High-Impact Entrepreneurship

Join the global conversation

Entrepreneurs

31 High-Impact Entrepreneurs from 15 Countries Join the Endeavor Network at the 54th Selection Panel in New York City

New York, NY – August 14th – Endeavor selected 31 high-impact entrepreneurs leading 21 companies in 15 countries at its 54th International Selection Panel. Endeavor now supports 948 High-Impact Entrepreneurs from 606 companies across 20 […]

August 14th, 2014 — by admin

Read more

In the news

Argentina’s Belatrix Software Partners with Silicon Valley-Based kernel; Highlights Endeavor’s Multiplier Effect

Endeavor Entrepreneur company Belatrix Software, founded by entrepreneurs Alex, Luis and Federico Robbio, was recently named a Co-Innovation Partner for kernel, a Silicon Valley-based software venture co-founded by Endeavor Mentor Avikk Ghose. This unique partnership is […]

February 26th, 2014 — by admin

Read more
Get RSS Feed

What separates an entrepreneur from a high-impact entrepreneur?

oh gah, I should be studyingReprinted from BusinessTrade.org. Original article here

by Louis Nel

Entrepreneurs start their businesses seeking to generate a stable income from their ventures. High-impact entrepreneurs, alternatively, seek to grow a stable business that can make an impact. Here’s three ways to find out which one are you.

According to Paul Jones, representative of the Council of Innovation in the US and experienced angel and venture capitalist investor, there are four main differences between entrepreneurs and high impact entrepreneurs:

1. Vision

Most small business entrepreneurs start their business with the idea to attain a measure of stability in their financial life. That is why some researchers also refer to them as lifestyle entrepreneurs. Building a profitable business that can pay them a regular income is their main goal. They may want to build a legacy, passing their business down to next generation or they may want to sell the business when they retire in order to supplement their retirement investments, but the focus stays on regular income generation over the long-term.

High impact entrepreneurs, in contrast, are less worried about maintaining a regular income and are more focused on short-term operations and long term personal wealth. This can take place over 3- 5 years. It may involve building the organisation up to an exit transaction, where the business is sold off to a purchaser for a substantial amount. Funds can then be used to finance new high-impact entrepreneur endeavours.

2. Growth potential

For the lifestyle entrepreneurs, establishing a business that can be sold for a large value in the long-term (5-10 years) is not that important, as maintaining a business model which operates a level that generates their desired income and corresponding lifestyle. Consequently, the business is often run at the minimum of risk to maximum growth ratio.

Compared to lifestyle entrepreneurs, high-impact entrepreneurs have a larger appetite for risk. Their aim to generate long-term personal wealth depends on the short to medium value of their business. They may be more inclined to accept much greater uncertainty to achieve a much higher returns. Capitalizing on new trends, implementing innovative technology, pioneering new consumer markets are all characteristics of high impact entrepreneurs approach; this is a way to capitalize on ingenuity and  capture new market share while stimulating their businesses’ growth.

3. Measuring impact.

In an interview with Memeburn, a business and technology website, Anthony Farr, CEO of Allan Gray Orbis Foundation, acknowledged a link between high impact entrepreneur businesses and businesses that create jobs and economic growth. This in part describes the impact that these entrepreneurs make on the economies within they function. Small business entrepreneurs have an inherent incentive to streamline their business operations, which leads to little job creation. Alternatively, high-impact entrepreneur organisations often drive innovation and because their focus is growth, they tend to generate more jobs.

Jones states that one should not make the mistake of vilifying small business entrepreneurs or classifying high impact entrepreneurs as good or evil. Both entrepreneurs play an essential role in their respective domestic economies. Small business often makes up the core of the economies, providing stable job opportunities.  High impact entrepreneurs are innovation drivers and market creators. They are both needed and should both be encouraged is to grow and develop.

Endeavor Entrepreneur company Yemeksepeti to enter MENA after investment from General Atlantic and Endeavor Catalyst

Reprinted from Wamda. Original article here.

By Nina Curley

As Webrazzi reported today, Yemeksepeti, a leading Turkish food ordering site, has announced a US $44 million round of funding from New York-based private equity firm General Atlantic, with co-investor Endeavor Catalyst.

