Latin America: the next best option for European startups looking to expand to the US

By July 2, 2018

Silicon Valley: The HQ coveted by startups across the world. Where else would entrepreneurs be surrounded by the best, most cutting-edge technology, software, constant innovation, like-minded thinkers and, most importantly, investors?

Nowadays, the answer does not have to be the United States. Or at least, not straight away.

Although the highest and most concentrated levels of venture capital are found in Silicon Valley and continents such as Asia have recently provided unprecedented levels of investment, European startups can now feel safe in the knowledge that this is changing. Companies such as US-based HACK Fund and EU-based Bloomio are now democratising investment opportunities around the world through their token-based blockchain investment structure.

In the case of HACK Fund, investors are presented with a portfolio of startups to choose from, spanning 48 countries, including many in Latin America. Bloomio on the other hand is a platform that facilitates the investor-startup connection, allowing the investor to browse through startups to invest based on third party recommendations.

The investment tokens work like shares, in a similar way to the stock exchange itself. However, their advantage is in the use of blockchain technology, meaning the startup does not need to be based in Silicon Valley to stand a chance of receiving investment.

Investment-wise, Latin America is also becoming an increasingly popular alternative gateway into the US market for European startups aiming to grow their businesses across the pond. Its levels of financial support and encouragement of startups, whether they be governmental or not, are contributing to the continent’s already well-established and ever-growing startup scene.

Latin America’s abundance of accelerator programmes, of which even some are government backed, speaks for itself. Start-Up Chile, Start-Up Peru, Argentina’s IncuBAte and Parallel18 in Puerto Rico are among those featured on this year’s Forbes’ Agency Council round-up. Colombia, for example, has also recently become an increasingly promising environment for new startups and entrepreneurs. New President-elect Iván Duque has pledged that during his tenure as President he will strive to provide financial backing and support for entrepreneurs in line with his economía naranja policies.

Besides government-based accelerator programmes, international accelerators that have also recently expanded to Latin America include Rockstart, Endeavor, Wayra, Seed Starts and Google Launchpad, which opened its first LatAm campus in São Paulo in 2016.

Although a large percentage of M&A occurs in Silicon Valley, setting up shop in Latin America could also provide the perfect opportunity for startups to undergo a merger and acquisition. Acquiring a new Latin American partner could be of multiple uses to a business, especially when it comes to the knowledge necessary to navigate local markets. Any well-established localised partner could also provide a business with the boost it just might need to start becoming recognised on an international scale. If anything, being that bit closer to the US time zone can do no harm.

Choosing to expand a business in this Spanish and Portuguese speaking continent also has its own advantages that could give any startup that extra competitive edge. Hiring multilingual team members will seldom impact negatively upon a business. In fact, mastery of multiple languages and international markets is an asset that will set a startup apart from the rest.

Is it safe to say, therefore, that Silicon Valley is losing its sparkle? European startups have many reasons to have faith in Latin America, either as a stepping stone to making that all-important move to the US, or an alternative altogether.

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