Table of Contents GENERAL ASPECTS... 2 ICT SECTOR... 3 FINTECH... 7 MINING AND ENERGY... 9 STARTUPS IN THEIR OWN WORDS...10 INFOGRAPHIC: Peruvian Startup Ecosystem...11 ABOUT GO SOUTH!...12 ABOUT LATAM STARTUPS...12 CONTACT US...13 Page1
The Startup Ecosystem in Peru GENERAL ASPECTS Peru is booming. And not just tourism, either the high-tech sector is about to explode. But Peru can be a difficult place to do business, if you don t know how the country works. Peruvian market. This white paper highlights the developing tech sectors in Peru and offers insights on how best to take advantage of the opportunities available right now in the Peru has a population of over 30 million people and it s part of the Pacific Alliance countries (Chile, Mexico, Colombia, Peru) an economic block in Latin America with a total population of 218 million people, the counterpart of Brazil in this aspect, as well in GDP. The tech sectors that are being developed in Peru include: ICT, Fintech, Energy and Mining. The startup ecosystem in Peru is relatively new compared to other countries in the region. Peru's economy has stabilized over the last two decades, but still lags behinds its peers in the region in terms of technology and innovation. Page2
ICT SECTOR In 2014 the government founded Startup Peru, an initiative modeled on Startup Chile. The program differs in some aspects, principally in their focus on supporting the creation of new Peruvian startups, rather than attracting foreign startups to the country. Startup Peru provides grants up to USD $50,000 to startups and also provide some funds to those that are creating incubators and accelerators in the country. The program receives dozens of applications every year. As per Startup Peru data, the program was designed to support 48 entrepreneurs in the first year of operations, 100 entrepreneurs in the following year and over 120 entrepreneurs in the third year (2016). Other players in the market support startups, and one of them is Wayra, an international accelerator with branches in different countries in Latin America. Wayra also gives USD $50,000 as a seed funding and under equity terms, to those startups developing new applications. Wayra has been in Peru for about 5 years and so far, they have received applications from 4,500 projects. More than 40 projects under the Wayra support have been valuated over 10 million dollars each. But how is Peru doing in terms of access to internet and uptake of new technologies? 52% of the population in Peru has access to the internet, and 43% of the total do so from their smartphones. Around 6 million Peruvians own a smartphone, a number increasing rapidly. Data EMarketer Page3
Peru's capital, Lima, remains the leader in terms of smartphone penetration. Rural and regional areas of the country lag behind. Buying online remains a challenge for many Peruvians, who either lack a bank account or credit card, or simply do not trust the country's banking system. Startups in Peru currently focus largely on improving logistics, education tech, and other markets primarily orientated B2B and less B2C. The creativity is there, but Peru is facing many challenges to keep developing the ICT sector. Necessity is the mother of invention, goes the old saying. And Peruvians are discovering that the future lies, in large part, in their own hands. Peru has a lack of a good number of quality engineers, the few good engineers are already taken by some big corporations. Gonzalo Villarán, Director at UTEC Ventures (Peruvian Accelerator) Peru does not lack seedfunding but, like so much of Latin America, suffers from the "Series A Valley of Death" great startups that should flourish wither and die for lack of follow-on financing. From the entrepreneurial side the situation is very hard. Our metrics and numbers are doing really well but we don t find local investors, we have knocked doors but Peruvian investors are not very confident investing locally. Gary Urteaga, CEO Cinepapaya Page4
Despite these challenges, Peruvians know it s only a matter of time before the country catches up with its peers in the region, and are working hard to close that gap. The transformation is coming to Peru Government, universities, and some other players are putting an effort to create a good startup ecosystem. Universities are creating business incubators, the government is helping with that, and in the last years we have seen a better quality in the startups that are going to the market. José de la Fuente Soriano, Founder at Quipu Group Consulting & Investment The opportunities for startups and investors is to look into Latin American markets, not only Peru, looking to expand internationally in Latin America, that s a good point to start, try to grow whatever is working in Peru to the neighborhood due the similar culture and economies. Gonzalo Villarán, Director at UTEC Ventures Foreign investors looking to enter the Peruvian market need to consider Peru as part of their regional strategy unless your company works in infrastructure or mining, in which case, you definitely cannot afford to ignore Peru any longer. Peru is in a very early stage, is not as developed as Chile, Mexico or Colombia, but there is where investors can get an opportunity. Patrick Watson, Director Financial Services Group at IDEV International Page5
Peru has an ecosystem with growing connectors, incubators, accelerators and startups. Some of those players are: Wayra (an accelerator with presence in several countries in Latin America and Europe) UTEC Ventures (Local accelerator) Lima Valley (Community of entrepreneurs and startups in Lima) StarUPC (Business incubator of University UPC) UPCH (University with a business incubator focused in R&D) Page6