It’s a big round for the already successful Turkish startup that has grown to 1.2 million registered users, 50,000 orders a day, and 200 employees since its humble beginnings in 2000. Co-founder and Endeavor Entrepreneur Melih Odemis told Wamda that he started the business with only his co-founder, Endeavor Entrepreneur Nezvat Aydin, and went without a salary for 4 years to get the business on its feet.

Yemeksepeti, whose founders are also Endeavor Turkey entrepreneurs, didn’t take on funding until 2008, when European Founders Fund, a venture capital fund led by Rocket Internet’s Samwer brothers, invested $3 million for a 20% stake. With its second round, the food delivery giant is looking to further expand in the Middle East region. “We have been looking at the Middle East, since we are in the UAE and know a lot of people in the region,” said Odemis. Oman might be first; “the GCC will be the first playground.”

The company already operates in the UAE under the name FoodOnClick, yet Yemeksepeti will be further investing in their MENA arm to boost its performance. It averages over 400 orders a day, but it could be better. The company faced a learning curve when localizing for the diverse Dubai market, says Odemis, but now is looking to accelerate and consider acquiring relevant local companies in the region whose models can be fit to Yemeksepeti.

The company is also welcoming Gabriel Caillaux, managing director at General Atlantic, to its board of directors. General Atlantic opened its first European office in 1998 and since has invested over $3.2 billion to support the growth of nearly three dozen European-based companies.

Even after this round of investment, the two co-founders hold close to a 50% stake, he says. “I always to tell entrepreneurs not to give up more than 20-30% [in equity] in their first angel or VC round; you have to keep at least 70-80% until the company grows to a significant size.”

After 5 years of endurance, Yemeksepeti became cash flow positive in 2005, so they were able to fund their own growth and only take on investment when truly needed. “It’s always better to wait for investors to come to you rather than going after them,” Odemis warns.

Odemis and Aydin are also founding partners in the Galata Business Angels, a network of over 25 angel investors, including founders from AirTies, Yemeksepeti.com, Mynet.com, and Markafoni.com and prior executives at Apple, eBay, Maxim, Turkcell and DBI. The Network is hosting a meetup and pitch session on October 5th, in hopes of perhaps finding the next Yemeksepeti.

“This is an enormously exciting moment for Nevzat and his team at Yemeksepeti, and we are thrilled and proud to be participating in it,” said Linda Rottenberg, co-founder and CEO of Endeavor Global.

Endeavor Catalyst co-invests in Yemeksepeti.com

Endeavor Catalyst today announced that it had participated in a $44 million round of funding in Endeavor Turkey company Yemeksepeti.com. The investment round was led by General Atlantic, a top global growth equity firm that manages over $18 billion in capital. This represents GA’s first investment in Turkey.

According to CEO Nevzat Aydın, the company will use the funding to propel international expansion. Yemeksepeti.com is an online food delivery portal that provides 1.5 million registered users from Turkey and the United Arab Emirates access to over 6,500 restaurants, including major chains like Domino’s, Pizza Hut, and KFC. Since selection by Endeavor in 2007, the organization has connected Yemeksepeti to senior executives from Foursquare, Seamless, and Travelocity, as well as providing visibility at conferences, media events, and at local universities.

Endeavor Co-Founder & CEO Linda Rottenberg said that the investment marks a critical inflection point for Yemeksepeti.com. “This is an enormously exciting moment for Nevzat and his team, and we are thrilled and proud to be participating in it,” Rottenberg said. “Our experience in other global markets suggests that investing in high-impact entrepreneurs like Nevzat ignites change throughout a region’s economy. New networks begin to form, inspiring and supporting the next generation of entrepreneurs who go on to create even more jobs and innovation. We look forward to Yemeksepeti providing a terrific model for this transformative economic development.”

To learn more about the investment, please click here

Fight poverty: move the GDP needle

High-Impact Entrepreneurship, a powerful engine for job creation, may also be an effective poverty reduction tool on a macro level.  A groundbreaking 2010 study by Maxim Pinkovskiy and Xavier Sala-i-Martin, researchers at MIT and Columbia University, demonstrated that in Africa from 1995 to 2006, GDP growth and extreme poverty rates were almost perfect mirror images of each other.

