As the world reopens and economic activity kicks into overdrive after 18 months of pandemic restrictions, entrepreneurship is booming. Global venture funding hit an all-time high in H1 2021, with $288 billion invested into unicorns and startups, according to Crunchbase figures.
As part of this activity, new businesses are evaluating international markets and their risks to find the best possible location to set down roots and succeed. For businesses in the western hemisphere or that communicate in Spanish or Portuguese, Latin America is being viewed as one of these potential markets. Home to growing economies, a large, young population, and plenty of growth potential, Latin America makes sense for startups, but which are the five best startup hubs in the region in 2021?
The leading economy in Latin America with a gross domestic product (GDP) of $1.4 trillion in 2020, Brazil weathered the storm of COVID-19 relatively well, with its economy dropping by only 5.8% in 2020, before growing by 2.8% in 2021.
It’s this resilience that makes it an excellent place for businesses to base their operations. Cities such as São Paulo, Rio de Janeiro, Curitiba, and Porto Alegre score highly on StartupBlink’s 2020 rankings of the best startup cities, and the country is first in Latin America (24th globally). This is partly thanks to the number of tech unicorns found in the country, and the great talent pool fuelling the growth of these significant businesses.
Chile was the fourth largest economy in Latin America in 2020, with a GDP of $252 billion, and it weathered the pandemic admirably that same year, experiencing just a 6% loss in GDP, bouncing back with strong 4.5% growth in 2021. Chile also came second in StartupBlink’s rankings of startup hubs in Latin America and came 36th globally.
The country is a good choice for startups due to the country’s stability, the highly prosperous, high-income nature of its economy, and high government engagement in attracting startups.
The second-largest economy in Latina America, Mexico’s GDP was worth just over $1 trillion in 2020, dropping by 8.9% in 2020 but growing 3.5% in 2021. The country is home to 4 million small and medium-sized enterprises according to the OECD, and has a population of 130 million – both keen drivers of startup growth. This led the country to come third in Latin America in StartupBlink’s rankings.
While Mexico is less developed than its northern neighbour, there are countless opportunities for businesses willing to push new ideas and commit. For instance, 63% of people rely on cash – offering a great opportunity for startups in digital financial services. Education, healthcare, retail; Mexico has problems, but whoever solves said problems will extract real gains.
With a GDP of $388 billion in 2020, and having experienced a drop in GDP of 11.8% in 2020 and growth of 4.9% in 2021, Argentina was certainly rocked by the pandemic.
Yet, startup hubs such as Buenos Aires make this a good choice for new businesses wanting to piggyback on the country’s post-COVID renewal. A high percentage of the country’s population are internet users (74%, according to the World Bank) – of benefit to tech startups – and the country has a young population that is well-educated, offering a great pool of talent.
With its $271 billion economy dropping by 8.2% in 2020, then rebounding by 4% in 2021, Colombia is fairly attractive for startups in 2021. Cities such as Bogotá and Medellín are home to the likes of Rappi (one of Latin America’s biggest startups) and Viajala, and has a strong, growing population of 50 million people – a good-sized market for new businesses to pitch to.
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