Peru is a great country for entrepreneurs, considered by the Global Entrepreneurship Monitor (GEM) as one of the fastest growing Latin American ecosystems.
With its widely varying landscape , biodiversity , natural resources and indigenous cultures, it is among the seven most diverse regions on Earth. This South American country has 84 of the 117 life zones on the planet. A similar diversity can be found within the Peruvian entrepreneur ecosystem, a fact that we will further describe in this report.
Having attracted more than 4 million tourists in 2018, Peru is the right place for the experience of a lifetime for visitors attracted for purposes ranging from business to culture and nature. Those looking to explore innovation will find that large public and private stakeholders - such as investors, mentors and global ecosystem enablers - have developed entrepreneurial programs and events focused on equality, women empowerment and the Sustainable Development Goals (SDG) energizing the Peruvian ecosystem.
Furthermore, according to the Global Entrepreneurship Monitor and ESAN University, Peru ranks third in the region for countries with the highest number of enterprises in early-stage investment rounds and years of operations. Even though being able to maintain a long-standing company is the main issue for Peruvian entrepreneurs, the startup ecosystem has improved in recent years, benefiting from investment dynamics and exposure to other countries’ innovation scenes.
A Fostering Ecosystem
The Minister of Production announced in 2017 that more than 430 Peruvian enterprises doubled their income compared to the previous year, generating 31 million Soles (around 9.4 million USD), which was supported by its program Startup Peru, born in 2014. In 2018, Edwin Goñi, Lead Specialist in the Inter-American Development Bank's's Competitiveness, Technology and Innovation division, stated that the performance of the Startup Peru initiative had already shown positive results in its first six years of life, recognizing that the entrepreneurial ecosystem had grown with the influx of more relevant stakeholders and ecosystem enablers.
For a great beginning to 2019, last year’s numbers closed with more than 9.1 million USD invested in Peruvian startups. It was 11 local and foreign funds that made this happen over seed capital investment, according to the Peruvian Association of Seed Capital and Entrepreneur (PECAP).
Entrepreneur ecosystems must be built through the combined efforts of private and public offices and stakeholders. Collaboration as well as open innovation are also key strategies that must be utilized to foster entrepreneurship.
Startup Perú (SUP) 2G - 2nd batch.
Success Stories of Peruvian Startups
Peruvian entrepreneurs are well-known for their perseverance; probably a result of facing great challenges in their day-day lives around the country. Proof of this can be seen in the startups mentioned below that have been tackling issues of low-quality education, transportation problems and gender inequality. It is thanks to private institutions such as Ransa who partnered with Urbaner or Visanet and Culqi and public institutions that have allowed new startups to begin to emerge and flourish. Several success stories of startups who have raised funds and begun expanding have increased in recent years. Let’s take a look at some examples.
One of the most well-known startups in Peru is Busportal, a company that sells bus tickets online and whose majority of shares was bought by Redbus in July 2016, the leader in the online sale of bus tickets from India. Realising that the purchase of bus tickets was spread across different offline and online channels, many times informally or without clear centralization, combined with the fact that the main transportation in Peruvian cities was done by bus, the idea of Busportal was born.
Another startup success story is Cinepapaya, which tackled the problem of queuing for movie tickets. It was the biggest Peruvian startup in 2016, accelerated by Wayra Peru, and the second largest exit transaction ever as it was acquired by the American startup Fandango.
Last year, fintech startup Culqi, closed a funding round with Krealo, Credicorp’s open innovation fund. In 2018 they also won 'Visa's Everywhere Initiative' contest with an innovative solution that makes it easier for businesses in the region to accept payments on their online platforms with a single integration.
Another startup named Urbaner begun its expansion into Chile and other parts of Latin America, with the help of Startup Chile who provided an investment of 40,000 USD and access to an acceleration program. Urbaner is a solution that connects the logistic networks of trained couriers with business and people to do fast, on-demand delivery within a city.
Another example includes Laboratoria, a social enterprise that supports young low-income women by providing them with 4-6 months of intensive coding classes. The project began in Perun in 2014 and later expanded its operations to Brazil, Chile and Mexico. This is a well-known project in Latin America because of its impact on empowering talented women to become developers and connecting them with the immense demand of the tech industry.
Rebajatuscuentas.com, is aiming to match people asking for loans with the best interest rate in the market, by partnering with different banks. They are saving their customers around USD 100 every month, having achieved USD 3 million in interest savings to their users. They won the Seedstars World Local Competition in Peru in May 2018 and best startup at Seedstars Latam Summit in December 2018. They also represented Peru in Switzerland at the Seedstars World Summit in April 2019 among 80 other local winners from around the world. Sully Siucho, COO & Co-Founder of Rebajatuscuentas.com pitched their business idea to global investors and corporates and was selected as one of the four finalists of the global competition.
Sully Siucho, Co-Founder and COO of rebajatuscuentas.com, pitching at the Seedstars World Competition in Switzerland. She was among the finalists of more than 80 countries represented (2019).
