Why 'Hacking' Your Way Into the U.S. Market Via Latin America Makes Sense for Your European Startup
For many European tech startups, opening offices in the U.S. might be a dream come true. It can mean setting up shop in innovation centers like Silicon Valley and New York. It means being within reach of arguably the world's most advanced software and IT services, as well as suppliers, investors and cutting-edge research. It also means direct access to the largest consumer market on earth, with a GDP of $18 trillion and 325 million people.
In short, expanding into the U.S. is a chance to grow larger, faster. Nevertheless, moving your startup there isn't exactly an easy process. And with President Trump's shelving of the Obama administration's startup visa bill -- which would have allowed startups a renewable 30-month stay period -- things are only going to get more complicated to navigate.
However, there's an opportunity for companies to consider alternate routes. One such way to "hack" your way into the U.S. market is via expansion into Latin America. Our own European product development company moved into Latin America with the intention of entering the U.S. market -- and earlier this year launched in New York and Silicon Valley. Here's what you should consider if you decide to take this road, too:
Acquisitions and mergers can provide a catalyst.
If you're moving your company to Latin America, a merger or acquisition may smooth the transition. Partnering with a team that already possesses an intimate knowledge of the market you're entering can be helpful in navigating the lay of the land. Why enter a market blindly, after all, when you can work with those who already understand the country's clients, business opportunities and, most importantly, laws?
In our case, we acquired an Argentine software development firm and opened offices in Buenos Aires last year. Having been influenced by waves of immigration from Europe during the 19th and 20th centuries -- especially from Italy and Spain -- the country offered a good cultural fit for our European offices. Its capital is also an alluring, metropolitan destination for people across the globe. With European architecture, top-notch restaurants and of course parilla, we knew having offices based in Argentina would make it easy to welcome clients and partners.
And one of the biggest bonuses was that establishing an office in Buenos Aires put our company closer to a U.S. timezone. As opposed to in Europe, Buenos Aires has just a two-hour time difference with New York City. This enables easier contact with business partners and clients in the U.S. for all our team members.
Latin American cities are full of IT talent.
Latin American governments have been investing in the technology industry and education. This has resulted in a number of burgeoning tech scenes with a wealth of IT talent across the region.
For example, the Colombian government is spending $19 million on its Digital Talent initiative (Iniciativa Talento Digital), providing citizens free education in IT graduate and postgraduate fields. Such professional training schemes have turned Bogota and Medellin into tech hubs, birthing Y Combinator unicorns like delivery app Rappi and ed-tech startup Platzi. Mexico is investing a whopping $600 million in tech startups through 2018, topping similar investments made by Portugal and Italy. The nation now boasts 100 incubators and produces 130,000 engineers per year -- more than Canada, Brazil and even Germany.
Buenos Aires, meanwhile, just created a new incubation program called IncuBAte, with an aim to encourage startup growth through the transfer of knowledge, networking and sharing of good practices. According to Stack Overflow, Argentine developers score higher than those of India and China in terms of "Average Reputation of Top Users." The country is also home to the highest number of tech unicorns within Latin America. This includes ecommerce company MercadoLibre, which is valued at $9 billion.
And not only do cities like Buenos Aires, Mexico City and Bogota offer a plethora of young talent, but for European market rate wages, you can also afford to hire senior software engineers with 10-plus years of experience. So, even if navigating the move to the U.S. costs you time and resources, in the interim you'll have the chance to grow more valuable with less capital, in less time.
These fertile grounds are drawing European companies, offering them the opportunity to build strong teams and strong products in affordable, innovation-minded Latam tech hubs. Seeded by the Chilean public startup accelerator Startup-Chile, Portuguese cloud ecommerce solution Jumpseller went to Santiago before expanding into the United States. Spanish startup SamyRoad, a branded content marketplace, followed a similar route, launching new offices in Puerto Rico with the help of the island's Parallel18 global business accelerator. And German entrepreneur David Geisen chose Mexico's tech scene to grow his now highly successful ecommerce coupon platform clickOnero. The list goes on.
A Spanish-speaking team gives a huge leg up.
A team of Latin American IT professionals won't bring just tech savviness to the team; they'll also bring a linguistic bonus that will prove invaluable for U.S. expansion. Barring you're from Spain, building a team in Latin America can mean acquiring the Spanish language.
The number of Spanish speakers in the United States, according to U.S. Census data, is estimated to grow to 41 million over the next two-and-a-half years. In fact as of a 2015 study, the U.S. has more Spanish speakers than Spain. A command of the language could therefore be essential for communication with your startup's U.S. clients.
Moreover, it's important to consider the level of English a particular country holds before launching into it. Argentina, for example, boasts the highest level of English proficiency in Latin America -- something that obviously, is necessary when launching into the U.S.
Representing a quarter of the $3.8 trillion global IT market, the U.S. will be a coveted market for quite some time. But, with isolationist, "America-first" attitudes prevailing in U.S. politics, access to this market may get harder and harder to attain.
Given what's at stake, it's in startups' best interest to find new ways to position themselves for the move. And there are many reasons to think Latin America is a great launching pad.