No matter the nation’s geography, political history, natural resource endowment, size, or colonial origin, the countries in the Pinkovskiy-Martin study experienced poverty reduction proportionate to GDP growth. Their conclusion – that “the driving force that explains the substantial reduction in [African] poverty…is economic growth,” – has important implications for the High-Impact Entrepreneurship policy sphere. Endeavor’s 700+ high-impact entrepreneurs, who, combined, generated ~$5 billion in revenues in 2011, have an average peak annual growth rate of 69.4%. Their unique ability to expand rapidly, attract foreign investment, and contribute to demand chains in the productive economy makes high-growth firms true engines of economic growth.

It would take, for example, just 169 medium enterprises expanding into large firms in Mexico to raise GDP by a full 1%. In contrast, 578,528 microenterprises would have to be created to have the same impact.

Economic growth is good for the poor. While some institutions such as the World Bank caution that there is considerable variance in the poverty-reducing potential of a given amount of growth from place to place, even those results that are not directly pro-poor can result indirectly in long-term gains for economically disadvantaged populations. When governments accumulate greater tax revenues from businesses and a growing middle class, they have a greater capacity to design and implement development programs. Middle class demands for product differentiation as they become more brand-conscious further expands the potential of a productive economy.

To learn more about the potential for high-impact entrepreneurship to transform economies via GDP growth read the full report here.

[issuu width=550 height=425 embedBackground=%23f2f2f2 backgroundColor=%23222222 documentId=121001195616-f58978ade8a8417e9426cbb975baa91c name=poverty-reduction username=endeavorglobal1 tag=brics unit=px v=2]

CNBC Squawk Box: CEO Linda Rottenberg discusses Endeavor Greece

BusinessWire press release: “Endeavor launches a new country affiliate in Greece focused on High-Impact Entrepreneurship

Endeavor launches a new country affiliate in Greece focused on High-Impact Entrepreneurship

The press release below can also be found on BusinessWire.

Athens, September 12, 2012 – In the midst of continuing economic turmoil in Greece, Endeavor announced today that it launches a new affiliate office in Athens, bringing its high-impact entrepreneurship model to Europe for the first time.

“I have always believed that some of the best entrepreneurs emerge in times of chaos,” said Endeavor co-founder and CEO Linda Rottenberg. “Greece is an extremely resource- and culture-rich country. There are huge opportunities for entrepreneurs, both in traditional industries like food and agriculture and in emerging sectors like biotech. We look forward to working with Greece’s High-Impact Entrepreneurs.”

Founded in 1997, Endeavor selects and supports high-impact entrepreneurs who have the potential to scale from promising SMEs into companies that create hundreds, if not thousands, of jobs and generate significant revenues. In the past 15 years Endeavor has selected 708 high-impact entrepreneurs from 12 countries around the world in Latin America, Africa, the Middle East, Turkey, and Southeast Asia. In 2011, these entrepreneurs generated US $5.0BN in revenue and had created 200,000 jobs.

All Endeavor affiliates are spearheaded by a local Board of leading business persons, each of whom believes that high-impact entrepreneurship can transform economies. With unemployment in Greece at a staggering 23%, the new Board Members of Endeavor Greece firmly believe that despite the country’s current economic challenges, Endeavor will help create opportunities and spur entrepreneurial activity.

The Endeavor Greece Board will be chaired by Michael D. Chandris, Chairman, Chandris Group; and vice-chaired by Mareva Grabowski, Head of Emerging Markets, Dara Capital, who is also the founder of the Greek affiliate. They will be joined on the Board by Marily Frangista, Managing Director, Franco Compania Naviera; Thodoris Kyriakou, Group CEO, Antenna Group; Johanna Papadopoulou, President & Managing Director, E.J. Papadopoulos S.A.; Dimitrios Papalexopoulos, Managing Director, Titan S.A.; Yiannis Stassinopoulos, Viochalco S.A.; Spyros Theodoropoulos, Managing Director, Chipita S.A.; Takis Theoharakis, Deputy CEO & Vice President, Nissan N.I. Theoharakis S.A.; and Melina Travlou, Managing Director, Neptune Lines Shipping & Managing Enterprises S.A.

