When you arrive in Buenos Aires, there is an immediate sense of prestige; European culture is everywhere.
You are reminded of this as you receive a customary kiss on the cheek during business greetings, pass Italian architecture, and hear echoes of distinct Argentine Spanish. The city is riddled with Euro-culture that will leave you disoriented.
This has attracted digital nomads and tech behemoths from all around the world, which in turn have taken part in creating one of the most potent cities for technology startups in Latin America. With all of this rich history and developed culture, you wouldn’t think twice about its economy.
However, Argentina has been a victim of economic decline on more than one occasion, creating a lot of problems for entrepreneurs. With hope on the horizon, a few local startup activists are taking a jab at public policy that will aid entrepreneurs and give the economy the kick it deserves.
How is Buenos Aires both a Latin American tech hub and an unfavorable city to start a company?
The startup problem in Buenos Aires right now is among a handful issues that we see a lot in Latin America. These include (to name a few) the bureaucratic process of starting a company, the lack of committed investors, a risky economy, and, something that we see a lot in Latin America, a culture that does not accept failure.
In the past decade(ish), Argentines have lost a whole lot, and, more importantly, don’t trust in their government and banks. In 2015, Argentina’s new President, Mauricio Macri, took office and decided his first call to action would be stimulating the economy by devaluing the currency and cutting off imports. This was good for some that would be able to become more competitive in a global market, but for most, it made life very difficult.
If you were living in Argentina, your currency devalued 30% overnight. At the same time, imports and exports were dramatically reduced, pushing people out of jobs, and even prohibiting Argentines from moving money between their accounts that existed in international accounts.
The economy halted, creating black markets for the peso and decreasing the value of everyday commodities, which made life very hard to afford. It’s nice for us tourists to spend a pocketful of pesos on dinner and a bottle of “vino” without breaking the bank, but it’s not fair.
In the process of encouraging competitive exports in a global market we have abandoned Argentine startups.
Startups in Buenos Aires? Yes, Startups in Buenos Aires…
Startup culture is increasingly growing around the world, and has been highly competitive in Buenos Aires. With the most tech unicorns in Latin America (companies that exceed 1B evaluation), and a highly educated population, multinational startups normally find a way to scale to Buenos Aires.
There’s no mistaking its low cost for highly talented developers and other tech-skilled labor, as well as hands-on community support from key players such as Startup Buenos Aires, Wayra, NXTP Labs, and Area Tres.
Many worry about the lack of investment that startups are receiving. We can talk all day about community support, but the people would rather shout out “show me the money!” It’s true: investment plays a huge part in the longevity of startups.
Not to worry! Venture capital is on the rise, and there’s a group of local startup activists that are about to show the government how to greet innovation when it’s at your front door.
How does Argentina’s government plan to innovate its economy? Startups.
Asociación de Emprendedores de Argentina (Argentina’s Entrepreneurs’ Association) or “ASEA”, is Argentina’s go-to non-profit organization that fights for entrepreneurs and is formed by entrepreneurs. This groundbreaking Latin American movement links all major entrepreneurial players, and believes that by engaging entrepreneurs, venture capitalists, influencers, decision makers, and organizations with public policy, they will disrupt the entrepreneurial environment in Argentina and Latin America. The organization has currently 85 founding members, and 5,000 regular members with the hope to double their support.
“Our mission is to improve Argentina’s entrepreneurial ecosystem creating the opportunities to develop more and better entrepreneurial projects and to create entrepreneurial business ventures. To successfully execute our goals, ASEA focuses on connecting entrepreneurs from Latin America, listening to their demands and proposing solutions to create a successful and collaborative entrepreneurial ecosystem,” said Marlena Arrobas, Executive Director at ASEA.
These are problems that ASEA believes can be solved through policy and cultural change. As a result, the organization hopes that the impact creates ripples through Latin America, much like their neighboring country, Chile, has done so well through government programs such as CORFO, Startup Chile, and ASECH.
While speaking to Malena Arrobas and Francisco Torres Vidal of ASEA, we were able to get a little insight on what’s next. Their team is looking to grow membership to 15,000, continue to push the implementation of the “entrepreneur” laws that they are promoting and supporting, and will continue to organize a handful of networking events in the community.
Their founding team is also looking to lead investigations regarding entrepreneur activities, coordinate free consulting events in order to help entrepreneurs achieve their goals without major costs, and continue supporting relevant events for the entrepreneurial ecosystem.
A New Dawn for Entrepreneurs
These plans aren’t distant fantasies. In early 2017, ASEA will be discussing new legislature, or “entrepreneurship law” with the senate. If approved, Argentina could be looking at a completely new entrepreneurial landscape in the new year.
“We believe that once the Entrepreneurs Law is approved, Argentina is going to be a better place to start a business. A company is going to be able to be registered in one day, whereas right now it takes around 60-90 days, and crowdfunding will be allowed. These regulations will make it easier for entrepreneurs to decide to achieve their dreams,” said Malena Arrobas, Executive Director of ASEA.
ASEA is finding a lot of support in Latin America as they press this movement, addressing the roadblocks that prevent easy incorporation of new companies in Argentina, while introducing a simplified model for limited companies. In turn they have also been able to create new investment and financing vehicles such as public crowdfunding and venture capital funds, which currently lacks.
“…every person that decides to start a business can change Argentina and Latin America’s reality because a new business means new jobs, new opportunities. That’s why, for us, every entrepreneur has their value. In terms of technology in Argentina, fintech and agrotech startups are growing and leading. We are planning to have some health organizations as partners, in order to promote also health tech startups. But, as I said, for us every entrepreneur has its value,” said Arrobas.
If the bill passes Congressional approval, Argentina will have the tools to become (or, continue to be) Latin America’s leading country in entrepreneurial and VC activity, which the tech world in Latin America has come to know it as in the past decade.
“Fostering enterprise, entrepreneurship, and venture capital is the only way for our country to get out of poverty,” said Francisco Torres Vidal, Regional Manager at ASEA.
As the country’s economy slowly begins to turn around under its new President, we hope that the startup culture and policy follows. If Buenos Aires is able to bring business back to the people, there is no doubt it will be a glowing example for a rest of the region, and a cultural hot spot for any up and coming entrepreneurs.
However, for that to happen, and in this case, it will take more than two to tango.