Startup accelerators helped spark Latin America’s tech boom

Five years ago, no startups from Latin America were participating in prestigious U.S. accelerators like 500 Startups or Y Combinator. In fact, no Latin American startup reached the renowned Silicon Valley accelerator, Y Combinator, until 2015, when Colombia’s Platzi was invited to join.

It seemed that Latin America was not yet on anyone’s radar at the big global accelerators. At the time, 500 Startups in Silicon Valley was one of the only global accelerators that was paying attention to Latin America. 500 Startups’ first Latin American startup investment was Chile’s Welcu in Batch 2 (2011), followed by Brazil’s ContaAzul in Batch 3 (2012) and Mexico’s Yogome and Brazil’s Ingresse in Batch 4 (2012). Alongside fashion platform Femeninas, we were one of the first startups based in Argentina to be accepted into the program in 2012.

500 Startups has since focused on forging partnerships and investing in startups in Brazil, Mexico, Argentina, Colombia, Chile and Peru.

Nowadays, dozens of Latin American startups, principally from Colombia, are joining U.S. accelerators. Since 2016, Rappi, UBits, Ropeo, Hogaru and Tributi have entered Y Combinator from Colombia, while RunaHR, Grin, BrainHi and Fintual have brought Mexico, Puerto Rico and Chile into the YC network, as well. Over the past five years, global and local accelerator programs have taken hold across Latin America. What’s more, we’re starting to see many specialized programs emerge and focus on accelerating companies in specific sectors, such as agtech, fintech and social impact. Here’s how the role of the accelerator is evolving in Latin America.

The inflection point: Start-Up Chile and NXTP Labs

When Start-Up Chile launched in 2010, it became the darling of the Latin American tech ecosystem. In dozens of articles, Start-Up Chile is known as the “spark that ignited Latin America’s startup ecosystem,” and is often identified as the inspiration for government acceleration programs worldwide. Among programs in Latin America that arose from the Start-Up Chile “spark” are Startup Peru, Parallel 18, IncuBAte, Startup Mexico, Ruta N and 21212.

However, there are two other local accelerator programs that arose around the same period, without as much global publicity as Start-Up Chile. 500 Startups Mexico City and NXTP Labs launched their local acceleration programs in 2010 and 2011, respectively, focusing on Spanish-speaking Latin American startups at a time when Start-Up Chile was still only focused on accelerating foreign enterprises. Of the 16 startups that graduated from NXTP Labs’ second group, 13 were from Latin America, 10 of which were specifically founded in Argentina.

Accelerators are now one of the top ways for Latin American startups to secure funding and reach international markets.

We went through NXTP Labs’ accelerator program in 2014, after they had successfully graduated dozens of local companies. But even before they became one of the region’s top private accelerators, NXTP Labs was one of the most active early-stage investors in Latin America. To date, there are still very few fully private venture capital funds in Latin America, including NXTP Labs, Magma Partners and Kaszek Ventures.

Since they began, Start-Up Chile, NXTP Labs and 500 Startups Latam have accelerated more than 2,000 startups in total, generating millions of dollars in revenue and investment, and creating hundreds of jobs across Latin America and beyond.

More importantly, they created the impetus for a steady wave of startup accelerators to enter the Latin American ecosystem.

The newcomers: industry-specific accelerators

In the past few years, accelerators of all kinds have cropped up in Latin America to provide mentorship, support and investment for startups as they grow. However, the regional trend has been to shift away from general support (i.e. the Start-Up Chile model) toward more specialized, industry-specific acceleration. Even NXTP Labs has pivoted its accelerator programs, focusing almost exclusively on fintech and agtech startups in Latin America, as they believe these two fields provide a competitive advantage in the local markets.

The new tendency toward specialization has led to the rise of programs such as The Yield Lab, an Argentine agtech accelerator, Chilean Bci Labs, focused on fintech, and Startupbootcamp’s new fintech program in Mexico City.

According to Gust’s Latin American accelerator report, more than half (58 percent) of startup accelerators in the region are focused on a specific vertical rather than trying to be a jack-of-all-trades.

Most of the government-funded accelerators, such as Startup Mexico, Parallel 18, Ruta N and Startup Peru, still support startups from every sector. MassChallenge Mexico also allows startups from any industry to apply for acceleration.

What’s next: bringing women into entrepreneurship

While fintech, agtech, blockchain and other hot industries have gotten their share of the limelight, there is still a massive elephant in the room (or the co-working space) in Latin America: the lack of women. A random sampling of 50 startups selected for accelerator programs this year in Latin America revealed just 28 percent had female founders.

A recent blog found just four incubator and accelerator programs that are specifically targeted toward enabling female founders in Latin America: Empoderando Mujeres in Mexico, Capital Abeja and The S Factory in Chile, and WIN Lab, which is actually based in Miami.

This vertical is one that is missing from the conversation in Latin America, and the world. Women make up just 17 percent of startup founders and receive only 2 percent of VC dollars, but it is estimated that fully incorporating women into entrepreneurship could boost the global GDP by US$12 trillion.

A lot has changed in Latin America since we launched our company and entered our first accelerator in 2012. Dozens of global accelerators and companies looking to support and invest in Latin American companies are joining the local accelerators that paved the way, such as Start-Up Chile and NXTP Labs.

More than ever before, the prestigious accelerator programs, such as Y Combinator in Silicon Valley and other programs across Europe and the U.S., are accepting startups from Latin America. Local accelerators are refining their strategies and focusing primarily on niche industries, such as agtech and fintech, to tap into Latin America’s competitive advantages. Accelerators are now one of the top ways for Latin American startups to secure funding and reach international markets. While there are still gaps to fill, it’s been rewarding to watch these programs develop and succeed in the region.