startup
Business Management

Was 2015 Latin America's tech startup tipping point?

Winston Churchill described Russia as a riddle wrapped in a mystery, inside an enigma, but you might say something similar about perceptions of Latin America’s technology sector. This huge continent is home to about 604 million people, making its population larger than that of north America (529 million) and not much smaller than Europe (742 million). But it remains poorer than either and its ICT sector is, arguably, only now maturing. Some still talk of bureaucracy and erratic local economies but it might be that the tech scene at least is stabilising.

It’s possible to make a case for 2015 having been an inflexion point for Latin American tech. Argentina’s e-commerce firm MercadoLibre, sometimes known as Latin America’s Amazon, continues to be a solid performer and closed the year with a market cap of about $5bn. That was a fairly remarkable achievement given the macroeconomic turmoil in Latin American economies where the firm predominantly sells. As more Latin buyers go online some believe that there are strong growth opportunities.

The innovative Buenos Aires-founded IT services company Globant is valued at about $1.2bn and also had a solid year with revenues up almost 30% for its most recent quarter over the previous year. Globant should deliver over $250m in revenues for the full year. Unlike Mercado Libre, Globant’s market is mostly in the US with banner names like Google, Coca-Cola and LinkedIn among customers. It is boosted by the world’s biggest marketing communications services company, WPP, being an investor, having bought 20% of Globant about two years ago.  

Over in Brazil, ERP software provider TOTVS trades its shares on Sao Paolo’s Bovespa market and continued its spending spree in 2015 by buying retail software seller Bematech for about $156m in August. That’s also symptomatic of the broader Brazilian tech sector where mergers and acquisitions have roughly doubled over five years.

Brazilian IT services giant Stefanini remains a powerhouse and said at the close of 2015 that it intends to continue to expand internationally via acquisitions.

Another Brazilian company traded on Bovespa, the e-commerce holding group B2W Digital is benefiting from more Brazilians buying online with the company’s revenues up 26% to 2.7 billion reales ($690m). There was 24% market growth in the Brazilian e-commerce market between 2013 and 2014, according to e-bit research. The Brazilian Association of Electronic Commerce predicted a 15% growth in e-commerce revenues in 2015. But only 52% of Brazilians today are online, according to Nielsen IBOPE so there is clearly headroom.

These companies are leaders but they are not alone. Think of Linio in Mexican e-commerce, mobile internet pioneer Naranya, mobile payments company YellowPepper over the border in Miami, or of the many startups that are being backed by the likes of Telefonica’s Wayra accelerator and are being fostered by progressive governments across the continent such as Startup Peru and Startup Chile.

Latin America remains a region with challenges but also with vast potential. As more people realise this, expect more dollars and euros to be invested there.

 

Also read:

Argentina’s Globant is galloping ahead

Mexico’s Naranya has global ambitions

Globant CEO sees a wearable future

YellowPepper heats up LatAm m-payments

Wayra seeks a new wave of LatAm startups

Brazilian outsourcer Stefanini turns crises into positives

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