“Endeavor comes to Greece at a pivotal moment,” said Board Chair Michael Chandris. “The crisis has unleashed a new wave of entrepreneurship. Thousands of young people are no longer content with accepting a civil service job but are keen to develop their entrepreneurial ideas. Endeavor can become a catalyst to this process and thus have a substantial impact on a society in transition.”

Chandris and the board have recruited former McKinsey & Co Manager Haris Makryniotis to serve as the first Managing Director, overseeing day-to-day operations for Endeavor Greece. Makryniotis intends to introduce the first Endeavor Greece Entrepreneur candidates- the founders of digital “city insider” platform Daily Secret- to an International Selection Panel in Istanbul, Turkey, in early October.

About Endeavor

Endeavor breaks down barriers that prevent emerging-market entrepreneurs from reaching their high-impact potential. Hailed by NYT columnist Thomas Friedman as the “mentor capitalist” model and “the best anti-poverty program of all,” Endeavor identifies entrepreneurs leading high-growth innovative companies in emerging markets. These entrepreneurs are given world-class strategic advice, access to key networks and other tools that will catapult them to success. With Endeavor’s guidance they become “high-impact” – expanding employment, generating wealth and inspiring others to innovate. Often overlooked, these local entrepreneurs are now jumpstarting private sector development in their countries.

At year-end 2011, Endeavor Entrepreneurs throughout Latin America, South Africa, Turkey, Egypt and Jordan had created more than 200,000 jobs and generated over $5.0 billion in revenues. For more information, visit http://www.endeavor.org

Further Information:

For more information on Endeavor Greece, please contact Anna Zilakou, anna.zilakou@endeavor.org (tel: 0030-697-887-0661).

For further details on Endeavor Global and Endeavor’s entire portfolio of High-Impact Entrepreneurs please contact David Wachtel, david.wachtel@endeavor.org. (tel: 1-646-783-6139)

Endeavor Entrepreneur’s women-only gym rewrites Turkey’s fitness industry

tired now, school beginsReprinted from BusinessTrade.org. Original article here

by Louis Nel

Credited for opening the first chain of women-only gyms in Turkey, Bedriye Hülya, founder of B-fit, has made exercise fun and rewarding, while empowering women at the same time.

Prior to founding the B-fit franchise in 2006, Hülya studied psychology in New York. She joined a fitness programme that prescribed a finite exercise time with a variety of exercises incorporated into the time frame, helping maintain focused attention. She realized that if she could redesign and incorporate the best qualities of the programme into a packaged fitness service, it would also serve the fitness needs of the women in her home country. After studying the dynamics of circuit training, she became convinced that her business idea had potential. She dedicated time to researching machines and equipment, talking to manufacturers and tweaking her business’ fitness and workout programmes. She spent two years going back and forth between the US and Turkey, finally hitting on a ‘formula’ she liked and opening her first gym in İzmir, Turkey.

Hülya’s gym proved very successful and within a year B-fit grew to three separate gyms. From there, the gyms grew almost exponentially, from 10 gyms in 2007 to 15 in 2008, 30 in 2009 and 52 in 2010 throughout the country. In an interview with Today’s Zaman, a Turkish print and web newspaper, she explained the franchise’s popularity.

“(…) This system works in great harmony with our traditions and ways. These B-fit sports gyms accept only women as members. From the founder to the sports instructors, everyone involved is a woman. (…) Then, in this system, women only do 30 minutes of exercise at a time. The most important element at work is that B-fit is quite cheap and therefore works for every budget,” she said.

Hülya points out that while everyone knows they need to exercise, not many people actually exercise. Her franchise fitness services taps into the needs of middle-class and lower-middle-class women, offering them a place where “where women of every age and type can come and be among only women.” This image has done a lot towards breaking down the negative perception of gym clubs in Turkey as exclusive playgrounds for the rich.

