wayra, the global accelerator from Telefonica with a presence in 12 countries, opened its first office in Argentina.
In 2015, Buenos Aires’ city government got involved, creating Academia Buenos Aires Emprende, an initiative to educate citizens about enterprise and business building. Also in 2015, ecommerce startup Avenida raised $30 million in Series C funding led by Naspers, with participation from Tiger Global.
From 1999 to 2017, progress has been a hard road for Argentina, but the country’s startup ecosystem is truly starting to flourish. This year the country passed its Ley de Emprendedores, supported by the Association of Entrepreneurs in Argentina (ASEA) and Argentina Association of Private Equity, Venture and Seed Capital (ARCAP), to better promote entrepreneurship in the country. The law provides tax incentives, a fast track for company registration, support for accelerators, and public funds to co-invest with private investors in order to promote projects. NXTP Labs Co-Founder Marta Cruz outlined the new law here.
The Buenos Aires region is the largest in Argentina, with over 3M inhabitants, and much of the economic activity occurs here. According to those we spoke to in Argentina, 90 percent of all startup activity in the country is based in Buenos Aires. The city and surrounding province is filled with highly educated talent. Argentina is a net exporter of developers and, when compared to neighboring Santiago in Chile, Buenos Aires has a better track record when it comes to success stories. This is doubly impressive as Argentina does not have access to the type of government-backed funding that is present in Chile, such as Start-Up Chile, a publicly funded accelerator that gives startups equity free funding.
Buenos Aires is famed across Latin America for its high level of education and talent. Some even say it is without parallel in the region. The aforementioned hard economic times have cultivated an ingenuity and perseverance – as well as the concept of side hustles – that lends itself well to entrepreneurship. This is evidenced by the strong ecosystem of bitcoin entrepreneurs and founders in the city, which has thrived due in part to the country’s currency issues.
AreaTres, a center of entrepreneurship in the city, is one of the largest co-working spaces in Latin America and includes over 220 members and more than 65 companies. It is led by Martin Frankel and it recently announced a partnership with Google for Entrepreneurs.
Another center in the city is Startup Buenos Aires, founded by Lisa Besserman. Besserman’s Startup Buenos Aires co-hosted the first startup week with the government and now hosts regular events and even created a global outsourcing hub out of Startup Buenos Aires.
Palermo, a popular neighborhood in the city, is known for its startup activity and for being host to Palermo Valley. As TNW’s Anna Heim wrote, “The term “Palermo Valley” was coined as a joke: Palermo is a neighborhood in Buenos Aires where many tech companies are based, although many are also based elsewhere in the city. More than a specific place, it refers to the very successful networking community created 4 years ago. At the time it was launched, there were many entrepreneurs and tech workers in Buenos Aires but they didn’t know each other. Thanks to networking events gathering up to 600 people, Palermo Valley managed to create a real community.” On its website, the most recent organizing team of Palermo Valley in 2014 is said to be Anita Massacane, Sebastián Nader, and Martín Vivas.
The city, which is well known for its development talent, is also fortunate enough to be on the same timezone as the east coast of the United States for much of the year. Compared to other countries in Latin America, it has a high proportion of English speakers. It’s large population – the fourth largest in the Spanish speaking world – make it a great strategic entry point for new businesses that want to launch a business in a new world region.
Buenos Aires has a reputation of a world class city, and is sometimes referred to as the Paris of the southern hemisphere. While prices for certain things are very expensive, rent is still affordable in the city’s central district which makes it attractive for talented expatriates who want to try an adventure elsewhere. There are exciting verticals such as e-commerce, the Internet of Things (IoT) and FinTech. Equally promising, the government is promoting initiatives to help promote female entrepreneurship.
Leading accelerators in the city include NXTP Labs and Wayra. NXTP Labs, which was founded in 2011, has made over 183 investments to date. The founders are now raising a large venture fund aimed at providing access at scale.
Strong venture capital funds include Kaszek, Casar, and Patagon, which cater for Seed, Series A and higher funding rounds, while Clarin and Xpand Ventures are prominent corporate VCs. There continue to be waves of promising startups including Restorando, Papumba, and Avenida.
As told of to us in person many times, Bitcoin startups in particular are thriving in Buenos Aires. Espacio Bitcoin, which was started in early 2012 by Wenceslao Casares, is a meeting place for Argentina’s Bitcoin community. Franco Amati, who is one of the leaders of the local Bitcoin community and is the founder of Signatura, is based there. According to the Latin American Private Equity & Venture Capital Association (LAVCA), investment firm Medici Ventures also recently made an investment in Argentinian bitcoin platform Ripio.
It’s important to note that the government is based in Buenos Aires. Historically the government has been more interested in promoting social programs, as opposed to benefits to relatively few startups. Mariano Mayer, the Secretary of Entrepreneurship and Small and Medium sized businesses, explained that Argentina is now looking to be friendlier to investors and entrepreneurs. Today, investors can deduct tax income of up to 75 percent of the initial total investment, up to 10 percent of the total income tax they owe. The government is also looking to support entrepreneurship by investing in vehicles to help venture funds.
Additional local leaders in the city include Martin Frankel, founder of Area3; Santiago Sena, Director of Entrepreneurship for the City of Buenos Aires; Juan Iriguia, Head of Google for Developers; Alec Oxenford, co-founder at OLX; Vanesa Kolodziej; Marcos Galperin; Mariano Amartino, and Hernan Kazah.