RIO DE JANEIRO, BRAZIL – “I am an agronomist and I know what a farmer goes through. Monitoring the fields is daily work and takes much time,” says SOS Agro founder Víctor López as he prepares his stand at an entrepreneurship trade show. His proposal is a software that allows real-time monitoring of different factors, such as temperature, humidity, rainfall or wind from satellites.
His startup provides a service that can be used as a web platform or as an app, with data in the Amazon Web Services (AWS) cloud and with integrated information from drone images and publicly available satellite image files.
It was founded a little over a year ago and already has over 1,300 users – although only 50 paying subscribers – and its team is made up of 7 people, 2 agronomists, 2 systems engineers, a finance analyst, a psychologist and a farmer. “Each one fulfills a role, such as visits and contacts with farmers, developing new functions, socializing our advances, and validating in the field,” López explains.
Although López acknowledges that in the beginning it was difficult to find both clients and partner companies, because many failed to see the benefits of its technology, but once the startup began to carry out pilot projects in the field, the advantages of the service were perceived. It has partners such as John Deere and Bayer Bolivia, among others, and has secured US$100,000 in investments that will allow it to internationalize.
The trade show for which he is preparing while giving the interview is ExpoAgroFuturo, a renowned agricultural event in Colombia, organized by Ruta N, the city’s business and innovation center, the Medellin mayor’s office and Agstar, a Colombian financing body for startups in the agricultural sector across Latin America.
Before the end of the event’s first day, López had already established contacts with agricultural banks, producers, input companies and discussed potential alliances with other startups that provide services to farmers.
It is precisely this type of impact on startups born in Bolivia that Innova Up, the innovation agency of the Santa Cruz Chamber of Industry, Commerce, Services and Tourism (CAINCO), is looking for. Given the scarcity of incubators and accelerators, in late 2019 the Chamber created this event as a way to help associated companies with entrepreneurship issues to generate dynamism in the local entrepreneurial ecosystem.
“We support them with workshops, training, mentoring, co-working and networking, in general we look for all kinds of synergies,” explains CAINCO’s Innova Up acceleration program coordinator Alejandro Farías.
Farías says that enthusiasm is evident and that in recent years there has been much interest from entrepreneurs. “Five years ago very few people knew what a startup was. The ecosystem is still maturing,” he says. But it is growing rapidly.
According to the document ‘Mapping the Digital Ecosystem in Bolivia 2021,’ released by five local foundations linked to entrepreneurship and overcoming poverty in the country (FUNDA-PRÓ, Fundación Emprender Futuro, Fundación SOLYDES, BIM and ICCO) there are 155 active startups in Bolivia, a number almost identical to the 151 initiatives registered in 2019, when the first study of this type was conducted.
“However, the birth and death structure of startups is considerably active,” the text stresses. Within 2 years, 117 startups have been created, although another 114 have ceased operations, representing a 76% interruption or cessation rate.
Although the number of Bolivian startups is far from the over 15,000 that exist in Brazil or the 724 and 1,711 in Peru and Chile, respectively, they are beginning to present exciting figures that make them feel proud.
“We have already had four generations [of 60 local startups] accelerated, and now with the new generation there would be 75,” Farías adds. “Many of them are edtechs due to the remote learning challenge imposed by the pandemic, offering new solutions and platforms for education. We have also been seeing many fintechs and outsourced services, such as Uber. And agtechs are also an interesting model, because Santa Cruz is also an agro-industrial pole,” he explains.
This is confirmed by the Bolivian digital ecosystem study, which shows that over 54% of these active ventures are located in Santa Cruz, the most populous city that also has the highest per capita GDP in Bolivia.
Innova Up also seeks to promote the connection of startups with investors in order to scale quickly.
LACK OF FINANCING
“Investment funds in Bolivia are not created to invest in startups. There is no venture capital as such in the country. There is an association called SC Ángeles, created by Bolivians who seek to invest, but the ecosystem is in its infancy because investors do not understand startup investment, the impact on the economy and the way it should be carried out,” says Farías, who is looking for the desired change in this mindset to occur.
Until then, “in general, we look for international funds for pre-seed or seed funding, which is the bulk of our startups,” the executive explains.
In addition, the Bolivian state does not offer a source of funding to assist startups. “The government has not fully understood […] and it is not a lack of will, but rather a lack of structure: there must be a special body in charge of these things,” says the Bolivian Association of Entrepreneurs (ASEB) chairman Salomón Eid, who also participates in SC Ángeles.
ASEB was born a year ago, when a number of Santa Cruz entrepreneurs realized that the informal meetings they held to help each other were growing, and decided to institutionalize their communication channels with the entrepreneurial environment in the area. The association currently comprises 80 members.
Although Eid recognizes that the government is concerned about helping entrepreneurs in sectors such as oil and gas or agriculture, it is the absence of a body to turn to, established for startups, such as Startup Chile – whose mission is to encourage and finance high-impact ventures – that this U.S.-trained entrepreneur misses in his homeland.