FINTECH Solutions in the financial sector are needed in. The country has one of the strongest financial sectors in the region, but access to banking for the main part of the population is not that easy, only 29% of the adults have access to banking, according with the Global Findex 2014. The government of Peru has put together a strategy to get the rest of the adult population into the banking system over the next seven years. Opportunities abound for fintech startups, especially those that offer "trust-less" solutions. Peru's population of around 30 million people boasts 32 million cell phones, of which around 6 million are smartphones. Peruvian banks have teamed up to get money moving through those phones, and in December, 2015 as part of their Peru Digital Payments consortium, launched Bim, a mobile payment program that unites all their online customer interfaces on one system. Smartphone adoption in Peru is expected to skyrocket in the near future, and the banks are eager to offer their services to a new generation of consumer. Indeed, some of Peru's biggest companies, including brewer Backus & Johnston, have signed up to start using Bim for transaction with retailers starting March 2016. Backus, a subsidiary of brewing giant SABMiller, collects mostly cash payments weekly from 115,000 bodegas and small shops, many high in the Andes or near the Amazon rainforest. Dealing in cash requires a lot of processing by hand, expenses, and risk, Luis Guzman, Backus's company treasure, told Bloomberg News. Page7
Crowdfunding is making some inroads in Peru, but the lack of regulations is so far deterring wider adoption. Users trust and use Indiegogo, but local startups are building local crowdfunding sites. Bitcoin adoption in Peru has been poor so far, mainly because banks are opposed to the crypto-currency. As Roger Benites, the founder of Peru-based bitcoin startup BitInka told us in an interview It s tough to talk bitcoin here in South America, especially to banks. They see it as a threat [...] They saw it mostly as we were trying to build a bank." Unlike Argentina or Venezuela, where Bitcoin has proved popular because capital controls impose an artificial exchange rate to discourage capital flight Peru does not impose such capital controls, making Bitcoin, so far, not terribly popular. Page8
MINING AND ENERGY Mining in Peru, like many countries is Latin America, remains a big part of the economy. Innova Peru, an initiative of the Peruvian government, has invested in more than 700 startups in innovate new solutions in the mining sector. Innova Peru is also sending local engineers and innovators to visit other countries in the region, to identify new developments in the mining sector and encourage regional cooperation. In the Energy sector, the government is exploring how to deploy more renewable energy sources in the country. Peru is especially interested in solar energy, wind farms, geothermal energy and biomass. Over the last decade renewable energy production in Peru has increased an average 7% per year, with geothermal leading the way at an average of 14% per year. By comparison, traditional hydroelectric power increased at an average rate of 10%. Many rural and regional part of Peru remain without electricity. The Peruvian government is especially interested in low-cost methods to bring solar or wind power to these small, isolated communities. Initiatives like The National Awards of Technology and Innovation in the Mining and Energy sector by the National Society of Mining, Oil and Energy (SNMPE) is one of the examples that the private and public sectors are putting an effort to find solutions in the market and also promoting R&D in these two sectors in order to improve the efficiency in projects related with the Mining and Energy industry. Page9
STARTUPS IN THEIR OWN WORDS Many startups in Peru have faced the same situation, it s hard enough to start to add a lack of investment, mentoring and other kind of support to grow their business. But the entrepreneurial spirit, the example from other successful startups in the region and the potential they see in their own market and in the region has helped them to continue the hard work. Interesting to see mainly startups Peruvian startups are looking to expand in the other countries part of the Pacific Alliance countries. And what Peruvian startups would like to say to the government? If you d like to know more about this chat with startups please check out our Storify here. Page10
INFOGRAPHIC: Peruvian Startup Ecosystem Page11
ABOUT GO SOUTH! We are your guide to doing business in Latin America. We specialize in helping small to mediumsized hi-tech companies to develop business and marketing strategies. Doing business in Latin America is not as simple as translating your website into Spanish. Unlike North America, business in Chile, or Peru, or Colombia is done in person, face to face. Even if you speak Spanish fluently and not all companies have a Spanish-speaker on staff we can make your entry into this new market as smooth as possible. ABOUT LATAM STARTUPS LatAm Startups in an initiative founded by Go South! Consulting Inc. We help startups scale. Page12
CONTACT US Business Development: Miryam Lazarte Email: Contact@GoSouthConsulting.com Miryam.Lazarte@GoSouthConsulting.com Phone number: + 1-647-888-3715 www.gosouthconsulting.com Page13