In addition, Hülya is also regarded as a social entrepreneur and advocate of positive discrimination. Franchise ownership is open exclusively for women and is seen as a great opportunity for women to start their own business. Aspiring owners are selected for qualities like ambitiousness, friendliness and the need for success, fulfilment or achievement. The costs of machines, brand rights and furniture are all included in the initial US $ 33,200 startup fee, and with clear finance plans available and payment terms spread over five years, business set-up is as transparent and easy as possible.

In addition to pure fitness, the franchise also requires franchisees to run their gym as a social club for women; offering a seminar once a month about healthy eating and nutrition, and organizing member activities, like eat-out dinners, movies and the theatre.

Chosen as one of Turkey’s best entrepreneurs by Endeavor Global in 2009, Hülya was recognised as a valuable high-impact entrepreneur with massive growth potential. Hülya has even set her eyes on increasing the brand’s presence abroad, especially in Central Asian and Middle East countries where women are sometimes less empowered. A positive agent for change, Bedriye Hülya is changing the world one kilojoule at a time.

Video interview with Endeavor Entrepreneur Sohaib Thiab of Wizards Productions [Wamda TV]

Reprinted from Wamda’s Entrepreneur of the Week feature, where this week Endeavor Entrepreneur Sohaib Thiab was spotlighted. Original article can be found here.

by Nina Curley

This week’s entrepreneur of the week, Sohaib Thiab, founded game development Wizards Productions along with Hussam Hammo and Afif Toukan in Amman, Jordan in 2009. After launching a few successful massive multiplayer online games, Wizards Productions has now pivoted into the mobile space, recently launching a new game, Aqua Jam, in partnership with publishing platform 6waves.

Here Sohaib discusses a new partnership with publishing platform Tapjoy on upcoming game Experiment Zero, what sets a Wizards game apart, and how the Jordanian company is undergoing remote training with YetiZen, a San Francisco-based accelerator that focuses exclusively on gaming.

“Make sure that you listen to your stakeholders and users,” he advises. “It’s fine to change your idea if you’re convinced that it’s the right move.”

“You’re hired”: Why we need High-Impact Entrepreneurs to fight poverty

CLICK HERE to read the full Endeavor Insight report, “Poverty Reduction Through Job Creation & GDP Growth: Understanding the Potential of High-Impact Entrepreneurship.”

Every day, more than 3.1 billion people survive on less than $2.50.  What seems impossible to imagine is in practice a numbers game: for instance, taking a gamble on whether it is more costly in the long term to continue working with a broken leg or to risk losing eight months of productivity and two-thirds of the household’s annual income when ignoring that leg causes complications and requires an operation. If there is only enough money to send one of eight children to school, parents have to guess which one is the smartest.

This is a population that needs jobs – a lot of jobs – which makes High-Impact Entrepreneurship an essential policy catalyst for emerging markets. Stable jobs remove an element of fear from the daily life of the world’s most impoverished, offering the security of a steady salary, the ability to accumulate assets over time, and a greater capacity to mitigate the impacts of unexpected life events. Numerous studies highlight the ability of high-impact entrepreneurship to create high-quality jobs compared with other policy approaches, such as microfinance or interventions at the macroeconomic level.

High-Impact Entrepreneurship is remarkably efficient way to create high-quality jobs. A five-year study by the Global Entrepreneurship Monitor showed that while high-growth entrepreneurs represented only 4% of all entrepreneurs in the dataset, they generated an astonishing 38% of all entrepreneur-created jobs. Unsurprisingly, metrics for comparative job creation suggest that, on average, supporting the expansion of a high-growth small or medium enterprise creates up to 100 times the number of new jobs as a microenterprise.

And the jobs themselves fight poverty.  Surveys also demonstrate that these jobs pay about twice as much as comparable positions, offer healthcare benefits 91% of the time, and enable over a third of employees to provide better educational opportunities for their children.

High-Impact Entrepreneurship works to close the gap between microcredit programs and macro-level government finance projects to efficiently generate high-quality employment. While it is not the only solution needed to eradicate poverty, it is an important part of the full solution. 