ASEB’s current goals involve reducing the bureaucracy associated with the steps required to set up a company. “Our work as an association is to lower barriers to entry. For example, to be able to aspire to have the figure of sole proprietorships, as in Chile, where you set up [a company] in one day, it makes all the sense in the world,” he stresses.
But it also wants Bolivia to be integrated in areas such as scientific research, greater integration with the business world, special visas to allow the entry of more foreigners to develop in the country, tax policies and easy access to reasonable credit for the sector.
Therefore, his organization’s goal is to influence public life in order to solve entrepreneurs’ common problems. “We want everyone to be successful […] to enable starting a business in Bolivia and do well, because today starting a business [in Bolivia] is bureaucratic and expensive and the idea is, as an entrepreneur, to focus on the business and not on [solving] the bureaucracy,” Eid explains.
Attorney Fernando Bedoya shares this opinion, managing partner of local law firm Wurth, Bedoya & Costadureis, better known as WBC Abogados, in charge of the startup department within the firm, and a mentor at Innova Up.
“Our current legislation has become obsolete and does not fit the startup growth model. Just to give a couple of examples, our entire system is built for industrial companies: buy cheap raw material, process it to give it added value, and sell it at a higher price, or traditional services where it is also assumed that companies are created to make profits, but startups do not have profits as their main goal, but rather to gain market share and grow fast,” Bedoya said.
Neverthless, the attorney believes that the startup environment in Bolivia is growing rapidly.
“And it is on everyone’s mind. There is a lot of activity in real estate, fintechs, delivery, transportation and other sectors. I think that the challenges are not very different from those of any new company, but undoubtedly the strength of the startup sector are the entrepreneurs themselves, who have the virtue of not even considering the disadvantages we may have in terms of legislation and only see opportunities, focusing on improving their product,” emphasizes Bedoya, in charge of the department since its inception in 2015.
“By their very nature, the vast majority of startups do not reach a maturity stage, and the minority that do, experience very rapid growth. Gladly, over the years, we have worked with several startups and some of them are now very large and well-known companies. The world is changing faster than ever, and this change stems from technology. A company that does not innovate at the same rate as new ventures, or at least has the good sense to make strategic alliances for integration with new technologies, runs the risk of stagnating and losing market share little by little, or very quickly in some cases […]. As such, we consider that it is more than necessary, it is vital to attend to the startup sector,” he says.
With this pespective, the firm supports high-impact ventures in three main areas: advice on the business model to find potential legal risks and their solutions, the development of contracts and strategic agreements with investors to secure pre-seed, seed, and later, A, B, and subsequent rounds of investment, and finally, “when the venture has passed the first two stages and is no longer an idea, but a fully formal and operational company, with payroll, tax and social and labor obligations, financial agreements, solid corporate governance, and a long list of etceteras, we move on to the third stage, which is permanent and comprehensive legal advice,” the attorney explains.
ON THE HUNT FOR OPPORTUNITIES
Chilean proptech startup Edipro.cl was founded in 2016 with the aim of managing buildings and condominiums, making the payment of expenses, or common fees, and the overall management, a more transparent and immediate experience for apartment owners and administrators.
In its expansion, the startup has raised capital twice: the first, which has been called Angel series, with a Chilean corporate venture capital fund, the same that months later supported it in its pre-seed series, completing U$600,000 in both rounds. It has also received financial support from Corfo and advice from ProChile to reach Bolivia.
Since its foundation, Edipro.cl has doubled the number of active communities every year and its growth led them to venture into countries they considered promising, such as Panama, Peru, Mexico and Bolivia.
According to its co-founder José Miguel Oyarzo, being in Bolivia was a more than interesting option for their venture, as both the country and Peru have been posting a sustained growth rate in real estate. “There are few alternatives in their local and foreign markets that fulfill the role that we do. Choosing Santa Cruz was due to the fact that it is an economic pole in the country,” the Chilean explains.
His strategy was not wrong. In four months of presence, Edipro.cl currenty manages 50 buildings in Bolivia. “We thought that the profit would be lower because there are fewer apartment buildings there, but it was attractive because there is less competition. We have done very well,” Oyarzo explains.
In any case, entering the startup environment and doing business in Bolivia has been a change from his native country. “Things are different. For instance, a company’s legal representative must be a local, administrative aspects are more complex, taxes are a little high, digital means of payment are more expensive than in Chile, and in general every input or service is available, but with fewer alternatives. It was a little culture shock, because the building market is not standard, the terms used are different and a previous learning is required,” he explains.
At the same time he perceived the flourishing entrepreneurial environment in Santa Cruz. “In general, there is a culture in Santa Cruz de la Sierra of catering well to foreigners. And in terms of startups, we have seen activity from investment funds, venture capitals looking to invest in Bolivian companies. Although I don’t have direct contact with incubators, I have seen it with local partners. There is an incipient local ecosystem… Bolivia is like Chile, before Startup Chile.”
