Published: March 6, 2013
A panel on entrepreneurship in Latin America
Some Latin American venture capitalists believe the best way to increase entrepreneurship in their respective countries is for government to remove barriers to entrepreneurial development.
“In Brazil … the best thing is to improve education, reduce bureaucracy, and reduce corruption” said Marcelo Lima, partner at Monashees Capital there.
Lima was speaking at the 16th annual MIT Latin American Conference, as part of an hour-long panel considering the need for more entrepreneurs in Latin America. The conference took place March 2 in Wong Auditorium on the MIT Sloan campus.
To improve entrepreneurship in Mexico, the government needs to fix a broken legal system that doesn’t respect personal property, as well as improve education and slash red tape so that beleaguered entrepreneurs can start businesses, said Miguel Angel Davila, partner at Latin Idea Ventures.
“It sounds like a tremendous challenge, and it is,” said Davila, also co-founder of the Cinemex theater chain.
On the other hand, Cristobal Undurraga, head of entrepreneurship at the Chilean Economic Development Agency, said his government works to help businesses. It has slashed the time it takes to license a business from 26 days to three days and overhauled its bankruptcy laws, he said.
Panel moderator and MIT Sloan assistant professor Alberto Cavallo said investors and entrepreneurs in Latin America used to be concerned about the uncertainty of available capital, so it’s auspicious that their biggest gripe now is government.
“The [Latin American] VC industry is developing, more angels are willing to provide capital, and at least one of the more difficult challenges entrepreneurs face at this time has receded,” Cavallo said in an interview. “A lot of people are interested in starting companies in Latin America, so that’s a really good sign. Now, we have to make sure the government provides an environment for that.”
The Latin American investors on the panel described areas where their countries’ approach to entrepreneurship could improve.
Lima said Brazilian entrepreneurs start companies to fill needs instead of grasping at big opportunities. He said the country needs “impact entrepreneurship” if it is going to create companies that will create products to sell to the world.
Davila, meanwhile, described a funding “death valley” for young Mexican companies between early and later funding rounds as the venture business continues to mature.
MIT Sloan students organize the annual conference. Christian Gabela, MBA ’13, a member of the MIT Sloan Latin Business Club, said the purpose of the conference was to bring together Latin American business, government, and student leaders in one place to debate regional economic problems and promote investment.
Cavallo lauded MIT Sloan for its conference.
“Many people talk about Latin America’s problems but not the opportunities,” Cavallo said. “It’s tremendously important we talk about the opportunities in the region, and bring leaders from the region here so students and investors can get a picture of what Latin America is all about.”