One more success story comes from iFurniture, a startup committed to the fourth industrial revolution and sustainable furniture. Their goal is to leverage on the current trend of automation and data exchange in manufacturing technologies. Vaneza Caycho, CEO & cofounder of iFurniture, was selected for the Woman Entrepreneur Award category of the APEC O2O Summit 2018.
Last but not least is qAIRa, a startup which monitors air quality with drones. It won the Launch Category of the 100K LATAM contest organized by MIT Sloan Latin America Office and ITBA University, which seeks to contribute to economic, social and environmental development in the countries in the region.
Talent is everywhere and the above are just a few examples of successful Peruvian startups that prove it. Great startups are growing every day, helping to develop the country and tackle its biggest challenges. They also all have a natural common commitment to the Sustainable Development Goals that creates global impact and erases barriers between countries and regions.
However, this is just the beginning of the entrepreneurial scene in Peru as there is still a lot of work to do. Local entrepreneurs are taking action and getting things done, which shows their commitment and attitude towards progress. In fact, some of the largest issues being tackled, like public transportation and access to quality health, are common pain points for many Latin American countries, which are also faced in several other emerging markets, such as Africa or Asia. They understand the importance of having a broad vision in this global world, creating several opportunities for international cooperation and expansion.
Peruvian Women in Entrepreneurship
It is important to mention that women founders are becoming great role models for the local society and crucial to gender equality in Peru. Amparo Nalvarte, CEO of Culqi, Mariana Costa, CEO of Laboratoria, Sully Siucho, COO of Rebajatuscuentas, Ivonne Quiñones, CEO of Urbaner, Vaneza Caycho, CEO of iFurniture, and Monica Abarca, CEO qAIRa are great examples of the many Peruvian women leading their own companies and creating impact in the Latin American region.
In addition, 2019 started with an exciting announcement: startups led by Peruvian women have been recognised at the NextGen Women Entrepreneurs Week, an international competition in Switzerland. This event was organized by Swisscontact through its Swiss Entrepreneurship Program (Swiss EP), supported by the Swiss-SECO Cooperation. Paola Mego, Founder of Qimi, and María del Mar Velez, Founder of Crack the Code, won respectively the first and second places of the NextGen Women Entrepreneurs final Pitch Contest.
Next Gen Women final Pitch Contest (2019)
Latin Growth and Supporters
Some Latin American startups have grown to become great companies, such as Rappi, Platzi, Grin, Conekta, Nubank to mention a few. What is behind their success? Important support organisations, such as the Ycombinator, Startup Chile and 500 Startups, who have built high-quality deal flow globally. This is also the goal of Seedstars, who has fostered a friendly investment climate to boost venture capital access in emerging markets all over the world.
How does Seedstars support entrepreneurship? By helping startups through a growth program after which 85% of participating startups raise capital. Since 2013, each year Seedstars travels around the world to find the most promising startups in the emerging markets to compete in a series of events that lead up to the annual Seedstars Summit taking place in Switzerland, where the best startup will win a prize of 500,000 USD in seed investment.
So far, Innovate Peru has invested more than 53M Soles (around 16 million USD) to support over 470 innovation projects promoting the country's development. Besides supporting a law that encourages town halls and universities to create new coworking spaces and making it mandatory for universities to have incubation programs, the Ministry of Production has highlighted important objectives for 2019. Together with Innovate Peru and CYNTECIN, they aim for four objectives: (1) to develop innovative talent, (2) promote a cultural mindset, (3) to do open innovation with corporations and (3) set routes of innovation for the country.
According to Gonzalo Villarán, Coordinator of Innovate Peru, raising the amount of quality innovative entrepreneurs should be this year’s focus. He also believes that ecosystem supporters such as incubators, accelerators and investors should specialize their services in developing the venture capital industry.
Valuable private players have brought programs, contests and events that have helped develop the Peruvian entrepreneur landscape. A great example is the Interamerican Development Bank (IADB) that established, in 2013, a program called WeXchange within its innovation laboratory, IADB Lab (BID Lab).This program seeks to unleash the growth potential of Latin American and Caribbean female entrepreneurs by expanding their network, providing access to mentors and investors, and offering participation in their Pitch Competition.
Another private organisation supporting entrepreneurial development in Peru is the Massachusetts Institute of Technology (MIT), which has launched programs such as the Global Startup Labs held at the UTEC on July 2018. MIT has built a strong community through this program by training and funding top MIT students and alumni to conduct technology incubator courses globally and, therefore, providing an important role in the Peruvian entrepreneurship ecosystem.
Private ecosystem enablers and stakeholders are important to promote growth in local and regional economy, as they create more opportunities and broaden horizons for local entrepreneurs.
Moreover, since 2015 Swisscontact has been fostering Peruvian innovation by supporting ecosystem builders, investors, accelerators and incubators with its Swiss Entrepreneurship Program, Programa Suizo de Emprendimiento. Through their programs such as Entrepreneur In Residence (EIR), Peer to Peer, and NextGen Women bootcamps, they have increased the amount of jobs created and startups funded in Peru by leveraging its international network. Swisscontact’s main objective is to encourage collaboration among ecosystem organizations, which is founded on a strong belief that we all share: an ecosystem has to be collaborative to be successful.
