Contxto – “Hay que pasar el invierno”. Argentina’s politics and the economy are marked by past decisions that make its current situation even more challenging to overcome. This is also the case for startups in Argentina in an already rough 2020.
One could trace the string of poor decisions to the “Standard Model —Modelo estandar in Spanish—. It came as a proposal for Argentina’s economy in 1991, made by Domingo Cavallo, then Minister of Economy during Carlos Menem’s first term.
The main objectives were to increase productivity, create jobs, and achieve long-term economic stability. This goal required the elimination of “inflationary expectations” and, as an instrument to obtain it, they proposed to apply a new fixed exchange rate based on alignment with international prices.
We all know nowadays that its exchangeability model did not work well. Among other prejudicial policies, the accentuated hyperinflation and economic speculation in Argentina. This left its technological field in an even more precarious position than the rest of Latin America.
Although its economy is still fragile, Argentina had already shown us its potential for recovery as it did in 2007. At that time, they were the third economy in the world in terms of growth, only behind China (10.7 percent) and India (8.9 percent).
Having Brazil, Chile, and Uruguay as neighbors is a bonus. These emerging markets enhance Argentine growth through existing trade agreements. The fact that almost all Latin American countries speak Spanish also reduces possible barriers.
The Argentine Startup Ecosystem
We know that the Latin American situation is not ideal for promoting business, but a smooth sea never made a skilled sailor, and Argentina is no different.
Aleksán Buyuk Kurt, Head of innovation at Black Swan Innovation and Founder of Stracktech, showed us his concern regarding Argentina’s ecosystem: “It is poorly developed and lacks vision. The responsibility of innovation falls completely on the companies’ side”.
And he is right. When a developing country, such as Argentina, freezes its spending, the market and research sectors suffer the most. This hinders the development of activities related to innovation from taking place.
The crisis also brings investment opportunities, such as better rates, incentive laws, and the issues a society may face. And that just to list a few. There are many ways to thrive in hostile environments. You just have to look deep into the matter. Actually, if you find a highly profitable opportunity while doing it, give me a call, would you?
Benefits of pitfalls for startups in Argentina
A smart upcoming Founder should use adversity as an advantage. The right look at the news, for example, might get you the information that will make your business come through.
Talking about news, at the beginning of 2020, the Argentine government lowered its initial interest rate to 40 percent, heating the market in the process.
Another factor that can also favor investors, even more than the disparity between the peso and the dollar, is the rush to scale out of Argentina’s market.
The Argentine peso is devalued. It will likely last at least a few years, so brace yourselves. In practical terms, it means that imported items are more expensive. But don’t worry too much. Basically, all other aspects of a business benefit from a weak currency: e.g., trained personnel, leasing, local supplies, etc.
Regarding external scalability as the basis of Argentine enterprises. They want to grow wings. So if you aim to run global, their mindset should fit precisely in your business model.
If you do not believe me, just have a look at the most valuable company in Latin America: MercadoLibre registered US$59.3 billion in the second half of 2020. Only one of many great startups in Argentina.
Argentina’s best qualities
- The Entrepreneur’s Law: Yes, A thousand times, yes. Every time Argentina approves a new law regarding business bureaucracy, we tremble with fear. I know. But the Entrepreneurship Law is a super positive one. It allows the requirements to start a business to be cleared up in just 24 hours. How cool is that? It makes Argentina a powerful hub.
- Argentina’s Government likes blockchain. A lot. They even keep their bulletin records using this technology and signed a four-year agreement with Binance Labs committing to invest in blockchain startups. They are leading the way in Latin America.
- Argentina people shops online. I honestly expected no less from the mountainous mother of MercadoLibre. 9 out of 10 people have bought something online at least once in their lives. Not a bad rap for budding startups in Argentina.
- They are highly educated. Ok. That seems subjective. I’ll rephrase that: Literacy levels in Argentina are one of the best in Latin America, which per se is a great indicator. But take this information alone, and you will realize the full range of businesses that can benefit from this ranking.
- A country of fintechs. With a stalled economy, banks become an expensive option and make access to their services difficult. Digital solutions end up becoming accepted rapidly all!
I could go on, but should I spoil all the fun? Do your research, make your notes. Did anything slip my mind?
IMPOSSIBLE Drop me a line, and I will be glad to face my editor.
Top 11 startups in Argentina to watch closely in 2020:
RSK Labs is an open-source smart contract platform that offers its users the opportunity to mine their cryptocoin while also mining bitcoin and a reward system to the transaction fee they execute into the platform.
While it seemed that they lost traction in 2016 with a warm halving—when mining rewards are cut in half—, RSK labs received two new investments in 2017 that together total US$7.3 million. With this third halving in 2020, services like RSK are sure to be on the rise.
Want to know more? Read the RSK WhitePaper
Emi Labs is an AI recruitment assistant for enterprises with high employee turnover. It replaces repetitive and time-consuming tasks such as resumé screening and manual interview scheduling.
Not only does it help companies save thousands of dollars, but it also enables a better experience for candidates, both the ones that are selected and the ones that aren’t.
Afluenta is a peer-to-peer lending network that brings together investors and creditworthy borrowers.
In short: A platform that allows small loans between parties, without interference from a bank.
Experts in Artificial Intelligence that help optimize your processes and take advantage of all the gaps of your business.
They’ve implemented intelligent sensors on low-cost vending machines that use Computer Vision technology to detect products and improve the user experience. They claim that with their technology you can transform the shopping experience, controlling selection by optimizing processes thanks to sensors and machine learning technology.
E-valuados is an educational platform that allows educational institutions to monitor daily the concepts acquired in face-to-face classes.
A crowdsourced mobility app that gives you the fastest and safest way to move by public transport. They combine schedules and routes of urban transportation, micro-mobility, and real-time reports of its user community, showing the best choice for people’s commutes.
Via Artificial Intelligence, Computer Vision and the Internet of Things, ZoomAgri provides quality assessment of agricultural commodities to all participants of the agri-supply chain.
Agree Market is the first global agri-commodities marketplace. Their platform is a cloud-based hub that allows users to buy or sell grains, oilseeds, by-products, and specialties on a mobile or desktop in an easy, safe, and smart way.
Blended is a communication platform for schools that brings all education services together, creating a single unified place to access student information.
With more than 250,000 users in Latin America, Blended helps schools build stronger relationships with students and parents. Administrators can integrate all school services into one platform, allowing them to manage complex processes like grading, attendance, or content management from a single place.
A tech-enabled real estate broker that makes it easier for people to buy, sell, and let their houses. Mudafy is removing all the hassle from real estate transactions introducing technology in each step of the process.
Cliengo promotes business relationships with your clients through a conversational platform. A powerful application of a CRM.
So that’s it for our top startups in Argentina to keep your eyes on this year. Did we miss any?