“We are constantly out of our comfort zone,” said one entrepreneur at a recent LendIt Fintech roundtable dinner held in Buenos Aires. He went on, “Being an entrepreneur in Argentina is like being in active military duty in the Middle East: one’s tools are sharp, and one’s mind is tuned for battle.”
These business-builders “have the marks of war” from ceaseless cycles of political and economic upheaval. Speaking of their forefathers, who mainly emigrated from Europe during the World Wars, one of our guests said, “they landed in Argentina and we have been reinventing ourselves ever since.” It is a population with a high appetite for risk. Perhaps this is why Argentinians are so well known and respected for their entrepreneurial capabilities.
A common refrain we heard throughout South America reminded me of Sir Raymond Priestley’s quote about the great explorers of the early 20th century:
For scientific discovery, give me Scott; for speed and efficiency of travel, give me Amundsen; but when you are in a hopeless situation, when you are seeing no way out, get down on your knees and pray for Shackleton.
Perhaps we might bastardize this by saying, When the startup struggle gets real, pray you have an Argentinian at the helm.
The situation is complex
Argentina has a highly cash-based economy, which presents an opportunity to multiply the financial services industry, and the general economy as well, simply by moving “from cash to data,” as one of our guests said. But that is easier said than done in a country that has defaulted on its sovereign debt eight times since the turn of the millennium. Even some of most trustworthy financial instruments are hard to find; try taking out a 30-year mortgage in a country so volatile.
Here in Argentina you will find both ardent patriotism and rampant cynicism. Here you will find seeds of greatness planted in soil that is sometimes fertile, sometimes arid. Here, in just a matter of weeks, you will find massive turnover in government leadership, or so it is surmised. However, here also you will find ample, inexpensive, highly capable tech talent. And here you will find not one, but two VC funds, which is more than can be found in Colombia, Peru or Chile.
Warning: turbulence ahead
It is difficult to bet on the system of government in Argentina, and by extension its economy. President Mauricio Macri has been making headway toward resolving Argentina’s economic woes through “economic orthodoxy” such as federal austerity. The issue, it seems, is that he has simply run out of time. New elections are fast upon Argentina, and the party that appears to be in the lead also appears to be positioned for a wholesale rejection of austerity politics. Too bad for Argentina; if Macri’s challenger wins, off we’ll go to another cycle of government excesses leading to further sovereign defaults.
Perhaps this is why one of our roundtable guests said, “if you can survive here, you can survive anywhere.”
Strong entrepreneurial fabric decades in the making
Fast-expanding companies, years later, often spawn scores of new companies in their wakes. And great entrepreneurs, decades later, often turn into great investors. It’s because of giants like MercadoLibre that the entrepreneurial ecosystem is currently so strong in Argentina. Still, there is a capital gap for companies that wish to scale. “There’s nothing,” lamented one fintech executive, “where scale-up funding is concerned.”
Can Argentine startups survive the next political upheaval? The next sovereign default? Almost certainly, yes, because they have survived so many times before. And let’s hope so, because South America depends on the fruit that Argentinian entrepreneurs produce from their volatile land.
I invite you to join me in Miami on Dec 3-4 to learn more about opportunities in Latin America. FINNOSUMMIT Miami by LendIt Fintech connects innovators, investors and bankers from around the world who are focused on advancing financial services in Latin America.