Keith Ippel, cofounder & CEO at Spring Activator in Canada, experienced Lima’s entrepreneurship landscape as an advisor for Swisscontact, supporting Peruvian accelerators and startups. He explained that “Peru’s goal this year will be to really start to go cross border - helping the most successful and fastest-growing companies access the rest of the world, and to attract more global startups to Lima and Peru. This will help local companies to grow quickly and bring a global mindset to the community, and the result will be to attract more global capital to Peru too”.
The Role of Investors
Similar to the case of the ecosystem enablers, investors are a crucial piece in creating sustainability in an entrepreneurial ecosystem. Important players such as Angel Ventures, UTEC Ventures, Wayra, PAD investors, Emprende UP, BBCS Capital, CAPIA, The Board, Winnipeg Capital, Magma Partners and Axon, have dynamized the Peruvian entrepreneur ecosystem and invested in local startups.
Investors create opportunities through capital and previous experience that requires high-quality assessment, consequently boosting promising startups. In Peru, the members of PECAP.pe commit to this purpose and set clear objectives such as promoting good practices in early-stage investments, collaborating with state entities to promote ecosystem growth and ensuring high ethical standards in the entrepreneurial environment.
A new opportunity for investment that is available for Peruvian startups is the Seedstars Investment Readiness Program, a tailor-made program that allows entrepreneurs to prepare their businesses for their next stage of funding while also having the opportunity to receive up to 500,000 USD in investment.
Hosted within the global network of Seedspaces, the entrepreneur hubs created by Seedstars, the program scouts the most promising startups in the region and supports them in their fundraising goals through tailored mentorship produced by a team of fundraising experts, provides access to tools and software, gives access to a vast startup library containing a great amount of educational materials and facilitates direct connections to potential investors.
“Consolidate the collaboration between institutions that has been built for some years”, which is the “north star” for Peru this year according to Charlotte Ducrot, Entrepreneurship Program Manager for Peru at Swisscontact Worldwide.
Gathering ecosystem enablers and stakeholders is a great way to dynamize the entrepreneurial ecosystem and promote community and growth potential. One such initiative is the Peru Venture Capital Conference held every year in Lima, an important local event that fosters innovation.
It is important to highlight that collaborating with each other and helping to raise this entrepreneurship ecosystem together doesn’t only help Peru, but the entire Latin American region. Therefore, every above mentioned effort made by private or public players has added to a thriving ecosystem. These entities should continue putting efforts into creating assets in order to grow together.
Indeed, there is an important global way of thinking for Peruvian entrepreneurs that should be improved. Thanks to important players such as investors, corporates and ecosystem enablers, opportunities are wide open for creating impact in society.
The challenge now for Peru is to promote a quality startups deal flow and fill in the gaps where capital access is struggling to decentralise opportunities and stakeholders in the Latin American region. I strongly believe that collaboration among ecosystem organizations is highly important for achieving this challenge.
In conclusion, to keep pragmatic our recommendations to the Peruvian ecosystem:
First of all, encourage the corporate and private sectors to jump into startup initiatives. There are plenty of ways, such as open innovation, corporate VC, hackathons as a content provider, mentoring, venture building, and more. We at Seedstars have experience working with partners like BBVA, Merck, VisaNet, FedEx, Continental, Orange, and being their "liaison" to the startup world.
Secondly, work on having investment-ready startups (and build a pool of them). Dealflow quality is important, and startups need to work on different areas of their business, to maximize performance and be attractive for an investor. Many investors are willing to invest, but the unit economics or the scalability of the startups are just not there yet. If you want to participate in our Investment Readiness Program and improve your Investment Readiness Score depending on the fundraising round you are looking for, enter here.
Thirdly, government and infrastructure must be integrated to decentralize opportunities. There must be action plans and programs to scale initiatives not only in Lima, but in every region in Peru. Even though the entrepreneur ecosystem is small, talent is everywhere so fostering entrepreneurs in the whole country creates a huge potential for growth.
Finally, build up initiatives that focus on public and private collaboration for the education and health sectors, accompanied by constant training of the teams in charge to ensure initiative sustainability. These two industries have been big pain points in Peru for many years so why not start there? At Seedstars we would be thrilled to be a part of this, as we have worked in both fields to build and promote innovative solutions.
This report serves to map out the current players of the entrepreneurial ecosystem in Peru as far as our experience and partners can take us. There are definitely several other aspects that could be covered to lay out an exhaustive landscape and we do hope to contribute positively to its development.
To discover the various initiatives by Seedstars in Peru, visit this page to learn about the next Seedstars World local event in Lima happening on the 27th June and click here to find out more about the Seedspace Lima entrepreneurial hub recently opened in May 2019.
Paula Garcia Malpica
Operations Manager at Seedstars Peru