To learn more on this topic please read the full report linking High-Impact Entrepreneurship to poverty reduction here

[issuu width=550 height=425 embedBackground=%23f2f2f2 backgroundColor=%23222222 documentId=121001195616-f58978ade8a8417e9426cbb975baa91c name=poverty-reduction username=endeavorglobal1 tag=brics unit=px v=2]

Innovation Rising: A snapshot of entrepreneurship in Latin America (with highlights about Endeavor Colombia)


Reprinted from Diplomatic Courier: A Global Affairs Magazine. Original article here.

By Oscar Montealegre

El Boom, as Latin Americans coin their sensational economic renaissance of the last decade or so, has been triggered by mainly commodities exports such as oil and copper to Europe, the U.S., and of course, commodity-hungry China. However, the region cannot wholly depend on their raw materials to sustain a vibrant economy for the long-term; Latin American leaders and politicians need to be cognizant that alternative courses of action need to be implemented to remain viable and diverse in the global economy. Enter entrepreneurship.

Entrepreneurship and the successful creation of enterprises is the catalyst of spreading wealth, upward social mobility, job creation, technological innovation, and improvement of living standards. There is one caveat that is attached with pursuing an entrepreneurial endeavor: the willingness to take risks. Therein lies one of many Latin American obstacles when implementing an entrepreneurial environment. Risk taking in Latin America is shunned; Latin Americans opt to seek safer routes in their careers, either in large corporations or government work, instead of taking calculated risks in the market.

Colombia’s former finance secretary, Rudolph Hommes, pinpointed the situation as such: “[Latin American countries] lack the entrepreneurial spirit that is the lifeblood of the American economy…citizens often value a steady job above the risks and rewards of owning a business.” The sentiment characterized by Mr. Rudolph Hommes is correct, but, albeit sluggishly, the Latin American psyche is changing for the better.

Entrepreneurship in Latin America is being embraced with an unprecedented fervor, from technological clusters in Brazil, to venture capitalists in Colombia, and top-down start-up programs in Chile.

In Recife, Brazil, Porto Digital harnesses the entrepreneurship drive through a technological and innovation cluster. The novelty behind Porto Digital is that it acts as a technological urban park, home to 200 businesses in the fields of gaming, cinema, video, multimedia, animation, music, and design. In 2010, Porto Digital businesses generated approximately $500 million in revenues, impressively bringing 70 percent from contracts outside of Recife. As businesses transcend borders in the digital age, market share in the global economic pie grows.

ICare Games, a development company based out of Porto Digital, specializes in games that promote social responsibility. One of their games revolves around safe driving and managing one’s behavior during stressful auto traffic. It is a niche-tailored business, but with social responsibility always being a headline in many sectors, ICare Games can market their services to schools, corporations, government agencies, and non-profits. Also ICare Games’ target market is threefold—Spanish, English, and Portuguese speaker countries, giving ICare a comparative advantage. ICare’s Sales Manager, Edmilson Rodrigues, said that there are many companies in Brazil that share the same drive, “The entrepreneurial environment here [Porto Digital] is boiling with new entrepreneurs and ideas.”

The same is happening in Colombia—one can sense the entrepreneurial buzz that is being enthused. Colombia is fertile ground for entrepreneurs due to a loosening of credit, rising consumer confidence, and most importantly, an instinct to survive under horrendous circumstances, i.e., the drug war, narco-guerilla insurrection, and paramilitary violence from the past decades. In Colombia, entrepreneurship is being stimulated by both top-down and bottom-up strategies. A bottom-up example is Endeavor Global, which has so far helped Colombian entrepreneurs create more than 6,000 jobs.

Endeavor Global’s raison d’être is to support high-impact entrepreneurs in emerging markets, such as Uruguay, Egypt, Indonesia, and South Africa. “High-impact entrepreneurs” see opportunities in these markets that have the potential to translate into large growth and long-term sustainability. In Colombia, Endeavor’s multi-tiered focus is to support entrepreneurs in breaking down barriers, thinking big, and demonstrating that Colombia’s high impact entrepreneurs are world class. Currently, Endeavor is in collaboration with twenty-seven entrepreneurs in further developing 18 business ventures.

