With destinations as intriguing and diverse as Machu Picchu,
Patagonia, the Amazon rainforest and the Galapagos Islands to vibrant cities
such as Rio de Janeiro, Buenos Aires and Mexico City, Latin America is home to
a active travel industry, attracting both local and international visitors.
According to Phocuswright's Phocal Point database, total
gross travel bookings in the region were worth $60 billion in 2018 and are
predicted to increase to $69 billion in 2020 and $78 billion in 2022.
IATA’s 20-year Air Passenger Forecast from
October 2018 predicts Latin America will grow by a compound annual growth rate
of 3.6% through 2037, serving a total of 731 million passengers.
That is all good news considering the region’s economic and political
challenges in the past several years.
According to Brazil-based Phocuswright analyst Carolina Sass de Haro, “We have
to consider that the political and economic turmoil that happens often is just
a given. We are used to living like that. Of course it does affect tourism and
everything, but you see entrepreneurship and the industry moving despite what
is happening with the political and economic crisis.”
In fact, the travel startup scene in Latin America has been gathering momentum
for several years and investors are starting to take notice.
In part two of our series on Latin America, we take a look at what
is happening in the region’s startup ecosystem, including input from one of its
largest accelerator programs and two entrepreneurs.
In late April, the Association for Private Capital Investment in
Latin America (LAVCA) released its annual report on the amount of venture money
flowing into the region.
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In 2018, investors pumped a record $1.98 billion into Latin
American startups, up from $1.14 billion in 2017 and nearly four times more
than what was invested in 2016 ($500 million).
And there’s more to come: In March, Japan’s Softbank announced it
is launching a $5 billion fund to invest in technology startups across Latin
"Latin America is on the cusp of
becoming one of the most important economic regions in the world, and we
anticipate significant growth in the decades ahead," says Masayoshi Son,
chairman and CEO of SoftBank, in a statement.
leads the region for venture investment – capturing more than 55% of the deals
in 2018 according to LAVCA. Mexico is second (20.5%), followed by Chile (10.6%),
Colombia and Argentina (4.1% each) and Peru (2.4%).
travel, some of the most notable activity has been in the transportation
January 2018, China’s Didi acquired Brazilian ride-hailing startup 99, reportedly
spending $600 million to buy out existing investors and $300 million for
co-founders of 99, Ariel Lambrecht
and Renato Freitas, then launched a bike and scooter company, Yellow, in April 2018.
By September it had raised more than $75 million, and in January of this year, Yellow
merged with Mexico-based scooter company
Grin, which itself had raised $65 million in two rounds last fall.
Together, Grin and Yellow have formed Grow Mobility, which has already raised $150
million in new funding to expand across Latin America.
investment activity has been picking up pace, respondents to LAVCA’s Inaugural Survey
of Latin American Startups still cite “access to investors” as the top barrier
to raising capital.
Challenges and opportunities
As executive director
of Start-Up Chile, one of the largest accelerator programs in Latin America, Sebastián
Díaz says one of the biggest challenges is helping the region’s investors understand
how to deal with startups, and that education is something his organization is
Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead.
Masayoshi Son - SoftBank
here are very traditional. They are used to investing in commodities. They
don’t know how to invest in startups, how the technologies work,” Díaz says.
“So now there
is a big interest in investors in Latin America to learn how to deal with
recent deals – such as Didi’s acquisition of 99 and Walmart’s September 2018 purchase
of Cornershop, a delivery startup serving Mexico and Chile, for $225 million – have
made investors eager to get in on the action.
“Those kind of
success cases are telling investors – you are missing opportunities,” he says.
founding in 2010, Startup Chile has worked with more than 1,600 startups from 85
One of those is
Wheel the World, an online platform created in November 2017 to help people
with disabilities find and book accessible trips.
online travel agency now offers bookings in 13 destinations in Peru, Chile, Mexico
and the United States.
It has also secured
about $740,000 in funding from an angel investment from Silicon Valley and
several grants, including ones from Start-Up Chile, Google Launchpad and
Booking Booster, Booking.com’s accelerator program.
CEO Alvaro Silberstein says Wheel the World wants to raise a seed round by the
end of the year to help it expand to at least 30 destinations, but he knows
that will be more challenging than the funding he has secured to date.
“There are a
lot of pre-seed programs, but for the next rounds, it is challenging to find VCs
and investment funds that are familiar with startup investments,” Silberstein
“It’s not that
there is a lack of resources - there is a lot of money in Chile, Brazil, Mexico
– the challenge is how we convince them in to be more aggressive in investing
in new technologies.”
One startup building
success in Latin America is Arrivedo, which provides curated neighborhood guides
that hotels use in their websites and apps to drive search engine optimization,
ancillary sales and a positive guest experience.
in 2015, Arrivedo closed a $2.3 million seed round in 2018 and received the
People’s Choice Award at HITEC Amsterdam. The company currently works with
1,400 hotels in 103 countries, with content from a network of 3,000 freelance
majority of Arrivedo’s core staff is in Peru and Mexico, and product development
and testing starts in Latin America. Co-founder Alonso Franco says the decision
to run the company this way is based on both economic and cultural factors.
are trying to do marketing to hotels in the United States first while at the
same time you are learning the purchasing behaviors of these hotels, each of
those leads will be super expensive,” Franco says.
“All the marketing
to attract a hotelier to your website from Chicago, San Francisco and New York
is going to be 10 times [the cost] of attracting a hotelier from Santiago,
Buenos Aires and Lima. So we think our own area it is more economic to learn.
And then we take those learnings and put it outside.”
It’s not that there is a lack of resources - there is a lot of money in Chile, Brazil, Mexico – the challenge is how we convince them in to be more aggressive in investing in new technologies.
Alvaro Silberstein - Wheel the World
comes to hiring, Franco says there is not only a large pool of highly skilled talent
in Latin America, but the cost to attract and retain those workers is much lower
than in places such as Silicon Valley. And those local workers contribute
additional value through innate characteristics unique to the region.
“If you think
about hospitality, it’s a lot about warmth and about being a great host, and
that historically has been quite related to the nature of our cultures in Latin
America,” Franco says.
“To me it’s not
a coincidence that the product that is giving a platform for hotels to
communicate as a local host is coming from a country that is historically a
from around the world seem to be taking notice of the opportunities in Latin
Díaz says about
70% of Start-Up Chile’s participating companies come from outside Chile – with many
from the United States and India.
This is in part
because Chile has made it very easy for entrepreneurs to set up shop. Since 2017
the country has offered a streamlined visa program that grants work visas to technology
companies within 15 days. Díaz says incorporation can also be done in a matter
But even with
these simplified processes, Díaz says he still advises startups from outside
the region to find a local partner, such as an incubator, accelerator or
venture capital firm.
America is way different to other developed countries,” he says.
America, when people say yes, it means no. And when someone says ‘I’ll call you
back’ – that call will never happen. And when you say, ‘Let’s meet at 9 in the
morning,’ the meeting will start at 9:45. If no one is telling you this is how
it works, they get super frustrated, and that can have a negative impact on the