Want to grow a successful startup? Hire in LATAM, grow from the US
Decisions, decisions, decisions.
Everyday entrepreneurs are faced with the task of making choices that will affect their companies. Specially along the lines of deciding a business model, where to establish operations, and where to sell their products.
This is particularly true for Latin American startups. Why? Because to get investor’s attention they need to decide if they will grow inside their region or export to the most profitable market: The United States.
“By selling in the US market you still have the place with the most VC funds, the most acquisitions, the most customers, and just a better environment to move faster and grow larger”, said Andrés Barreto, investor and entrepreneur. “Now, what it’s not necessarily an opportunity, is not intuitive, is launching products for the Latin American market for Latin America. Now that’s the inertia of the startup activity over the last two decades in Latin America, cloning what’s going on in the US and doing it in Latin America. But that’s not necessarily the easiest, nor the fastest, nor the one that brings more returns.”
“[In Puerto Rico] You can have all the benefits of the US in terms of security and laws that work, and at the same time have a better lifestyle than in the US, for rent and all the other things. And you don’t have to pay Federal taxes,” — Andrés Barreto
However, getting a startup to the US market requires resources that many small companies lack. It is also a great gamble to move to a new culture and try to sustain a comfortable lifestyle. This is where Puerto Rico comes in. Located in the Caribbean and a previous Spanish colony, the Island shares many traits of the Latin American culture, including language and traditions.
The best of both worlds
As a US territory, Puerto Rico not only has the same currency, it also has the infrastructure, justice system, and financial structure of the mainland. Basically, the best of both worlds. “[In Puerto Rico] You can have all the benefits of the US in terms of security and laws that work, and at the same time have a better lifestyle than in the US, for rent and all the other things. And you don’t have to pay Federal taxes,” the Grooveshark founder explained. In a nutshell, Puerto Rico offers the chance to try to penetrate the US market while making Latin American entrepreneurs feel close to home. Seems like the best of both worlds, right?
Puerto Rico and Latin America also offer a great opportunity to US companies, and that’s better and, more affordable talent. Cost of living, specially rent, in PR and LATAM is cheaper than in the US tech hubs. “You can pay over market rate and they’ll have an amazing lifestyle, because cost of living is very low. For $90K to $125K you can afford someone with experience and they will live very, very well. Even immigrants that move to the US can’t keep the same lifestyle. They have to make more in the US to have the same lifestyle. Having team in LATAM is cheaper, and you can still sell in the US to move faster and grow,” Barreto continued.
One way of doing this, is applying to acceleration programs that have strong ties with the US. Parallel18, a startup accelerator for companies that want to go global, is conveniently located in San Juan. The program offers a USD $40K equity free grant and provides mentors, a network of contacts who have experience in penetrating the US market and who can help you navigate the caveats and challenges a Latin American entrepreneur can face when trying to get to the US.
The program also helps in the quest of finding qualified employees of all fields, and attractive tax incentives that help promote growth. It is the perfect chance to hire at lower costs and growing at a faster rate.
So the choice is clear, if you are a Latin American startup looking to increase sales, get funded, be considered by VCs, or even acquired, Puerto Rico and Parallel18 are your chance to try and succeed in the US market without increased risk.
