Start-ups, usually from the tech and FinTech sectors, which quickly grow to a £1 billion valuation are said to have achieved a “Unicorn” status. It’s becoming clear that Latin America has its fair share of companies that have not only achieved such status, but are about to join the exclusive club.
San Francisco has long since been the preserve of aspiring “Unicorns”, but the global financial community is now waking up to the fact that way further south, things are beginning to stir.
These start-ups are not rare in the region and already there are quite a number of companies which have reached the all-important milestone and grabbed the attention of the major venture capitalists. These include B2W, Despegar.com, Globant, MercadoLibre and OLX.
But, there are another raft of companies waiting in the wings which begs the question, why is LATAM such a good breeding ground for the Unicorns? And why are the venture capitalists so eager to turn their attention away from Europe and Asia, and look towards LATAM?
Two of the biggest reasons cited by experts is the region’s overall growth and the high levels of innovation.
Start-ups are able to exploit the region’s rapidly emerging populations as LATAM emerges as one of the most important markets in the world. Latest figures suggest that the GDP in the region is set to be over $15 trillion by 2025. What’s more, the growing trading links with China have been very beneficial, generating growth and encouraging a can-do attitude. Centres of business development have been created in many parts of the region, allowing companies to benefit from pools of talented staff and a low cost of living.
Innovation is high throughout the region and many start-ups are said to have been very adept at finding gaps in the marketplace and developing products that are required by consumers. Also, many companies are clever at spotting trends and similar solutions, and introducing better and more sophisticated versions.
The scene is set for increasing numbers of Unicorns getting the start they need in Latin America and quickly emerging on the global stage. No wonder venture capitalists are increasingly taking flights to LATAM to check out just what’s going on.
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Photo: Amin Sikaroodi