Followers of news coverage on Latin America & Caribbean in US and international media may be aware of the profound pessimism about the region. Endless cases of corruption, the effects of the pandemic, which has hit harder in Latin America than other regions, an educational crisis and the usual political struggles of the “Bolivarian” left vs. the “free market” right abound in press coverage.
But most of this news coverage misses one fundamental fact about the region: Latin America & Caribbean is having a moment. Technology ecosystems in many countries of the area are thriving. Technological progress in countries like Brazil, Argentina, Mexico, Chile, Colombia, Costa Rica or Caribbean islands such as Jamaica and Barbados, is allowing disrupting companies to emerge. Companies are satisfying local business demands but also reaching international markets.
At the same time, even though Latinos in the US remain underrepresented in the tech industry, over the last few years more Latino founders, executives and leaders have risen within technology. The convergence of these two factors – stronger tech development in Latin America & Caribbean combined with broader presence in the US tech industry of people with cultural connections to the region – opens a bridge for partnerships and greater collaboration.
“In terms of Latino tech leaders in the US, we see that there is a greater openness to look at Latin American solutions for US implementation. Having a Latino connection, there is less friction in understanding how Latin culture operates and the malleability companies have that allows adaptation to working with US companies,” said Charly Esnal, Co-Founder of BASE Miami, a management consultancy that helps Latin American organizations find their footing in the US market.
Technology Growth in Latin America & Caribbean
By 2019, pre-pandemic year, IT revenues in Latin America & Caribbean were already experiencing a boom. That year, revenues from the virtual and augmented reality (VR/AR) sector grew 53%, artificial intelligence (AI) 44% and internet of things (IoT) 28%.
In the last five years, US venture capital activity in Latin America has exploded as well. Last year alone, the region tallied US$4 billion in deals for the second year in a row and closed a record 488 contracts. At the same time, the software-as-a-service (SaaS) market in Latin America & Caribbean is slated to grow around 28% in the 2019-2026 period.
In an interview with the Brazilian publication Valor Econômico, Marcelo Claure, CEO of Softbank International, which has committed $3 billion to fund Latin American startups, said: “There is a lot of interest from banks, family offices, who suddenly discovered Latin America. The volume and capital invested in growth in the region in 2019 was US$2 billion, and our projection is that this will increase to US$28 billion in 2022.”
This reality creates the space for US businesses to increasingly consume products and services from Latin America & Caribbean-based companies.
Tony W. Haywood, technologist and PhD candidate at Northcentral University in San Deigo explained the situation: “I think many of the larger businesses are ready to leverage tech talent, goods and services from the region. With the world able to now hire remote, more individuals and organizations have the opportunity to work for a US or global company. I see a lot of effort, all in all, from Brazil, Colombia and Argentina from a tech standpoint. Many global companies are establishing partnerships with businesses of all sizes in these countries the most from my experience.”
Latin Presence in the US Tech Industry
According to the US Census, only 6% of people holding computing operations roles are fulfilled by Hispanics. Currently, the S&P 500 counts 16 Hispanic CEOs among its ranks. A recent report of the group LatinxVC found that despite the Latino population comprising 19% of the US population, Latino investment professionals comprise only 2% of total venture capital professionals.
Despite this underrepresentation, today many Latinos occupy positions as CEO’s, CTO’s and C-suite executives in general. From positions in big companies such as Google, Microsoft or Samsung to small startups all over the country.
Considering this progress, we ask what is the level of readiness of these tech leaders in working with, partnering, supporting or simply encouraging technology practices and professionals in Latin America & Caribbean.
Despite the Latino population comprising 19% of the US population, Latino investment professionals comprise only 2% of total venture capital professionals
“We see that it has a generation component. Younger generations in the decision making are usually more open to working directly with Latin entrepreneurs in implementing solutions. Older generations tend to be more conservative about working with companies abroad,” said Esnal.
“This also changes when the company has already done business with other regions like India, or Eastern Europe, then they get the benefits of working with a similar time zone and a stronger cultural affinity. In terms of effort, we don’t see a special commitment from the Latino community to support Latin American startups in their entry to the US Market. There has been an increase in investment dollars going to Latin startups from the US but it’s mainly for their development in Latin America, not in the US,” he added.
For Valerio Adrián Anacleto, CEO of the software architecture company Epidata, there are already various initiatives to capitalize the growth of Latin American & Caribbean companies in the US market.
“I see several individual projects of established Latinos in the industry in the US, but we are still missing something to bring all of that together. If more people know about what’s happening in Latin America, they’d be more tempted to buy or utilize services from people in the region,” said Anacleto, who is also a mentor at Manos Accelerator, a startup accelerator targeting Latino entrepreneurs.
Anacleto considers that it is all about building an ecosystem that uses cultural connections to open spaces. “It is proven that ecosystems work, we are still far from a fully functional one but the success of our region and people offers hope,” he added.