Now herein lies the interesting fact about entrepreneurship about in Latin America; subtly, entrepreneurship has always been widely practiced. According to a study conducted by Cristian Larroulet and Juan Pablo Couyoumdjian, Latin America has the second-highest rates of entrepreneurship in the world. From 2000 to 2007, 18 percent of Latin Americans were involved in some type of entrepreneurial venture. A paradox indeed; but as the study further states, the difference between entrepreneurship in Latin America versus the U.S. or Europe is that a considerable size of Latin American entrepreneurship is based on necessity rather than opportunity. Entrepreneurship based on necessity tends not to go far, as it is pursued primarily because of the lack of opportunities—making the best of a bad situation.

Obviously, entrepreneurship moved by opportunity is the ideal situation. However, a multitude of challenges in Latin America exist that prevent entrepreneurship from reaching total optimization—the cost of failure (cultural), lack of role models or mentors, the lack of contracts and enforcement (rule of law), limited management experience (educational opportunities), limited access to financing (economic), and lack of trust. Fragile property rights, excessive regulation, high taxes—the list of challenges that impede entrepreneurial development goes on and on. On the bright side, Latin America is no longer dealing with entrepreneurship killers, such as monetary instability and shortages of the most basic items, an achievement that cannot be understated.

The political and regulatory climate in Latin America does not do any favors for new enterprises. No Latin American country is in the top 30 of the World Bank Group’s ranking of countries where it is easy to do business. Chile is the highest ranked Latin American nation (39), followed by Peru (41) and Colombia (42). It is no coincidence that these three countries are also aggressively pursuing open trade and growth, typified by the integration of all three respective stock markets (MILA), while Mercosur (Brazil, Uruguay, Argentina, Paraguay) are occupied in allowing Venezuela join their economic and political trade group. The logic behind Venezuela’s inclusion is uncertain, but it appears the trade bloc has become more political than economical.

According to a 2010 Gallup Poll, Latin Americans are the most likely to see government as a liability rather than as an asset when starting a business. Also, when asked if they can trust the government to allow their business to make a lot of money, 34 percent of Latin American respondents said yes, while 50 percent said no, once again the highest mark in a poll of the world’s regions. Of course we should not be too surprised about the results of this poll; the bureaucracy and red tape in Brazil is touted as a nightmarish labyrinth and Argentina’s President Fernandez de Kirchner is doing everything in her power to stifle entrepreneurship.

Entrepreneurs in Latin America, compared to their peers in the U.S., have limited access to capital. In most cases, Latin American entrepreneurs, faced with a scarcity of bank loans, lines of credit, venture capitalists, and private investors, begin to search for capital and outside investors through family and friends. According to the South American Business Forum, 80 percent of entrepreneurs surveyed use personal or family savings as a source of initial funding; less than 40 percemt had access to banks for startup loans; and less than 5 percent relied on venture capital or private investors.

The notion of good debt versus bad debt is not a fully mature idea in Latin America. Being liable for a debt obligation combined with the possibility of a failed business endeavor can be too daunting for many. However, there are some bright spots. From 2009 to 2010, funding for private equity and venture capital in Latin America more than doubled, reaching $8.1 billion. According to the Latin American Venture Capital Association, technology deals funded in the first half of 2011 increased by 133 percent compared to the previous year. Gradually, access to much needed capital is improving for Latin American entrepreneurs, reflecting a stable macro-business environment.

Compared to other regions, Latin America possesses concrete promise in achieving further economic growth. Collectively, the economies of Latin America boast a GDP of $5 trillion—impressive, but it pales beside the U.S.’ GDP of approximately $15 billion. This comparison can give Latin Americans incentive to achieve more progress, but politics and business must be in relative unison.

Luis Alberto Moreno, President of the Inter-American Development Bank, wrote in his book, The Latin American Decade, “The new generation of businessmen [in Latin America] is not only more educated and less dependent on the state, but also more connected to the world…” Latin America faces an incredible opportunity to diversify economies and avoid the web of the Dutch Disease. It can be accomplished in many ways, but one variable cannot be omitted—the spirit of the entrepreneur.

Contact us

Press center

Community

Newsletter Sign Up