He is not alone. Chilean Hans Goecke, CEO of startup PRenseable, ventured into Bolivia in search of new markets to expand his business, due to the growth that the local ecosystem is registering. His company is a communications incubator for the startup world, supporting basic aspects such as training spokespeople to talk to the press, but also to be more effective in raising capital. It also provides the service of public relations and definitions of digital or sales content.
“When we realized Bolivia’s ecosystem, we found that there are many opportunities. Although digitally it is a little behind Chile and there are few incubators, there are private and public projects that contribute to this ecosystem. So we wanted to take a chance on Bolivia, understanding that Chile started like this many years ago and that today its ecosystem is large,” Goecke emphasizes.
So far, Goecke is happy with his decision, seeing many advantages in the Bolivian ecosystem, except for the informality that he considers a deterrent for several businesses. But because Bolivia is not yet on the radar, “it also generates great interest from entrepreneurs who want to bet on a market without much competition, unlike Chile, Peru or Colombia, which have a much more developed ecosystem.”
On the other hand, every Bolivian startup has internationalization in mind. “We have been contacted by many startups interested in the Chilean market, because it is now more developed and they ask us more or less which path to follow. Currently in our pool we have 30 startups,” says PRenseable’s CEO.
BRIDGING THE GAP
Along with SOS Agro, Bolivian startups are already beginning to ressonate on the continent.
These are initiatives such as TuGerente, an online inventory app; EnvíosPet, a pet delivery startup; TuPase, an app that allows companies to involve their employees in physical activity; Izi, a digital solutions service for SMEs; Creotec, a healthtech that manufactures customized prostheses; Yaigo, a delivery and e-commerce startup; NetComidas, a delivery platform acquired by PedidosYa; and Ultracasas, a portal for selling and renting properties.
In fact, 5 Bolivian startups – Mobi (so far one of the most promising and best valued startups in the country), Minkedu, Medicinets, Tech Solution and Facia – were selected for this year’s Incae Entrepreneurship Award, to be announced on December 9, where they compete with 20 other startups from Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Mexico, Panama and Peru. In 2020 there were 6 Bolivian startups in this contest and only 1 in 2019.
Moreover, the number of ventures and media and specialized services for startups are beginning to show that the ecosystem is attractive and, above all, viable.
Innova Up offers as an example their recent collaborations with the Universidad Adolfo Ibáñez (UAI) in Chile, which will provide various telematic master classes focused on changing the mindset of traditional investors.
Startup Mexico recently announced its entry into Bolivia to support and promote local startups. The company will leverage local startups in its journey to position itself as a bridge of innovation and economic driver between Latin America and the most developed markets.
When announcing its landing in Santa Cruz, the Mexican company justified its decision on the fact that the local ecosystem is “demonstrating its willingness to become a more entrepreneurial and innovative nation in the business world.”
For the Mexican company, the Bolivian geographic location would also be strategic: “the country is located in the heart of South America, a logistic position that allows being close to more than 200 million people in less than 4 hours, offering easy commercial configurations with any of its neighbors, which ensures great export opportunities,” it highlighted in its communiqué.
In this regard, Alejandro Farías says that the partnership between Innova Up and Startup Mexico will offer an acceleration program based on training, workshops and tools to develop value propositions and high potential business models, as well as access to a network of mentors, investors, collaborative spaces and, above all, visibility: “To make the solutions of ventures known to Bolivian companies and society.”
In addition, Farias adds that in the first days of December (7, 8 and 9), Innova Up will hold the Bolivia Venture Capital event, which he defines as the first forum organized in Bolivia for entrepreneurs, angel investors, venture capital funds and key players in the entrepreneurial ecosystem, thanks to the project “Dynamizing the Entrepreneurship and Innovation Ecosystem in Bolivia,” funded by an alliance of IDB Lab and CAINCO dating back to 2019.
“The aim of the forum is to bring learning experience from abroad. Entering the startup world is difficult if there is no investment. The forum seeks experiences, workshops, talks so that they may continue to grow. Startup Chile will be there, and we will have match-making sessions, as well as connections with the private sector, articulating the ecosystem around Bolivia, learning from scalable and exponential success stories so that they may migrate quickly,” Farías says.
ASEB is committed to continue supporting startups to raise capital and overcome financial issues, which is the specialty of the support they provide. “When I came back from the U.S. in 2018, there were very few Bolivian startups, it was barely the second generation. But since then they have raised capital, they have grown, they are successful and have been multiplying since 2019: today having a startup [in Bolivia] is a viable [work] option. That is an achievement in itself,” says Salomón Eid.
“Many startups and institutions that want to support and invest have begun to emerge, the networking is being promoted by institutions such as Innova Up and CAINCO, which helped us a lot in the acceleration stage and introduced us to investors, although we found capital from a farmer who was interested in helping us expand the solution,” adds SOS Agro’s Víctor López, while proudly presenting his startup’s new service for the agricultural sector.
“We talked to a company that works closely with BanColombia and I showed them how to finance farmers. So we are setting up the fintech part of SOS Agro. Today we already know how to financially support farmers and we ourselves will fund any agricultural solution that emerges… it’s going to be great!” he concludes.
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